All Forum Posts by: Ramsin Jacob

@Mike Cooke

Excellent, old thread but just came across this. I am a Realtor in San Jose/Bay Area. Getting into consistency mailing post cards just at you mentioned with each of my sales and listings. I have a lot of off market pocket listings as well. Doing the monthly analysis is a good idea that I would like to do as well. Problem is costs to hit all the doors I would want to. Figured out all the methods for the cheapest postage with their bulk mailing systems. Still comes out to a four figure amount. You mentioned it takes 7 impressions, thats what Im afraid of...

Ironic story, this house was on the market during last summer.  Fixer upper project in the Burbank district of West San Jose, less than 2 miles from the soon to be Google Village in Downtown San Jose.  I put an offer in with another client when it was on the market during last summer.  Didn’t get the deal.  Few months go by, I see this house being advertised online as a for sale by owner. I reached out to the new owner, turns out he lost his job and needed to break even, cut ties from this house.  He hadn’t done a single thing towards the rehab besides getting permits and plans approved for the new construction (new 5 bed / 4 bath house).  Seller was desperate to sell.  Told him to let me find a buyer.  Within 3 days, I got him a offer and he accepted it.  Got him the exact price he asked for.  We reached the finished line this past Monday.

Don't need the license, but why not get one?  It's simple.

Originally posted by @Carlise Gianna:

Hello,

Can anyone suggest any legitimate education material on wholesaling in its entirety. After reading all the above post I want to ensure I know all there is to know to protect me and as I start this business from scratch. I’m beginning to think  it’s best to be licensed for the sake of grey areas. 

Thanks in advance. 

Carlise G. 

Listing a property on the open market does not necessarily always result in receiving as much as possible.  If the property is distressed or needs rehab, listing on the open market will deter away majority of investors.  A property under this condition won't be purchased by the end buyer most of the time (families or married couples for example).  The investors for these properties want the deals presented to them as off-market deals.  Less exposure the better.  Investors don't like bidding wars.  They like bidding wars when they have completed with the rehab and THEY have the property is listed on the market for top dollar.  Oregon I am sure is not as competitive as the Bay Area.  Here in the Bay Area, when a fixer/distressed property is on the market, it's usually sitting on the market for a long time.  I see it always.  I know of dozens of properties just off the top of my head around here that have been sitting on the market for 2+ months.  Combine that with the seller's agent not having a realistic understanding about the rehab costs, city permit fees/requirements, everything that goes along with rehabbing a property, majority of Agents and Realtors have no idea about the costs or processes.  Therefore, the seller of the property carries a high figure in their mind for what the property should sell for.  When in reality, the property is no where near that cost.  Finding a Realtor who understands this (like myself) is very rare to find.  Quick story: I represented a buyer on a fixer property in Downtown San Jose during last summer, seller held a high bar for the price he wanted.  Seller's agent knew it as well but couldn't convince her client what the reality was.  After the property was sitting on the market for weeks, I was able to close the deal for $105,000 less.  Safe to say, listing a property on the market doesn't always bring the highest price.  

Originally posted by @Mary M.:

I love that wholesalers admit they are stealing equity and that this is the very reason they wont get licensed! they want to be able to take the equity that is rightfully the sellers. 

Sellers should, in most cases, list on the open market so they can get as much as possible. 

Wholesaling is completely legal in CA.  Many people do it and many are successful.  Whether you have a license or not, you can negotiate a deal directly with the seller and then you have a legal binding contract which can be assigned.  Yes of course, the seller needs to sign a separate document authorizing the assignment with the assignee's information.  This document is required by escrow to officially switch buyers.  There is also something specific a buyer must include on the original purchase agreement if they wish to have the option to assign the property if desired, (this information I won't mention, if you want to know, figure it out.)  If you have a license, simply let it be known from the beginning that you are representing yourself only.  Documents should reflect this as well.  

@Jim G. I believe you would be safe to add another 1,000 SF living space on this size lot. On certain properties, there is ratio for lot size to livable SF that cannot be exceeded. Would have to check closely in particular to property exactly first. Once you have that information, next step would be to hire an architecture to draw the plans that will be turned into the city for permits. (If you need one I can refer my architecture) After that, find the contractor and get the project moving. Since your property is zoned as RM, I’d take advantage of extending the property into a duplex; rather than adding a ADU. Long term will be a higher ROI. I currently have a off market SFR in Downtown San Jose under contract that is zoned R-2 (allows duplexes), potential buyers have been considering adding SF for a Duplex conversation.

@Kenyetta Overton  Much to what @Alexander Felice & @Junior Soares mentioned, knowledge is power.   There are many ways to fund deals.  The example @Alexander Felice used was perfect with person A who has $100k sitting around to invest but no knowledge whatsoever, Person B who has no cash but all the knowledge, experience, game plan AND a deal ready.  Person A is going to get no where.  Person A is PRAYING for someone like Person B to come around.  Of course it's always good to have cash to bring to the table, BUT, don't let that hold you back from learning, networking and being creative with the ways you fund a deal.  There's no right or wrong.  If it makes sense internally for the parties involved, that's all that matters.  Nobody externally can say right or wrong.  The only way to find OPM is by jumping in the pool.  You have to get out there and get your hands dirty.  Lots of time should be spent on learning the industry.  Learning your markets.  Understanding of all aspects involved.  The more information you can attain, the better off you will be.  There is a lot more money out there than there are deals.  Im in the Bay Area where we have experienced a crazy growth in prices within the last decade.  There are many people out here with cash ready to close deals, problem is the deals are hard to come by.  That's why if you can attain the knowledge and get the deals, the cash will follow closely behind.  Good luck. 

Listening to a former client whom recommended a company in Nevada to set up an LLC for me. Then taking that LLC and forming in California. The scenario isn't bad, what's bad is that I ended up $1,500 out of pocket when I could have filed everything myself for about $200. At the time, it was all new information to me and I assumed these companies would be legit to assist. Nothing further from the truth, this company offers "compliance coaches" who are more like salespersons because all they do it try to lure you into buying more services from them that are not even necessary or it's something you could do yourself. It was funny to experience their changes in their approach once they realized I had figured out everything related to this field. Same cases for Trademarks. Attorneys will charge arms and legs, but you can do it yourself successfully for about $300.

He spoke the truth right there with his main point.  Went through a company in Nevada to open my first LLC.  Then they filed a foreign LLC license in CA.  Quickly, I come to find that with each time we communicate, they simply are trying to get me to bite on more services.  I've figured them out and have figured out the process for filing LLCs, which is much cheaper than what they charge.  Once I broke it down to them and they realized I knew, they still tried to sell me on services.  Like $200 for their fancy shmancy binder with operating agreement (received for 1st LLC filed through them, which is super generic, not even custom tailored to my business, no one from the company consulted with me during drafting the OA).  Along with that were generic minutes documents, membership certificates, etc.  All things which someone who is motivated can draft up themselves (IMO), kept internally and regularly maintain/update documents as business grows.  The company definitely got sour as they kept realizing they couldn't sell me anything more. (They were suppose to be "Compliance Coaches" offering guidance with anything related to my LLC.  That was far from the truth.  It felt as if I was at war with them when trying to grasp information about my LLC and how I should go about my current deal).  They offered to create a Partnership Agreement for $1,500!  I bet anything it would have been generic just as their operating agreement.  As we know, agreements are terms and conditions between multiple parties.  So, one could simply draft up a partnership agreement themselves with resources to ensure it's proper.  The reality of my situation in particular, I don't need any document for my partner and I.  There are relationships which simply you don't need to.  They exist in the real world.   All the documents that these companies are selling are for internal use and to ensure there is proper recordings/documentations of minutes/minutes/decisions/financials/ etc of the business, Right?  Correct me if I am wrong.  So I don't understand the point of hiring these companies to do this for you, who frankly have no idea about you, your partner or the deal.  Same thing for an attorney.  They basically are mediators between multiple parties.  You would meet with the attorney, partners and talk about what will be on the partnership agreement.  Right?  Well, why pay the attorney in that case?  I can get together with my partner, discuss what we will put in the agreement and sign the damn thing.  If it's just two people and the two people are in full compliance with one another, I don't see what the big issue is that majority seem to make such a case to hire a attorney to draft up your partnership agreement or hire someone to draft an operating agreement??  Even in today's world, we have all the information available.  I spoke to a local attorney, he asked me, "Do you know what attorney's get paid to do?  We get paid to do research."  And that research is nothing but case laws.  So there it is, spend some time doing research to educate yourself, I know I always am and wanting to connect with like minded individuals. 

Originally posted by @Costin I.:

Thanks @Chris K. for bringing another perspective to the discussion.

My main point - be wary of any professional who has an interest in selling you a specific product and not giving you options/information. Most of the time they will give advice that makes the most profit at the least risk for them, not for you.

Thanks Katie, I appreciate your input and yes, I definitely understand it is difficult to give a specific opinion without an extensive meeting.   I have all the proper documents in place from my first LLC which I paid an arm and leg for.  Costs concern me when people charge over the top prices for something I can do myself.  There are many people who are lazy and don't want to figure it out themselves and they pay these companies to do it for them.  This company charges over $700 to just file an LLC with the state.   Online I can do that myself for $75.  And then the filing of the LLC-12 is only $20 online.  Why would I pay $600 more to this company for doing that? (Their full package is over $1,000)  Makes absolutely no sense at all.  Then I asked them about the Operating Agreement, Minutes log, members certificate, etc.  They charge $200 a la carte for this.  They said that's all kept internally for the record.  I asked them will they be tailoring these documents specifically to my business?  They said no.  So what is the point?  I have already their generic Operating Agreement and other documents.  I can use those as templates, along with additional resources to tailor one to my new LLC.  Right?  As an Entrepreneur, not just in Real Estate, I've figured out how to do things on my own.  Such as registering for US Trademarks.  Attorneys charge arm and legs for that as well.  I've successfully registered multiple trademarks for my other businesses and just had to pay $275.  So my previous experiences with this realm of legalities give me the same "figure it out yourself" mentality.   Then in terms of a By Style Partnership Agreement, they charge $1,500+ just for that.  Which again is something just kept internally for everyone to abide by.  I can create that myself as well with my resources.  This partnership is with my family, so there's no concern about anything amongst ourselves, we are all on the same page.  

My current LLC was drafted just two months ago, so I highly doubt there has been extensive changes, if any.  My CPA is very legit with 20+ years of experience and he confirmed LLC is the way to go.   Not that I want a "short work around", it's the point of why throw my dollars away when I already have all the resources and knowledge to do it myself?  And it'll be done in a proper professional matter just as good as an attorney will do it.  My attorney tells me everything is based of case law.  All attorneys do is research.  So I can do research too and figure it out.  I'm on my way into Law School as well because of all this.  It's something I can do very easily. 

Katie, again I appreciate your input and time.  Thank you. 

Originally posted by @Katie L.:

@Ramsin Jacob I second what @Stanley Bronstein has stated. I do not know what your current operating agreement looks like and how well it was drafted. Therefore I will not opine on whether you can just try to use your existing documents for a new formation. Since your current LLC was drafted I can tell you for sure that rules and laws relating to LLCs have changed so in the very least, you would want to research to see if the code sections referred to are still legitimate. We make changes to our documents here at my law firm regularly to keep up with changes in the law that are passed. Since Congress did a major overhaul of the tax code recently, plus California has made some changes, it may be prudent to have a new set of documents done, and possibly do an amendment to keep your existing LLC document current. You also may want to talk with a professional to confirm that an LLC is the right type of entity for you and that other entity types, such as an S-Corp, do not provide better tax results for your situation. If you are concerned about the costs and want a short work around, then that is your call and the risk you want to take is your decision of course. But, if you approach a professional about it, be prepared to pay a few thousand dollars as you did the first time around.

*This post does not create an attorney-client nor a CPA-client relationship.  Readers are advised to seek professional advice.