All Forum Posts by: Will Stahl

@Joe Villeneuve, What @Tom Gimer is referring to is the fact that when I created the LLC I specifically wrote that the business purpose is 'Wholesaling Real Estate'. I now realize that this was a mistake. Hey Tom, any idea if I can chance the purpose of the LLC? I'd like to just declare it as 'real estate'.

@Steve Vaughan Thanks for the advice on the S-Corp. Csn you explain why an S-Corp better suites my situation, I thought that the only difference between LLC and S-corp was the tax structure. Does an S-corp provide different legal protection or do anything else differently? Thanks!

@Will Barnard I 100% agree. I just started taking the required courses which is very informative and opens more doors for me just like you said. Even with the license I still get concerned about the legality of the situation. For instance, I interpret the below state as saying if you have a RE license and aren't sponsored by a broker you are limited in the capacity that you can act. 

"All Salespersons must be sponsored and supervised by a licensed Broker. In the words of DOS, "A real estate salesperson is associated with a real estate broker to list and negotiate the sale, lease, or rental of real property for others for compensation, under the direction and guidance of a responsible broker. A salesperson cannot operate independently."

However, I suppose if you have a RE licences, sponsored or not, that still shows that you've been deemed 'Qualified' from a real estate sales perspective.

@Ian Walsh I do think I just spooked myself when I started in doing some due diligence into the legality of the practice. I'm continuing to move forward with my plans still, it's not slowing me down. I agree, my number one focus needs to be getting a property. However, if there's one thing i'm okay with over thinking its whether or not the business I'm conducting is illegal.

@Joe Villeneuve

Thanks for the information and response. It'll cost me an extra few hundred bucks to form the LLC but it'd still be cheaper than a double closing in my area. I suppose I can create an additional llc solely for getting the property under contract. Whereas my website/marketing/brand will live under a different LLC (my main llc which I will never sell)

@Joe Villeneuve

Maybe I need to change how I plan on structuring things. 

Let's say...

My business is called 123 real estate

My website is called 123 real estate

All my marketing says 123 real estate

I planned on buying the property using the 123 real estate LLC so I wouldn't want to sell it because I still need it for the rest of my business. I believe what you're saying you would do is to create another LLC soley for the purpose of using it to get the contract and then you sell the llc which is the current holder of the contract. Correct?

@Jason D. thanks for the advice. I know you're not a lawyer but if I had my real estate license would you still consider this a grey area?

@Joe Villeneuve I see what you're saying and that was my original train of thought when I began putting together this business. However, the fact that the business is essentially selling real estate contracts leads me to think more from the perspective of @Jason D..

When you operate as an individual, not as an LLC, its easy for the individual to basically come up with an excuse as to why the contract was sold. Whereas in an LLC the intention of getting the contract from the beginning was to sell it to someone else.

The big reason I wanted the LLC is because I want to create a known brand in the community as the company that can help you when you need to sell fast for cash. However, now I'm a bit worried. I'm not sure how the "We but ugly houses" franchises do it but they don't seem to have a problem.

Hey everyone,

I'm starting a wholesaling business In New York and just formed an LLC. I've been doing some research regarding the legality of it and I'm a bit concerned. A lot of the forums I read seem to deal with this topic on an individual level, not from the perspective of doing it in an LLC with the sole purpose of making it a business.

Here is a quote from Billy Gulley's website:

"Where the clouds of the storm move in, acting as an individual in one transaction is much different from a legal standpoint than building a business model that does nothing but assign contracts. Being “in the business” of doing something will require licensing to be legal conducting any business, your local jurisdiction most likely requires a business license as well.

This also goes to the intent of someone entering into a contract where contract law requires a “meeting of the minds” for a valid and enforceable contract. Agreeing to purchase without the intent to purchase is simply fraudulent." - Quote from 'general real estate academy dot com'.

To me, it almost seems like by forming an LLC where the main purpose is to assign contracts, I'm requiring myself to have a business license and am opening myself to a greater possibility of being fined. I also don't have a real estate license but now plan on getting one after educating myself about the legality of wholesaling a bit more. Again, since I'm operating in an LLC i'm not sure if my 'business' is licensed in real estate or only me as an individual. The reason I formed an LLC is for extra legal protection and so I can write off the thousands of dollars of marketing costs I'm going to be spending on sending out mailers. Again, the mailers are being sent out on the behalf of my LLC - I am marketing to buy properties. 

When I created the LLC I specifically made my area of business 'Wholesaling Real estate'. Now, i'm wondering if forming an LLC at all was the right idea or if I'm opening myself up to trouble since I'm acting as a business. I'm just trying to start my first legitimate business the proper way and the last thing I want to do is get in trouble. I have a consultation with a lawyer in 2 weeks and will be touching on the same topic along with more focused questions about what I'm allowed to say in my mailers and phone calls to the homeowners I'm targeting.

Any thoughts BP community? I could really use the feedback. Everything was progressing well but now I feel that my goal might be in jeopardy.

Hey everyone,

I'm wondering if anyone targets balloon payments when they're mailing or has in the past. To me it seems like a great opportunity given the probability that at least one person won't be able to pay it off in full or refinance - especially with rising interest rates. 

Let's hear your stories!

Thanks for the responses everyone. Has anyone ever used this methods rather than a cash purchase before? Anyone have any others?

Hey Everyone,

Obviously, being able to provide cash in exchange for the house is the most desired solution for wholesalers. However, if the seller doesn't want to sell their house at enough of discount for cash, what other options are out there? If the home owner is interested enough to call the number on my mailer, I want more options to offer them than just cash. These are the only ones I can think of...

1) Seller financing - Offer to put down a small amount and pay principle + interest off over time.

2) Offer to list the house on the MLS - If you're an agent or broker you can offer to try and sell the house for them, or refer an agent you know and collect a referral fee.

There has to be more, let me hear them!

@Greg Scott - Thanks for the great advice. At my next REIA meeting I'm going to reach out to the other local wholesalers, ask them what they do and don't deduct, and ask them who their CPA is. I think it would make the most sense for me to work with a CPA who has previous experience working with real estate wholesalers.

@Basit 

@Basit Siddiqi - I had a feeling the bandit signs could be a grey area. However, from a filing perspective, if I write off my 'yard signs' as business expenses I doubt it would raise any red flags. I guess it comes down to this question: Is saving a few bucks worth the chance of trying to defend myself if uncle same starts asking questions.?That's something I'm going to have to talk to a CPA about.