All Forum Posts by: Tom McGiveron

wow.

the answer to your question is it depends on the state. no, not all states tax heavily if you do business outside of that state. no you do not have to open a company in every state you do business in, does Microsoft have a Corp opened in every state? NO, of course not.

there are foreign and domestic companies. if you live in Utah, and have your S Corp filed there, and want to invest in Seattle Washington, you speak to your CPA and he'll tell you if you need to even register in the STate of Washington to transact business there.

ask your CPA.

now, as for LLC and self-employment taxation - talk to your CPA first before you jump to conclusions about S Corp vs LLC.

each entity provides different advantages and disadvantages. S Corps have limitations as well and you pay will pay taxes here as well.

LLC is a pass-through entity where if you make 40k in profit, the entire 40k is taxed through your personal self employment tax - but you don't pay SS or Medicare Taxes, like you will with an S Corp, because with an S Corp, you are both an owner and an employee.

so maybe you're getting taxed at say 25% through LLC, with the S Corp, you have to pay yourself a salary and it can't be something stupid like a dollar.

i'm not a CPA by any stretch of the imagination - all i know is there are definitely big differences between these and your strategies for investments will dictate which entity is best.

you can also elect the LLC to be taxed as S Corp. but again, check with your CPA...this is important.

books specific to florida may be a problem. rei books are general and they always state things like "be sure to check your local..."

overall, rei is pretty consistent when it comes to general stuff. but of course, each state will do business different than others, for instance, NC is one state that does not allow assignments.

if you live in Florida, it shouldn't be that hard to develop a sound knowledge base about rei particular to that state.

on a scale from 0 to 10, what is your experience in rei?

0 being none

10 being extremely knowledgeable

cassy,

what part of NC are you?

with bad/no credit - you can still do whatever you want. you just will have a hard time borrowing money from banks and such.

you'll need to start from the ground up. what is your background in?

what are your financial goals?

what is your current financial status?

sounds good. it helps to have that expertise.

in regards to LO's and Land Contracts - be sure it's okay with your lender or seller's lender first. any contract for sale violates DOSC. many people might tell you not to worry, just make the payments on time blah blah blah, but if the loans have a DOSC, be careful with any contracts for purchase/sale, as a lender can accelerate the loan if they choose to do so.

Indicant,

first, let me say that the point of my post is not to badger you in anyway. i am simply asking you questions, so don't take anything i type as being condescending. it's not meant that way at all.

let's take each comment one at a time in order:

1 how do you know commercial properties are "less risky/stressful investments"? they may seem less risky, but they are because most who invest in them have experience doing so. there are plenty of "investors" out there that are losing their shirts because they invested in poor triple-net leases/commercial props.

2 how do you know this if you have not done it? you also need a qualifier with this...."and the mgmt service will eat up all your revenues."

3 birddogs and actual birddogging takes TIME to develop. rei and any other business is all about relationships. they take time to cultivate.

4 do not plan to quit your day job for at least 2 to 3 years. i say plan in bold because i'm not saying you won't hit the ground running and just kick butt, BUT, it takes time to find deals where you find yourself in a positive cash flow circumstances. they are not as easy to find. you can find them, and especially with that kind of money. you my friend, will do very well with the right advertising, management and investment strategy.

have you thought about other avenues for your money?

have you considered taking on a mentor who's willing to help you and share some of the responsibilities? i mean, that's a good amount of money. i'm sure other experienced investors wouldn't mind having you on board. make a deal. you put up some money and learn learn learn, while you earn earn earn.

just a thought.

MGK,

what type of investing are you planning on doing? do you have any experience with rei?

zona is kinda cooling out like a number of other states so unless you've got a very good idea of what it is you're going to do, i'd be real careful.

keep in touch!

that's exciting!

how long have you been in business without a business name?

or are you planning to buy fix and sell outright or through land contract?

if you like the word "new"

how about:

new vision homes LLC

new hope realty group LLC

or just trash the new beginnings and go with something different like initials of your name, your favorite words, family names, etc. i'm not sure what your investment strategies are, but some people make it real simple, like addresses or Blah1, Blah2, Blah3, etc.

it depends on what you're going to be doing. you may find that really putting so much effort into a company name may be a waste of time, especially if you're just rehabbing and selling residential houses. now if you're planning on building a name around the quality of the work your busines does and marketing the homes you rehab accordingly, then a business name would be important. get what i'm saying?

good luck...

well first let me say that with 585k to invest, you are in a totally different league than me and my partners. that's big money. so i would never even attempt to give you advise. i mean, the advise i gave was just simple logic. but then again, when it comes to business and investing, no matter how big or small, it all boils down to good ole common sense...at a basic level.

having said that, i would be interested in hearing about your "mistakes". have you ever written them down and looked at them? i know you have them in your head and maybe even on some painful financial paperwork, but i think writing them down helps. [i'm a counselor in my day job :D ]

writing them down with specifics would help you to match them to future decisions. writing down the numbers, the contacts, the areas, the businesses etc. can possibly steer your investment strategies in the right direction.

are you involved with any partners in your real estate ventures?

who manages your apartment complex?

who will manage your future apt complex?

and again, i'm not versed in the commercial arena(...yet), nor do i deal with the amount of cash you are, but we all know that every type of investment comes with varying levels of risk. but i mean, if a local economy goes to the toilet - it can still effect your apt complex. issues like migrating demographic groups can impact negatively on your apt complex as well right?

i mentioned the strip malls because a friend of mine invests in them and he says they're the best kind of rei. with long-term triple-net leases and solid businesses, they can be very hands-off as far as managing, whereas an apt complex is just that....more complex.

the reason i'm saying this is because, if you're dealing with over 500k in investment funds, i'd presume that you or the people you're working with KNOW THEIR STUFF. so i mean, investing in excellent triple-net leases would be a sound investment strategy because you're dealing with people who know what's good and not good, thus it's very safe, whereas for someone like me (who doesn't know a lot and doesn't have the resources to analyze major purchases) such an investment would be very risky.

please, tell me if i'm dead wrong. again, i do NOT want to come across as if i "know what i'm talking about". cuz when it comes high-end commercial rei, quite frankly, i don't.

but getting to my point, what were you're investment mistakes?

that sounds pretty sweet.

ever think about strip malls?

i would never feel comfortable buying real estate and leaving my self/company with no liquid cash to help run things.

i mean think about your own business. would you tie up all your cash? well, no, you wouldn't.

a business needs cash. so does your real estate business.

leave yourself a nice 6 to 12 months of operating expenses, or match whatever your accustomed to in your other business.

jluci,

don't get so wrapped up into the whole "no money down" late night guru thing. i mean, you can definitely buy real estate with little or no money out of your pocket, but it can be just as risky as any other type of investing.

why is it risky?

because no money down depends largely on leverage. and with 100% of a deal financed, that could leave the borrower in a pricarious situation, especially if that person doesn't know what they're doing.

a question like the one you asked would indicate that you're new to rei. while the late night guru phenom is sweeping late night tv watchers, it's important to keep your feet on the ground. the carleton sheets packaged deal is a good start if you want an overall view of how things relate to each other. it definitely covers alot, but the reality is these "techniques" that are referred to, i think, are easier to implement depending on where you live or plan to invest. for instance, here in New York, land contracts are not common, but in Texas (i'm guessing), land contracts may be very common and in deed, be the norm.

know this, any offer you submit is considered a valid contract once it is signed by both parties. do some states require earnest money for contract validity? i guess. i mean, the bottom line is, what seller is going to let you put their property under contract without any money on the table?????

they'd have to be very stupid. i don't care what kind of "sweet deal" you offer the "motivated seller". that's just dumb.

and you mentioned "wholesaling" - i know what that means, but i'm struggling with how you connected the two? one doesn't really effect the other or am i missing something? and you can't put anyone's property under contract without them signing one and you signing it as well.

:D