All Forum Posts by: Neil Sinha

My 2 cents, for what it's worth are that I think this describes a lot of "what" and not a "why".  It's good to have an idea of what your methodology will be, but mission statements need to hit on some of the notes Ernesto mentioned to motivate those working with you.  You should look up some of Simon Sinek's work about starting with why.  And I generally think statements that include "most successful" or "best" tend to be too generic to be actionable, because how do you track that?  If you want to have something aspirational, pick one strong suit you want to play to and benchmark with other investors.  Something like "We aim to have the fastest cycle time from initial offer to post-rehab listing in the DFW area," as an example.  But don't throw a goal out there just because unless you will build around it and use it.

@Mike DeBuccio Jr.

My biggest fear is that I won't have a sufficient pipeline of deals directed to me as a newbie when there are seasoned investors with active marketing that will beat me out.  I fear the competition who has been at this longer stifling my ability to hit my targets and goals.

Hello everyone.  I'm doing my best not to be stuck in paralysis-by-analysis, and have been reaching out to prospects I've skip-traced to find my first deal.  No luck yet, but I'll keep trying.  However, I subscribe to a lot of the logic in the E-Myth and Rich Dad books about planning / thinking for the long term instead of just the next individual opportunity.  Striking that balance between strategic and action-oriented behavior is a challenge.

To the more strategic end, are there any comprehensive checklists for getting a complete REI operation rolling, particularly using the BRRRR strategy? Something that talks about how to get different marketing channels set up for both sellers and tenants, what team members to add and how to screen them, what bookkeeping and forms to have in place, etc? I'm a project manager by day, so if I could try and wrap my head around the total scope of achieving a fully-functioning REI business, I can plan a statement of work, budget and schedule to get to that state. But it seems like each topic is tackled individually on BP. A snippet about direct mail here, something about lenders over there. If there was an end-to-end view of what a functioning BRRRR enterprise looks like, I could plan to build one for myself. Thanks for any feedback.

@Jerry Puckett

Thanks for replying. I'm pretty sure I've gotten into the frame of mind for rule #1 you mention, but until I hit my stride I might still grind some gears on it. Practice will make perfect in triaging the slightly motivated from the not motivated. Finding the masters of different strategies is another salesmanship challenge I'm trying to wrap my head around: How to add value to those who are already doing fine so I'm worth their time to mentor. I know I want to move towards getting better at BRRRR, but for the numbers to work you need to be able to add enough value from initial acquisition to refinance to get the money back out and on to the next deal. That takes a seller willing to leave potential value on the table for you to capitalize on and I want to get better at convincing them I'm the one to help them. I also am trying to figure the same thing out for cold calls when I'm prospecting as opposed to waiting for marketing leads to come back to me.

Hello.  I'm still a newbie trying to get my act together, and being an analytical, left-brain kind of guy, my RE learning tends to focus on the numbers and financials and quantitative issues.  But when you get down to it, so much of success is people-based, and as much as I cruise BP, I don't see a lot of threads that talk about how to reach the actual motivated seller such that they're sold on you, as the investor, being their solution.  With that in mind, I'm wondering how people have gone about developing and continuously improving their messaging and pitches to convert from prospect to closed deal.  Lots of information on here about how to look and qualify a prospect and run the numbers, but once you know you have a potential deal, what then?  I know a lot of it is so subjective, but with the amount of brainpower in the community, people have to be studying and analyzing conversion to figure out what works.

What kind of actual design in direct mail gets your yellow letter to be opened when these individuals might be in a list that results in them flooded with yellow letters?  What wins out and piques interest?  Once opened, what language helps motivate them to pick up the phone instead of tossing your mail in the trash?  Has the community here A/B tested and studied what psychologically works better for different seller segments?  How about that initial call?  What pitch leads to a sit-down meeting to further qualify the deal instead of "I'll think about it"?  What framing around an offer does better to actually get it accepted than to come across as a lowball or insult?

Are there certain pitches that work better for:

• Next of kin inheriting abandoned homes?
• Owners with equity that are being foreclosed?
• Landlords that want out of their investment?

The opportunity cost for these people could be to instead list the property with a realtor for full or near retail value, so what kinds of salesmanship goes into convincing them the convenience you offer is worth the money they leave on the table?

This is an area I definitely want to learn more about without getting sucked into a bad guru course.  Just curious what everyone thinks.  Thanks for your input.

Thanks everyone.  I knew there was a difference between whether it "could" or it "should" be done, but some of it is just learning how this works.  Knowledge is power, so I like to ask questions in areas I don't fully understand.

@Dmitriy Fomichenko

Thanks.  I've seen the self-employed definition, but the "Otherwise in business for yourself" leaves a lot of grey area.  I know Scenario 3 is most appropriate, but is there any reference or reason why scenario 2 or scenario 1 would result in a 401K plan being considered disqualified because there was no earned income to contribute?  That's the brass tax I'm trying to understand.

Hello. I'm looking for some more information about the requirement for earned income which allows a 401K vs a IRA. It would be particularly helpful if anyone has the actual references that define some of the terms. But I wanted to talk through a few scenarios to make sure I understand.

Assume a husband and wife team want to buy and hold real estate both inside and outside of a retirement plan.  The husband has a day job with a 401K with employer matching, and he moves companies every 2-5 years instead of sticking with one company long term.  As those company 401K funds get vested, he will roll them out of the plans and into a self-directed vehicle when possible (between employment opportunities).

Scenario 1: They form an entity to hold their non-retirement real estate which they rent to tenants. The entity is either an S-Corp or an LLC that elects S-Corp taxation. The entity issues them a regular salary on a W-2 for the management of the portfolio. Is that W-2 income from the entity to themselves as employees earned income and makes the entity eligible for a 401K, or because the original source is passive rental revenue the salary is passive?

Scenario 2:  They form a two entity structure: holding and operations.  The holding company keeps the title and the operating company engages in all of the leasing, negotations and public-facing operations to shield the holding company from liability.  The holding company contracts the operating company to conduct property management of its portfolio for a reasonable market fee.  Operating company uses this fee to pay a W-2 salary.  Does the separation and distinction that the salary is a result of property management fees, not rental leases make it earned income, or will it be viewed as indistinguishable from the original rental income and still passive?

Scenario 3:  Same as scenario 2, but assuming proper licensing and compliance, the operating company offers property management services to other property owners than just the holding company.  Will the presence of external income from other individuals make this situation more "earned" and less "passive"?

Again, if there are specific citations that can define where the threshold between earned and passive lies, I'd really like to learn more.  The opportunity to use the UBIT loophole of a 401K and take loans against the balance make it more attractive, but I understand there needs to be eligible income for it to exist.  Thanks for any insight.

No updates to report, will let you know.

@Tracey O'Hara, if I understand you, the seller won't do a subject to, so he wants to move out, keep the deed, you put in 50K in rehab plus the mortgage holding costs, and then let him sell, and then try and get a portion of that profit because you fronted those costs?  Without the deed to the property in your name, that seems like a lot of exposure you take on without any control or any protection for your interests.