All Forum Posts by: Tim Silvers

https://wcginc.com/kb/ and https://wcginc.com/fee-structu... -- They have fixed fee structure to compare with anderson advisors without any blatant selling tactics

https://www.kbkg.com/" class="redactor-autoparser-object">https://www.kbkg.com/

https://go.empiretaxusa.com/61...

If you attend any tax-wise or other 3 day events with anderson which costs $197 + travel expenses you will get enough knowledge on how they operate and you should be able to understand what LLC structure is beneficial, also they have a large collection of online videos with plentiful of information on youtube and tax tuesday webinars.

With enough knowledge you can make a educated decision on which approach you take.

My experience:

I personally don't sign up for any program who take you aside during events and try to sell packages that is just blatant sales strategy.

Once you sign up there is every attempt to make you sign for their programs for bookkeeping, registered agent, LLC or corp setup fee which have ridiculous even with platinum membership.

Basic standard structure they suggest to take advantage of multiple deductions can be easily achieved by proper education or work with a good firm like https://wcginc.com who is local to you.

A umbrella C-crop to manage all other LLC properties and take advantage of many tax deductions that are not available with a llc, its also used to take losses up to 100K as startup expenses and dissolve the entity after few years.

Few LLC entities for investing in Real Estate, etc preferably in Wyoming or Nevada ( you can find many companies online who can do this for $150 compared to anderson $1500-$3000) , they will claim they have a secret Operating agreement which is bogus.

They certainly try to take advantage of tax loopholes and claim to be smart people, my view they are just taking advantage of numbers as per their own statements. They claim only 2-3 percent of the companies are audited so the more clientele they have the percentage of audits will be less even if they make some calculated risks.

Few Deductions they highlight which you can get with proper planning and right CPA.

1) 119A - Revenue stream bifurcation

2) Augusta Loophole 280A - use primary residence for 14 days of business and pay you back without tax implications.

3) Paying your medical and children education fee using c-corp

4) offcourse the famous charitable llc - another program and package.

Thanks for the insight. Question - what is #1 and #2?

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My 2 cents on the EIDL from when it started to current:
Understandably, the entire program was crafted in a emergency and shows its deficiencies. There is no uniformity in the use of the proceeds whatsoever. The advice you get from the SBA reps to any so-called expert attorneys and accountant varies widely from day to day. They are all trying their best to interpret the language in the loan agreement, but the agreement is the most byzantine and vague agreement I have ever seen. Worst of all, you cannot waive your liability or assume any protection based on a verbal statement made by any SBA rep, and an opinion from an accountant or attorney is just that: an opinion. As such, you ask 5 different people their take and get 5 completely different answers. Misinterpretation will run rampant; what you or your advisor deemed as being "good judgment" based on such and such argument, tax or case law is all well and fine, but may not be upheld in a court if it gets that far (doubtful unless you did something blatantly wrong).

I would just take whatever you were approved for, not change ANYTHING (because you will likely never get it done), set up a separate bank account for the proceeds, not touch the funds UNLESS (a) it's for an expense that is clear cut with zero ambiguity that you can point to the agreement and see it stated in the language, and/or (b) it's an absolute necessity to use it. If you need a reconsideration to raise the amount, you can request, but what happens if you hear nothing back and your 60 days is up? I'm waiting for a reconsideration to decrease the amount after I agreed to the full amount but didn't submit the loan agreement, have spoken to 3 SBA reps, got 3 different answers, none of which sounded credible, and another 2 weeks has passed with no response. It is like a bad joke.

Until and unless such time comes that the SBA makes amendments, revisions, or best of all, forgives the entire amount (which one attorney feels strongly may happen Attorney Explains: Will EIDL Loans be Forgiven?
then I would err on the side of caution and use common sense I've outlined. I'd say take it and decide later if you need it and can justify using it on clear-cut expenses that ARE NOT SUBJECT TO INTERPRETATION BY ANYONE. If it turns out that you don't need the funds or can't use them on supported expenses as outlined in the loan agreement, then pay it all back. Case closed.

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What I have gathered is that as long as the loan proceeds are used for REPLACEMENTS and not IMPROVEMENTS or UPGRADES, then it's ok. In other words, if you replace a water heater, make sure you're replacing it with a like water heater. And yes, I agree, they are capital upgrades in our business.

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Originally posted by @Gary Leonard:

Originally posted by @Devin Browning:

Originally posted by @GARY LEONARD JR:

Originally posted by @Paul Fournier:

What’s up BP!

Recently, I came across a wholesale strategy called Astro Flipping, which seems to be a way to get multiple deals out of one property. This seems to be the new craze.

Have you done these kinds of deals before? What’s the process for successfully completing deals like these? And Is it worth it?

Thank you BP!

Astro Flipping is just a fancy way of selling online coaching. If you wholesaled before you probably Astro Flipped and didn’t even know it. It’s when ( you) partner with (1) investor and complete deal- Usually latching onto the Dispositions side of the spectrum.

1) Wholesaler Gets property under contract tract with motivated Sellers

2) Ensure due diligence and makes sure the numbers work.

3) Then Partners with another investor who gains equitable interest of the property and lines the deal up with a prospective buyer -

4)Secures buyer then reassigns back to wholesaler for a $2000 to $3000 fee-

5) Wholesaler now has equitable interest back and a buyer ready to close- Buyer closes and wholesaler gets their assignment fee LESS exit fee of either $2000 - $3000 to partner who provided buyer.

So imagine doing this with 20 wholesalers who don’t have a solid buyers list and come to you because all your business focus is on direct to buyer/flipper/ landlord with airtight contracts on a national platform. While those 20 closings are scheduled 15 more investors come with their contracts and dropping them off by transferring equitable interest securing a buyer, and existing for a fee - You charging the wholesaler a fee of usually $2000-$3000 because you’re delivering the deal back to them with a secured, willing and able buyer.

Has nothing to do with a rehab team -

It's having one wholesale get the deal, you don't JV nor daisy chain you actually take control of the property through getting deal fully assigned to you. Once you now have equitable interest you market for a buyer AT THE SAME PRZICE POINT as the wholesaler, after securing a buyer, you reassign to wholesaler with buyer attached to the deal. Have a stipulation that although you are assigning the contract to the buyer, you are not given them full assignment until day of COE (usually so they don't back out of the deal and try to go over your head as well as allowing you to reassign back to wholesaler.

I would really like to learn more about this process. Would you be willing to provide a slightly more detailed walkthrough?

Sure But the more details the more confusion.

here are the players:

Wholesaler # 1

Wholesaler # 2

Cash Buyer

Motivated Seller

Wholesaler #1 Through marketing get property under contract with motivated seller- therefore (see below)

Wholesaler # 1 signs P&S with Motivated Seller

Wholesaler # 1 has equitable interest in the property. Traditionally he would then market for a cash buyer correct ? But wholesale .#1 doesn't- here’s what he does (see below)

Wholesaler #1 assigns to Wholesaler # 2 instead of a cash end buyer.

This allows Wholesaler # 1 to focus on acquisitions and get more deals under contract to assign over to wholesaler # 2

Wholesaler # 2 usually has a rotund viable buyers list(s). They market there newly assigned deal to a cash end buyer

Wholesaler # 2 finds cash investors and assigns their interest in the deal to the final cash end buyer

Cash end buyer then closes with the motivated seller

Assignment fee is dispersed and paid in full to Wholesaler #2.

Wholesaler # 2 takes their share (usually 40% or whatever they agreed on with wholesaler #1)

After paying themselves, wholesaler 2 sends 60% or whatever the deal agreed upon ro wholesaler #1

Wholesaler 1 makes 50 to 60% of the deal and only need to work. about the acquisitions side of the business.

I hope that makes sense to everyone.

Like my business - I very rarely even deals with acquisitions or motivated sellers I have wholesalers dropping their assignments at my door step on a daily basis (doorstep figure of speech) All’s I need to do is ensure deal was formalized correctly and not a pie in the sky inflated or deflated figures- If it passed, ill market to my rotund buyers list where (if I did my job correctly which I always do) rapidly find a buyer to close deal with like clock work

After reading through all the posts on this thread, the only one that made sense and that answered the KeyGlee "mystery" is yours.

From your breakdown, the AstroFlipping/KeyGlee business model is just a systemized version of co-wholesaling or JV which I've been doing as a one-man shop for the last 5 years. As you explained, I work on the disposition side of the deal by bringing buyers to the contract holder (or supplier as I call them) who is on the acquisition side. They deal with the marketing, marketing budget expense, hassle with the sellers, and rightfully get the lion's share of the total markup to the buyer. All I do is procure a buyer. Sometimes it's a 50/50 split of the assignment fee, but most of the time, it's a fraction, but I will make it up in volume because of the economy of scale in that I can work with an unlimited amount of suppliers. Bad analogy, but I'm basically like the street dealer selling them product at a markup from from my...supplier, lol!

Here's the thing: the only way it works consistently is if I work with newbies or smaller wholesalers who don't have established buyers lists that out-compete mine. Only occasionally am I able to squeeze a deal here and there with the established wholesaler.

I cannot see ANY of the big suppliers out there working with KeyGlee given the fact that the suppliers a) hog up most of the spread on the deal thus leaving little to no room for me and my flip buyers, and b) have a large list of established buyers already, so what can KeyGlee offer? Maybe they have an insider connection to hedge fund buyers that no one else has, and that will buy at higher prices?

Right now, I need to refresh my buyers list, it's stale and needs fresh blood. Product is flying off the shelf, just not to my buyers :(

Thanks for any input.

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Originally posted by @Mark S.:

@Tim Silvers, lots of ambiguity in the contract language. On the one hand, it’s difficult to get oneself to sign it; on the other hand, it seems like they just went overboard on the language to protect themselves and at the end of the day as long as you spend the money on normal operations of running your business, I would guess we’re all fine. There are people on here stating they’ve taken the loan and then asking “now what?” as far as what to spend it on. Crazy. My plan would be to keep the funds separate and use those funds to make normal mortgage payments (not refinance, not large principal paydowns, not acquisitions, etc.). Making those regular mortgage payments allows me to stay afloat and keep my properties. Some tenants are starting to fall behind. I don’t think we’re out of the woods yet. The question I’m essentially asking myself is whether or not I want to be a hero and put the burden solely on myself/my existing reserves if things get much worse and be “too scared” to sign documents with some strong, yet ambiguous, language, or do I want to put my big boy pants on, take it in good faith, use it for its purpose, and be glad I have it if you know what really hits the fan even worse? That’s essentially my dilemma.

I have an inquiry into my mortgage officer as to whether or not taking the EIDL will hinder me from qualifying for any additional investment property loans in the future (other than the obvious change to my DTI ratio). Surely I'll buy another rental in the next 30 years. If he gives the green light, my bias leans even further toward signing the documents.

I agree. I don't like the lien aspect of anything over $25K. Yet I know some folks don't care, they're just using it to buy whatever. I really don't know how the SBA is going to police trillions of funds, let alone being able to collect it all back over 30 years. Many people will be dead by then lol.

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Originally posted by @Mark S.:

@Tim Silvers

I ran some quick numbers and it appears to match standard time value of money (TVM) calculations (assuming deferral of interest in year 1 and then amortized over 29 years). It was within a few dollars a month of the monthly payment mentioned on the documents.

Are you going to take the loan? I’m still scratching my head.

Thanks.

Good question. Just got approved today.
Will take the $1000 forgiveable loan as that's no big deal, but as far as the 3.75% loan, the agreement seems far too restrictive for landlords: "Borrower will use all the proceeds of this Loan solely as working capital to alleviate economic injury caused by disaster occurring in the month of January 31, 2020 and continuing thereafter..."

What is considered working capital if you're a small landlord? In my case, I need it for repairs and maintenance for a couple rental houses because the property(s) ARE the business that require working capital to keep them rented.

Any clarity on this?

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Again, let me reiterate my question: Does anyone know how the MONTHLY PAYMENT on these EIDL loans are calculated??? SBA has a bunch of morons that don't have a clue.

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Originally posted by @Raul R.:

@Tim Silvers

SBA decides, what I suggest is apply and if you qualify you can decide to keep it or not. I received grant a couple of weeks after applying and weeks later I received noticed for loan $50k 30 years at 3.75% it’s cheap money but loan terms are strict. You can only used funds for working capital and need to keep good records and you have potential of being audited.. I have a month to decide been reading fine print..

I just did another post about that on another thread:

As a landlord, does anyone know if the EIDL loan proceeds can be used for repairs and improvements to our property(s)?

This article states that, " EIDL funds can also only be used as “working capital” related to economic injury after Jan. 31. They can’t be used as capital for physical improvements..."

https://www.cnbc.com/2020/05/2...

A section of the actual SBA loan agreement also states:

"USE OF LOAN PROCEEDS
· Borrower will use all the proceeds of this Loan solely as working capital to alleviate economic injury caused by disaster occurring in the month of January 31, 2020 and continuing thereafter and for loans of more than $25,000 to pay Uniform Commercial Code (UCC) lien filing fees and a third-party UCC handling charge of
$100 which will be deducted from the Loan amount stated above."

Since tenants ARE our business customers that rely on the property(s) condition and that it is imperative for landlords to keep their properties in rentable and updated conditions in order to get tenants and keep tenants in order to generate rent, this restriction would make zero sense.

Can anyone please clarify?

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Originally posted by @Edward Derosa:

somebody mentioned on youtube -- "Annual gross income" minus "cost of goods sold" divided by 2

Actually, it's the LOAN PAYMENT I need the calculation for, not the loan amount. And in my case, there is no cost of goods sold.

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I cannot figure out how the monthly loan payment stated in the note is calculated. It does not match up with any amortization schedule. SBA reps are clueless. Does anyone know?

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All Forum Posts by: Tim Silvers

Tim Silvers has started 38 posts and replied 175 times.

Post: what are your thoughts using Anderson advisors?

Post: Attn: SBA Disaster Loans for Landlords

Post: Attn: SBA Disaster Loans for Landlords

Post: Astro Flipping Wholesale Contracts

Post: HOW IS THE EIDL LOAN PAYMENT CALCULATED???

Post: HOW IS THE EIDL LOAN PAYMENT CALCULATED???

Post: HOW IS THE EIDL LOAN PAYMENT CALCULATED???

Post: HOW IS THE EIDL LOAN PAYMENT CALCULATED???

Post: HOW IS THE EIDL LOAN PAYMENT CALCULATED???

Post: HOW IS THE EIDL LOAN PAYMENT CALCULATED???