All Forum Posts by: Adam Hershman

Hey @Maura Paler

It sounds like what your husband is talking about is a margin loan, where your current securities act as collateral for the loan. As far as I know there is no reason that the bank would want you to prove liquidation, they should only be concerned with a proof of the funds. As long as they don't suspect the money came from illegal sources or ill gotten gains, there shouldn't be any issue. The only thing I can see that would cause an issue is if your lender requires the down payment not made from the proceeds of a loan, or in other words, they don't want you to owe on 100% of the house, in which case you can liquidate the 75k from a position in your TD Bank account (preferably equities and not mutual funds) and immediately invest the margin loan in the same securities. Essentially now you own securities on margin, and have funds you liquidated for the down payment to show the lender, plus you keep the same investments, but now your technically paying interest on your investments instead the down payment. 

Hopefully that makes sense.

Adam

@Dev Horn

You're absolutely right, these signs do work, hence the reason a lot of people use them. My personal feeling aside, it is one of the few marketing strategies that can get a negative reaction as opposed to being ignored. TV and Radio, websites, etc are often ignored, but almost never produce a negative reaction from someone. Now it might be that those methods don't produce as many quality leads, and I totally get that. Just know that you will alienate at least a small portion of people using bandit signs and the like, although to be completely fair, I'm not the type that would sell my house as-is to a wholesaler/investor anyway so alienating me isn't really a bad thing.

Adam

@Rodney Marcantel

Just to clarify, like @Brian Eastman said, the custodian will charge you a fee for the IRA account that invests in the LLC, If this is the $45 per quarter management fee you're talking about is the fee from the custodian then it sounds about right. The custodian I work for charges $175 annually for IRA LLC accounts, so $45 quarterly would be on par with what we charge. One thing to double check is make sure those fees don't change based on account value which can make that fee skyrocket if you start growing funds in the account.

If on the other hand the LLC formation company is requiring a fee to maintain the LLC, I would maybe look at other options since that is a fairly uncommon practice, in my opinion.

Adam

Personally I hate things like bandit signs, window flyers, direct mailers, etc. For some reason I just find them detestable. At one time I was doing some marketing consulting for a car dealership, who used windshield flyers as one of their main sources of advertising, and I remember telling them "If you left this crap on my windshield, the only reason I would remember your business, is so I could never do business with you." I know for the vast majority of people it doesn't cause that same type of response, but I just cant stand that type of marketing. 

Just my 2 cents...

Adam

 Hey Rodney,

I'm not really sure how you would be able to borrow against a retirement account, even if your father in law has mostly roth retirement assets, there are no loans allowed on most accounts, and distributing the money means he would not be able to get it back into his tax sheltered retirement accounts other than via contributions. 

If you don't think you will be starting the RE investing/flipping for some time, it would probably be better to park that money in an account that grows those funds, even a little, and then roll them over to a self directed IRA when you need to. I can tell you that a self directed IRA is not the place for idle cash, it is essentially earning checking account interest (Full disclosure I work for a self-directed IRA custodian).

If you think you will be starting the REI activity soon, then a self-directed IRA LLC is a great option, although if the formation company your working with is charging a quarterly management fee, I would do a little more research on other options as that seems a little odd. In most cases the manager of the LLC would be the investor, because that's the only way for them to control the LLC. I can't imagine they would be charging you for managing the LLC as an entity, as it is disregarded, and doesn't require any tax reporting.

In any case you should consult with a knowledgeable professional before opening an account or forming an LLC, doing a little extra work now can keep you from a TON of extra work and headaches later.

Adam

Hey Tom,

Acid isn't really a great idea anyway, you're more eating away the stone that is dirty than cleaning it. There are several PH balanced products out there for cleaning sandstone, I have used Silque and StoneTech products before and both worked fairly well. You can use it with a microfiber cloth to work the solution into the stone, and rinse with warm water. The worst part is it just takes time and elbow grease, it's not a job you can do quickly, and I hope you have strong hands because it will be an intensive workout for them. 

Adam

@Jerry Padilla & @Lakeisha Robichaux

Thanks! 

This is something I am pretty passionate about, it's one of the few areas where you can really help someone on a life changing level, with nothing more than a little information and insight. Granted people have to act on the information, and that can be nerve-wracking but when they see their credit score jump by 25-50 points in 2-3 weeks, its worth it. 

 Hey Gary,

Like I said, this is a pretty common misconception. Currently it is incredibly easy for a debtor of any kind to provide sufficient "proof" of the debt, according to the reporting agencies. Good news is that will be changing come Nov. Here is an article about the changes http://www.nytimes.com/2015/03/10/business/big-cre...

The highlights are all good, medical bills will no longer be reported until 6 mos. after default to allow time to haggle with insurance and medical debt will be given less weight moving forward. Also there will be provisions to add positive reporting for tenants (this could be huge for you) which would allow landlords to report on time rent payments in addition to the current late payments being reported. That means you could tell your tenants if they pay on time you can report that to their credit score, very beneficial for most landlords. 

Here is the part that will most interest you in regards to disputing first. Now if the debt is legitimately not yours (or who you are helping) then absolutely send a verification letter. Don't send one if you know the debt is yours (or who your helping) because they will easily prove it and increase collection activity, see below for the new changes.

From above linked article

Even though consumers are entitled to dispute any inaccurate information in their credit reports, the entire process has been criticized by consumer advocates for years: The bureaus often outsource thousands of disputes daily to workers overseas who generally are told to translate the problem into a two- or three-digit code that is fed into a computer; the code and any documentation are sent to the creditor. If the creditor verifies the information, no further investigation takes place.

Now, those automatic rejections will no longer be tolerated. And specially trained employees will have to review all supporting documentation submitted by consumers involving mixed credit files — in which aconsumers’ file is blended with another person’s report — fraud or identity theft.

So as you can see the current system makes it very easy for creditors to verify debt to the reporting agencies. Again like I said, if the debt is yours (or who your helping) then you should NOT send a verification letter first, because they will prove the debt easily, and now they have a better position from which to negotiate the pay-for-delete price. Additionally if they don't accept your pay for delete offer, you can no longer send a cease and desist letter because the debt has already been verified as yours. 

Adam

 Hey Randy, 

I assume you were asking me? 

Essentially what you will need to do is draft a letter. It doesn't need to be written by an attorney, it just needs to have some general language regarding the deletion of the account reporting, and not reporting on the account again in it. 

Here is a sample I prepared for a friend, I don't do this type of work professionally:

Collection Agency Name

Date

Account # if you have it, if not use whatever information your credit report has (i.e John Doe - City Bank - $1001 - Opened 7/27/2004)

To Whom It May Concern,

This letter is to inform you that the validity of this debt is disputed. I am unaware of this account and have no verification that this debt is mine. I know of this account based on my credit report(s). I have the right to dispute this account, as well as request for verification and validation of this debt, however, in an effort to quickly resolve this matter:

I XXXX, am willing to pay you, XXXXX, the sum of $XX.XX on the condition that this account be deleted from any and all reporting agencies, that this account be considered satisfied and closed, and that no future reporting to any/all agencies will take place.

I am aware of your rights as well as my own, and I know that you are the source reporting this account. I know that you have absolute right to report, not report, or delete it from all reporting agencies. We are both aware that paying this unverified debt is of no benefit to me and merely having a collection on my credit report has a negative impact, whether paid or unpaid. The purpose of this proposed restricted settlement is to have this item remove from all reporting agencies, this is not an acknowledgement of liability for this debt in any way, nor is it a promise to pay, a renewal, an admittance to this debt or an agreement that this debt is mine.

If you agree to the terms and accept this proposed agreement, I will send you certified funds immediately upon receipt of this signed agreement. The funds will be sent only in exchange for deletion of ALL records related to this account from ALL reporting agencies, this debt will be considered satisfied, with nothing owned, and nothing further to collect. Since certified funds will be sent, all information about this account must be removed from all reporting agencies within 15 calendar days of your receipt of the funds. If you agree to the terms and wish to accept this agreement please have an authorized representative sign this agreement, and print clearly their name and position held. It will be implied that this letter shall constitute a legally binding contract, enforceable under federal and state law. Please also include with this signed agreement a company letterhead stating you received, signed, and agree to this restricted settlement offer and its terms.

I will expect your response no later than 20 days from your receipt of this restricted settlement offer, and it will be withdrawn 30 days after today, March 3, 2015. If you decide not to accept this restricted settlement offer and begin attempting to collect this unverified debt, I will withdraw this offer immediately, send a cease and desist letter, and request full validation of this unverified alleged debt as is provided by the Fair Debt Collection Practices Act.

Thank You

Then just attach a page for them to sign, print name and title, and date. In this case the debt was a small ($700) credit card debt from when he was in college. I believe the offer was $100 for the delete, but again, I don't do this professionally so I leave deciding how much to offer up to you. Like I said, old debt is easier, so in the case a $100 offer for $700 debt that is 4-5 years old would likely be accepted. Most debt collection agencies would rather take some money now, then wait another 4-5 year trying to collect, especially considering they most likely purchased the debt for 4%, so $28 in this case. The key is you want to make clear that you do not acknowledge the debt (as you may need to ask them to verify it later if they do not accept) and that if they accept your offer they will delete all reporting, and never again report on that account. Some of the more underhanded collection agencies will send a response saying something to the effect of "Sure we will accept  your offer of $100, and close your account" but not sign or return the agreement you sent. That is not what you're looking for, and they will most likely never delete the record and keep reporting it as a closed account, but with funds still owed. The only way this works is if they agree to delete the records, and never again report. Essentially if they don't sign this agreement or an agreement with substantially similar language, don't send them any money.

Adam

 Hey Patrick,

REI is commonly used for Real Estate Investment/Investing/Investor. There are professionals who market themselves as REIA (Real Estate Investment Advisor) but this acronym is also used for Real Estate Investment Associations, or clubs of investors.

If you're asking what a REI (real estate investor) does, that can be a pretty broad answer, anything from tax deeds/liens to rental properties to raw land with natural resources. If you are asking what a REIA (Real Estate Investment Advisor) does, they usually find excellent RE deals for investors, whether private investors, REITs, or other institutional investors.

Adam