How to Start a CRE Business in Texas
Everything is bigger in Texas, including commercial real estate. Since 2017, Texas has surpassed every other state in commercial real estate development and carved out an industry that makes up nearly $60 billion of the state’s economy and supports almost 380,000 jobs.
One of the contributing factors to this expansion is the recent increase in population, with more and more professionals moving to Texas for work. The Dallas-Fort Worth (DFW) metroplex is currently outpacing the rest of the U.S. as the fastest-growing metro area.
Overall, seven of the nation’s most rapidly growing cities are in Texas, including Midland, Pearland, McKinney and College Station
Moreover, multiple major corporations are planning to relocate their headquarters from California to Texas. The 33 percent downturn in commercial construction in Dallas will turn around, and cities like Austin and Houston will also see greater — or at least sustained — commercial development, which will translate to heightened demand for commercial real estate.
Where To Start?
Given the positive industry projections and Texas’ business-friendly atmosphere, this may be a good time to step out and start a commercial real estate business. We recommend following these steps to set yourself up for success:
Before you can own a commercial real estate business, you may have to become a real estate broker — and before you can be a broker, you may have to get your real estate sales license. As mandated by the Texas Real Estate Commission (TREC), there are a few key requirements for being a sales agent in Texas:
• Be at least 18 years old
• Be a U.S. citizen and a Texas resident
• Meet TREC’s moral qualifications
• Complete 180 hours of approved classes
• Pass the test in three chances
All real estate sales agents in Texas must be sponsored by real estate brokers. In fact, even after you are licensed, you must work under a licensed broker. Texas also requires all real estate sales agents and brokers to submit to background checks and fingerprint scans.
Make A Plan
As a precursor to legally forming your commercial real estate firm, you need to put your business plan together on paper. You must devise a plan of where and how your business will operate, what the startup costs will be and where will the funding come from, as well as whether you plan to strike out on your own or open a franchise office.
There are pros and cons for being completely independent versus working under an established business such as Remax, Century 21 or Keller Williams. On one hand, if you’re independent, you really are in charge and can set your own business guidelines and training tools, and even design your own contracts. But the upside of the franchise is the structure — the guidelines, training, contracts and marketing are already in place. And you have the name of the parent company behind your name, which can aid in securing listings.
Form Your Business
Forming a business in Texas is easier than you might think due to the state’s pro-business environment. Your first step is to decide which business entity you want — an LLC or a corporation. Because of tax laws and other business-specific regulations, LLCs are generally the preferred option.
The responsibilities of maintaining your brokerage license with the Texas Real Estate Commission include adhering to standards professional ethics and conduct, correct practice and procedure and other general administration rules.
If a complaint is filed against you are subject to a hearing with the Commission and possible removal of your license. In addition to brokerage license compliance, properties must also pass inspection and building codes. To review all provisions under the TREC rules, visit https://www.trec.texas.gov/.
Keep In Mind…
Every state is different in terms of how it designates real estate businesses. Some states specify real estate firms as professional service businesses. Texas only recognizes medical and legal professions for professional LLCs. Your business will be a regular LLC, but you are still required to adhere to regulations issued by TREC.
Forming an LLC in Texas has its own steps and stages, but the most important step — aside from naming your business — is to file the paperwork that makes your commercial brokerage an official business entity. You still have other steps to complete, but you are now on your way to building your own commercial real estate business.
— By Travis Crabtree, president, Swyft Filings. This article first appeared in the March 2019 issue of Texas Real Estate Business magazine.