Wholesaling for Beginners #5

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While we’ve only covered the basics of wholesaling (and there are A LOT MORE ISSUES to understand), you’re well on your way to completing your first wholesale deal. The easiest way to wholesale is to just assign the contract. It’s clean and simple and doesn’t cost anything or require any other documents.

But, if you’re working with bank, like REO properties and short sales, they will not allow you to assign the REPC. Some sellers and agents also that won’t allow you to assign the contract because they may think it’s somehow fraudulent. Or, maybe you’re looking for more privacy in your transactions. Then you many want to consider using a disposable LLC or real estate trust.

When you assign a contract, the named buyer actually changes, so the bank and seller will see that at the closing table. But using a disposable LLC or trust as your initial buyer (on the initial REPC you sign with the seller) will allow you to pass on the right to buy the property WITHOUT changing the named buyer.

The process is similar. But first, you set up either an LLC that will be use
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Wholesaling for Beginners #4

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This is our fourth blog on beginning wholesaling. If you haven’t read the earlier ones, make sure you go back and do so.

Before you start out on your first wholesale deal, there are some things that you should take into consideration. First is privacy. We touched on this in our last blog: keeping your wholesaling fee and final buyer private. Many wholesalers will use trusts for privacy purposes. We’ll discuss this more in the next blog.

You should also be aware of seasoning issues. FHA loans and some other lenders will look at title transfers occurring within three months before a retail sale (your post-flip sale). This could affect things if you do a double close (more on that below). If they see a couple of title transfers close together, they could ask questions or delay loan approval until the property has been in one owner’s name a certain length of time.

Also understand that your wholesale fee is an “add on” fee that your buyer will pay at closing, like paying an invoice. It is NOT an increase in the purchase price because that will also affect the price the seller is getting. This is a common mistake on the assignment part of a wholesale deal. Yes, the fe
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8 Important Steps for HOA & Other Non-Profits Before Year-End

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"Fear has a large shadow, but he himself is small.” -Ruth Gendler

When the dust settles on this year, chances are good that there will be a bunch of non-profits who have had to close their doors. Between lockdowns, massive unemployment, and general decreases in charitable deductions ... it's not easy out there.

Which is why it would be very wise for you to get "ahead of the game" if you are one of these organizations.

So, to do so, I suggest that you put these items on your "list" before Thanksgiving, so you're not caught in the flurry of holiday madness and year-end. Yes, we're already halfway through November...!

  1. Have your staff update tax withholdings.
    Nobody likes to get hit with a big tax bill in April, or be unnecessarily "loaning" money to the US Treasury. Encourage your team to check on their withholdings and adjust as needed.
  2. Get info for any individuals/contractors to whom you paid more than $600. 
    You'll need to file a
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Wholesaling for Beginners #3

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Now that you’ve read the first two blogs on Beginning Wholesaling, you know what it is and some of the licensing issues. But if you want to become a wholesaler, you will need to understand the core transaction. In the simplest of terms, wholesaling is about “assigning” contracts.

Yes, you will need to learn how to market for properties, run number to determine the deal, negotiate with sellers and sign a purchase agreement. But that is something that all investors do and applies to just about any type of investment transaction. What wholesaling does is extend that one more step: assigning that purchase agreement to another buyer. You will then also need a list of potential buyers who will take the deal.

So, the process starts with you (or preferably, your wholesaling LLC) signing a real estate purchase contact (REPC) with the seller where your LLC is the named buyer. Your LLC will then “assign” that REPC to another buyer. This assignment is done for a fee. This fee is your compensation for finding and contracting the deal. In a common transaction, you will use an assignment addendum that transfers all the rights under the REPC from you to another buyer. Simply, this just swaps out the buyer so the new one can close and buy the house. It’s that easy, but let’s take a closer look.

First, can you assign all contracts? The answer is that all cont
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An Incomplete List of Potential Tax Moves To Make

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“When you know better, you do better.” -Maya Angelou

Ah, November. Cool weather, Thanksgiving, football. Even though 2020 still seems to be chugging along in all of its particular form of glory, we can at least get productive and distract ourselves from the political war games by making a positive impact on our financial world. Although, in Utah, Governor Gary Herbert is making Thanksgiving plans by Skype video.

Here are some things to consider as you do:

1) Look ahead to 2021. By that, I mean: what will your income potentially look like in 2021? For some, ANY income after a very rough 2020 would be welcome. But once you have that landed ... should I accelerate possible 2021 income into 2020 for tax reasons? Because the best of both tax worlds is to reduce your taxes in both years.
So take a look to see what you think your income will be looking like by the end of this year (including any investment year-end payouts, gig work, gambling winnings, etc. ) and what you expect it to be in 2021 (more, less or about the same). Next, check out the Read More...


Wholesaling for Beginners #2

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In our previous blog, we explained how wholesaling has become a major real estate investment strategy and thousands of investors are engaging in it. But all that notoriety has brought the practice to the attention of state real estate governing boards. This blog will discuss some of the licensing and other rules regarding wholesaling.

The first thing you need to understand, is that wholesaling is when you get paid to find a seller of a property and then find a buyer to purchase it. That sounds a lot like what real estate agents do: connect buyers and sellers for a commission. Because it looks like you’re acting as an agent, real estate licensing agencies all over the country are taking a close look at the practice.

So, the first thing you need to confirm is how your state handles wholesaling. A few states have banned the practice altogether. In those states you cannot wholesale a deal unless you are a licensing agent. Other states allow non-licensed individual to wholesale but have some regulations. And other states have said nothing at all. Further, all these rules can and probably will change over time.

Utah falls in the middle. You do NOT need a re
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The Dangers of Distraction

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"Every new beginning comes from some other beginning's end." -Seneca

There's a famous study, often referenced in business focused productivity/success books and podcasts that you probably have heard about in some form or another:

[Edited excerpt from Wikipedia]

Mischel's famous research study, "The Marshmallow Test," showed the importance of impulse control and delayed gratification for academic, emotional and social success.

In the 1960s at the preschool on the Stanford University campus, Mischel put marshmallows in front of a room full of 4-year-olds. He told them they could have one marshmallow now, but if they could wait several minutes, they could have two. Some children eagerly grabbed a marshmallow and ate it. Others
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Wholesaling for Beginners #1

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Wholesaling! The big new (sort of new) real estate investing strategy. Wholesaling has, in fact, been around forever. Investors and non-investors have been able to assign contracts as long as there have been contracts. Many states (including Utah) have standardized forms to assign the contract. But it’s been more recently, in the last 4-5 years that wholesaling has become its own cottage industry within real estate investing.

Wholesaling is the strategy of finding a great deal and locking it up by putting it under contract. The wholesaler is the buyer and the property owner is the seller on that agreement. But then, instead of the wholesaling actually purchasing and closing on the home, she “assign” or passes the contract—the right to buy the house—to another buyer for a fee.

It is possible to assign a fix & flip project, a buy & hold project, a seller-financed deal, residential or multi-family deals, or a commercial deal. Wholesalers are generally very good marketers and negotiators. In other words, they are good at finding deals, negotiating great terms, and getting a signed purchase agreement. So that’s where they focus their time and energy.

Wholesaling is way you can get involved in real estate
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Are The Opportunities Worth The Threats?

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"Not only must we be good, but we must also be good for something." -Henry David Thoreau

Too many entrepreneurs are blind optimists. (And yes -- too many accountants are blind pessimists, I admit.)

Aside from the financials of a new venture, there are obviously other factors that play into its outcome. And my gut is that the people on your team already know what they are. They're probably not writing a book or preparatory articles about it (yet), but they probably have some good ideas.

Over 50% of U.S. businesses fail in the first four years. Many that linger past that point are alive in name only. Yet very few entrepreneurs actually believe they have a less than 50% chance of success. They are convinced that those statistics only apply to the other person's ideas.

The concept of a pre-mortem was designed to h
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Understanding Short-Term Rentals #4

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OK, this is our fourth blog on understanding rentals. If you haven’t, go back and read the previous three for a better understanding. We covered the possible local laws restricting short-term rentals, how they are taxed at the federal level, how to hold title and how to save money on the self-employment tax.

This article is going to discuss another surprise tax that many investors don’t understand: sales and lodging taxes. These are the taxes all hotels have to pay, and they are at the city, county and state levels.

Short-term rentals, like those offered on services such as Airbnb and VRBO, have always been required to collect and remit sales and lodging taxes. Historically, the large vacation rental websites viewed these occupancy taxes as the responsibility of the host or homeowner responsibility, not the platform.

The platform was positioned simply as an advertising website or marketplace, and transactions occurred directly between homeowner and traveler. These taxes, however, were often overlooked and not well understood by homeowners and hosts.

As the short-term rental industry has continued to grow, these lodging taxes are increasingly part of the industry narrative and becoming much better understood. Short-term rentals are now ubiquitous, which has sparked pushback in some communities, with a new and heightened focus
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