How Many Houses Per Year?
O.K. Afriend of mine is studying to be a realtor. She told me that I only can buy 5 houses within a year. She says its illegal to buy more than 5. Is this true? 
O.K. Afriend of mine is studying to be a realtor. She told me that I only can buy 5 houses within a year. She says its illegal to buy more than 5. Is this true?
Have her show you the law!
Ask her so can you show me the law? Besure and ask all nice and everything. When she can not find it ask her how many can I buy?
Your friend better go back and study some more. At the rate she is going, she will never pass the test. And if she does, she is on her way to being part of the reason many investors hate dealing with Real Estate Agents.
My guess is that she's refering to people that are classified as dealers based on their volume rather than homebuyers.
Dealers do indeed play by different rules that are more strict and have smaller margins. You DO want to avoid getting the dealer status.
Illegal is a very strong word. It's not illegal. Far from it.
Tell her you heard that realtors can only SELL 5 houses per year. I think she will see how crazy she sounds...
Prosperous investing,
td
A lot of us are in BIG trouble if that's true!
Seriously, there is no such law. Go buy as many as you can!
In Calif. when you exceed 5 RE Sales as a unlicensed person your status is considered a Dealer. The Dealer faces different Tax ramifications with respect to Capital Gains. If your doing more that 5 per year you should be doing business as an LLC or other business entity.
[addsig]
If you're buying to hold, you're not a dealer. You may be clasified as a dealer if you buy and sell more than 5 (If 5 is the magic Number) The Federal Tax Statutes do not name a magic number that I know of. If you are going after a combination of Quick Turn Properties, and Long term properties, Use a diferent entity to purchase them based upon your plans with that property. If 1 entity is deemed to be "Dealer" status, live with it. Pay the taxes accordingly. Avoid Dealer Status on your keepers, and save money on taxes.
Talk to your accountant, and they can tell you the defferences, and ramifications of each.
Good Luck,
Jeff
Thank you all for the strong advice. This has got to be one of the greatest sites in the world.
Dave