RES 497 Week 3 Assignment

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Feb 20, 2024

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Cooper Realty, LLC Elena A. Cooper RES 497 Strategic Management of the Real Estate Enterprise Margaret Vivoda October 23 rd , 2023
Introduction A business plan is a document that details a company’s goals and how it intends to achieve them (Hayes, 2023, p.1). The following paper is an explanation of the financial costs for a real estate brokerage startup. Cooper Realty has gone through all the expenses for the company to become a brokerage and their plan to thrive in the growing market. Start-up Costs Licenses In order to start a real estate brokerage office in the state of Virginia, you first need to get your real estate salesperson license. In order to get your license, you must take a 60-hour pre- licensing course. This course takes about a month and can range from $200 to $500 to complete. After you complete the course, you will then need to take the real estate exam. The exam will take 2 ½ hours to complete and cost $60. You will also need to pass a background check, which will take 4 to 6 weeks to complete and cost $52 to take. After all of this you can file for your real estate salesperson license and pay $170 when you file. After you have completed all of these steps, then you can start on the brokerage license part. To be considered for a brokerage license you need to be an active, full-time realtor for at least the last three years prior to applying for your brokerage license. Another stipulation before you can apply, is that you have to complete 180 hours of real estate courses. These 180 hours do not include the 60 hours that you completed for the salesperson license. These hours can cost you about $1100 to complete. After these hours are completed, you can take the brokerage test and if you pass you can apply for your license. Taking the test and applying for your license will cost $270.
The last license that you need to obtain is your business license. Some states do not have statewide license requirements, but if you work in certain industries you are required to have one. Virginia is one of those states. “Real estate brokers, engineers and home inspectors, for example, must obtain a state license” (Iwuozor & Main, 2022, p.3). The first step in getting your business license is to choose a name for your company. The author of this business plan has decided to name their brokerage. Cooper Realty. They have also decided to form a limited liability company (LLC) and will have to file the articles of organization with the Virginia State Corporation Commission. They will file for an EIN, or an employer identification number, this is used to file taxes and pay employees. After doing these things the owner can then get a business license. Real Estate Fees When it comes to starting a real estate brokerage there are different fees that you will have to pay before you can even open the doors. Multiple Listing Service (MLS) “is a database established by cooperating real estate brokers to provide data about properties for sale (Chen, 2022, p.1). This could cost a broker between $36 to $60 per month. Another fee would be the REALTOR association fee, which includes local, state, and national REALTOR association fees plus one-time application fee. This fee would cost the brokerage between $500 and $850 per year. Insurance In the state of Virginia, there are different types of insurance that are required for you to have before you can open the doors for business. The first thing that you need to get squared away in the insurance category is getting a business owners policy. A business owners policy can cost between $700 and $3800 per year. This type of policy includes general liability insurance,
commercial property insurance, and business interruption insurance. According to TRUiC (2023), generally liability insurance protects a business from the financial burden that could come from claims arising from bodily injury, personal injury, or property damage (p.2). Business interruption insurance will replace some of the income you may lose for a period after a covered loss. TRUiC (2023) states that commercial property insurance is put in place to repair in case you must repair your building, tools, furniture, or any other physical object in the event of a covered catastrophe (p.4). The next type of insurance is worker’s compensation insurance. Being a brokerage, the realtors will technically be self-employed and will file 1099’s so they would not be able to file a claim for workers compensation, but there will be some employees that would be w-2 and they would be able to claim. These employees could include the manager and receptionist. The average cost of a workers compensation insurance is $45 per month. Another insurance that you need to have before starting work is errors and omissions (E&O) insurance. Errors and Omissions (E&O) insurance is a type of professional liability insurance that protects companies, their workers, and other professionals against claims of inadequate work or negligent actions (Frankenfield, 2023, p.1). E&O insurance can cost $500 to $1000 per employee per month. Office Space The next step to opening your own business is to find a place either to buy or rent. Cooper Realty LLC has decided to rent a space. Cooper Realty decided on 150 Riverside Parkway in Fredericksburg, Virginia. Suite 309 is 6933 square feet with 28 separate rooms and a reception area. According to LoopNet, it costs $18 per sq ft per year to rent the building. The rent for the suite would be about $10,500 per month. The owner would have an office, along with a
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