Effective but inexpensive method to form a business?

Question

I have notices in the past 10 telephone calls to seller that many are hesitant to enter transactions with someone as inexperienced as I. I would like to form a business structure to operate within but not sure which is the most cost effective. Any ideas, suggestions? Is this even a good idea?

Brian Gibbons · Answer

Thanks @Douglas Dowell you are too kind.

Hi @Cecil Russell

Yes see @John Jackson I initiallly trained him in lease option assignments in 2002, and he has done over 400 lease option assignments in TX.  A great guy too.

I wrote an article called - "The 4 Legged Stool - Your REI Business Plan" here in my BP blog http://www.biggerpockets.com/blogs/3/blog_posts/39...

your business structure is a tax and legal conversation.  You may want to look at this TX attorney's blog

http://www.lonestarlandlaw.com/LLC-Formation_in_te...

Being a transaction engineer starts with the Seller's Interview.

See "Be the Doctor when Talking to the Seller"

http://www.biggerpockets.com/blogs/3/blog_posts/17...

and "How to Negotiate with the Seller"

http://www.biggerpockets.com/blogs/3/blog_posts/30...

Cecil Russell · Answer

Thank you to Ms Kirk and Mr. Telles. I live in Texas and this gives me a point to start at.

Helen Kirk · Answer

@Cecil Russell You can set up a LLC with just yourself as the only "member".  I just did it in Alabama.  It was easy, going through my attorney, and I was able to get a federal ID number within minutes after I got the LLC registered.  You need that federal ID for setting up a bank account for your LLC.  I still haven't closed on any properties yet, but at least I do have my LLC in place for when I act.

I still feel that I need more education in regards to controlling properties without using my own cash, but I'm going to at try to purchase some auctioned REOs or foreclosures and getting my feet wet that way.

Cecil Russell · Answer

I see that forming an LLC isn't going to work for me as I am doing this alone. No family or friends so what kind of company can I set up that provides asset protection that I can do by myself?

Cecil Russell · Answer

Thank you for all the excellent information. I can see I'll be up burning the candle low reading all this. Again thank you.

John Jackson · Answer

@Cecil Russell  Sounds like the issue isn't a "business structure" so much as sounding confident on the phone.

I can assure you now seller is going to ask if you are a S-Corp or LLC etc.

They just want to look at options and you are the problem solver.

I actually work with people in TX and have worked with a number of Ron's peeps, and work with Ron as well. I still do and he's taught me more about marketing than I can tell you.

The first thing you need to do is understand what it is you are offering to the sellers that are calling.

If you can't explain it, then they won't bite.

I just put a video up on youTube on talking to sellers, which is great, but I won't put a link up here. I guess you can search for it.

Douglas Dowell · Answer

Hello Cecil,

I think you should give @John Jackson and shout.   He is crushing it with lease option assignments in Texas.   Also consider doing sub 2 and sell on a wrap instead.

As to the original question the real issue is one I think we all face.   It seems like so much to learn that we think we need to do x y or z to look more professional.   I believe you dont need anything.    Just adopt a problem solver mentality and let the chips fall how they may my friend.   That's what helped me the most.

I also recommend speaking to @Brian Gibbons ...he is a jedi master at this stuff.

Cecil Russell · Answer

I guess the proper term is what Ron leGrand calls a transaction engineer. Lease option to purchase with intent to sell my option. Something called ACTs. I keep hearing that in Texas, I cannot take an assignment fee when I sell out my option and I should use a land trust. There is still a lot I dont understand about ACTs.

Louis Leone · Answer

@Cecil Russell

Could you explain a bit more?  Are you trying to wholesale or buy, etc..

Depending on what you're trying to do, you may be trying to sell them too much on the phone.  In many cases, the phone call is just to get an appointment in person.  In person you will be able to present your case much more effectively.

Effective but inexpensive method to form a business?

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