All Forum Posts by: White Kandlez

Wholesaling is an active business activity, meaning it is non-passive ordinary income subject to self-employment taxes (generally 15.3%) in addition to simply being reported as taxable income.  

Running an active business activity generally results in legal benefits, low-to-no financing benefits, and greater flexibility from a tax standpoint. You mentioned S-Corp. The hope, from a tax standpoint, would be that your your business is profitable enough to experience significant tax savings by having your LLC elect to be treated as an S-Corporation.

We do not recommend that you form a new S-Corp or elect to have an LLC treated as an S-Corp unless you are certain that the tax savings will be there and have talked through your situation with somebody in the future.

In my opinion, if you wholesale, you are running an official business whether you are using an LLC or not. You need to figure out the following:

• Do I get any legal benefits by running my wholesale business activity through an LLC? Can I legally do this?
• What is the cost to forming and maintaining an LLC?
• Am I ready for the administrative burden of best accounting practices when it comes to using funds in the LLC checking account? Basic Rule - You should almost never pay for personal expenses directly from your LLC account; first make an owner distribution to yourself personally and then pay for the item from your personal account.

There is a chance that an LLC will seem pretty reasonable to you after working through those questions. Hopefully my response helps you analyze the cost and benefits of using an LLC for your wholesale business activity.

Too many people think going to college or university is the right thing to do.  It is hard when you are 18 and people are telling you to do it. Not all degrees are created equally and it is really hard to see people putting 4 years into a degree, going into massive debt and it amounting to 'nothing'.  I'm not saying university or college is bad (where I am most colleges are great as they focus on trades); I work at a university in the sciences, so I literally see hundreds of students every year and quite a few would be better off doing something else.

I hear you and have been there. I lost my job about 6 weeks after I upped and moved 2 states away for that job in 1997. I was scared and had a new marriage and didn't know about REI.

I would focus less on the buyers list, more on sourcing a deal.  Buyers will come if you have the deal.  What area are you?  Maybe can point a colleague your way in your area. 

In the meantime, side hustle.  Maybe acquire free stuff from CL, let go, offer up, etc and sell.  Check for moving and labor gigs. Offer your web services to old dogs like me that know nothing tech.  Get creative and have fun at it!  

If you attend local REIA meet-ups you will get in front of active buyers.

That being said, I suggest you focus on finding the deals - the buyers will come.

Finding 1 good deal will bring multiple buyers.

If you spend your time to go find buyers, you'll find that they're going to ask you to turn around and find a deal... then you're back at square 1.

Best of luck to you moving forward!

Abel

From a purely hassle and tax free maximize return perspective, the credit cards and $20k student loan at 11% gotta go.  If the credit cards haven't been paid on in a while, they may settle.  2 years + will probably accept 25%.

I'd recommend Dave Ramsey's Total Money Makeover for debt pay down.  Work 3 jobs and attack smallest to largest with his debt snowball method.  I paid off $87k that way.

The first and most crucial step is recognizing there is a problem. You've acknowledged and asked and are on your way👍

That's the beauty of real estate. There are so many ways to do it and to make it work whether you have money or not.  Don't mistake that to mean it's easy, because it sure as heck isn't.  But if you are driven to succeed and are willing to put in a lot of time and work into learning and doing this stuff then there's zero reason you can't be successful.  

Wholesaling is often touted as an easy way to get started because you don't need money, but in reality it is one of the harder ways because you need to know how to find buyers, negotiate with them, value housing both current value and after renovation, estimate renovation costs, run financials on the property to generate to other investors, etc.  To be a good wholesaler you have to know the whole spectrum of investing.  You could certainly pursue that option, but there are other ways too.  Look into getting your real estate license and start working as an agent to build your network, make some money, and learn that side of the business.  You could build relationships with local investors and try to find someone you can help who might take you on as a mentee or partner and get into RE that way. You could call up a local property management company and try to find a position with them. Tons of options are there if you want.  

College can be great, but it does not define whether or not you are successful.  You determine that. School offers academic knowledge and a piece of paper that tells the world you have a baseline competency in something.  Your work ethic, integrity, commitment, and drive to succeed tells the world who you are and is ultimately what determines how successful you are....professionally or otherwise.  

@White Kandlez  Pay off those credit cards with the high interest first.  I would suggest getting your finances in order before you get into real estate.  That doesn't mean having your student debt paid off, but it does mean not maxing out credit cards.   High interest debt and carrying high balances on credit cards isn't good.

Start with a budget and see where your money is going.  Keep track of all your spending.  Perhaps you need a second job for a while and use paying off your debt and saving to get into real estate as your motivation.

@White Kandlez  How much do you have in student debt and at what interest rate?  There are many sides to this coin, but generally speaking if you have low interest debt meaning somewhere around 4% or less then it is probably a much better idea to invest that money since you can make a much better return.  Debt with interest rates around 5-6% get more ambiguous; and anything over that would most likely be best to pay off first before investing.  

Now, these are all general statements and at the end of the day it comes down to whether or not you can peacefully sleep at night with your decision.  If you are going to be stressed out and very anxious the whole time while trying to invest with that debt then perhaps it is in your best interest to tackle the debt fast and hard and get it out of the way.  Based on your comment expressing concern about building FI while still in debt, perhaps that is your answer?  Good luck.