Notes & Pics – March 2017 TBI’s Networking Event

It was a jam-packed room on Wed night!!

Thanks to everyone who attended The Boston Investor’s Networking event this week.  There were a lot of questions in the Q&A segment that made for some great discussions.

 

  • What’s the difference of closing in an LLC vs. a trust?
    • Most investors who operate as a business place properties into an LLC.
    • While there was a lot of input on this question, it wasn’t provided by someone who has explicit knowledge on the subject.  Therefore, I recommend the following:
      • Obtain clarity over the following:
      • tax aspects – talk to accountant
      • legal aspects – talk to an attorney
  • Can you 1031 a flip?
    • No, this is a buy and hold strategy
  • Do you have to pay self employment taxes when you take money out of an S corp?
    • When you pay yourself salary, YES
    • When you pay yourself a distribution, NO
    • Make sure that you pay yourself a reasonable salary before taking distributions.  Follow IRS guidelines so you don’t get flagged by them.
  • Has your direct mail strategy changed?
    • Competition is very high, pulling quality lists is important (d4$, tax liens, small niche lists, etc.)
    • Still using high quality, creative mailers to differentiate from competitors
  • Live auctions, anyone know anything about how they work?
    • Some companies have full time staff that go to each auction. They know the system and know how to get the deals.
    • Traditional auctions – most properties don’t sell and they end up going back to the bank, which then becomes an REO property and will later be listed on the market.
    • Absolute auctions – the property will sell that day to the highest offer.
    • Call listing agent/auctioneer/attorney and ask what type of auction it will be
  • How do you find deals?
    • Direct mail
    • Cold calling
    • Networking – anywhere and everywhere, you never know where the next deal is going to come from
  • When using direct mail, how can you compete with the benefits of other investors if you need a commercial loan and they can buy with cash?
    • Tell seller that you’ll waive inspection
    • Talk to seller, find out what they need/want – find their “pain” and talk to that
    • Tell them they can take what they want and leave the rest behind
    • Waive financing contingency (as long as YOU are comfortable that you can close)
      • Many investors do this even though they use commercial loans/other people’s money
      • This is essentially a cash offer
  • What do you use as proof of funds if waiving financing contingency?
    • Build relationship with bank and they will often provide this
    • Ask a hard money lender for one
  • What are the requirements of commercial funding?
    • Usually, you need a track record
    • It’s important to build relationships with banks now and show them what you are looking to do
      • Use a business plan
      • Provide them with a personal financial statement
      • Show them you are serious
      • Best banks are usually small, local banks that offer portfolio lending
      • One attendee mentioned that Neighborhood Cooperative Bank in Roslindale is willing to work with first time rehabbers

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