All Forum Posts by: Michael Merritt

Thanks guys, I'll be reaching out to each of you.

New member and building out our wholesaling powerhouse team. We're currently seeking a very ambitious real estate agent or property manager in Sacramento, CA area. This person knows Sac and its surrounding counties well, is licensed, can meet with sellers and buyers, put lockboxes on houses, inspect properties, taking pictures and help close deals. You will represent us as our agent on every transaction and be an invaluable member of our team. A plus would be you know how to estimate rehab costs. We have a very large marketing front end and will handle all inbound call volume, vetting quality leads, matching cash buyers to sellers and making sure we close. We are location in SF and will be frequently traveling to Sac to get this going. If this sounds like you let's set a date to have coffee and talk.

@Steven Hamilton II, she is currently self-employed and starting her own company as well, so income is under 1k month so far. 

Sounds like a complicated question, so I'll give you a ring, thanks for reaching out!

How much income does a wholesale business need to generate for an LLC with S-corp taxation to make sense?

For example, let's assume my day job satisfies my social security tax and the wholesaling business does the following:

• Makes a 100k profit
• Pays me a salary of 50k
• Pays medicare tax on this employer and employee
• The 50k profit would get taxed via a k-1 and be subject to federal and CA tax but not medicare tax.

Same as above without the S-election:

• I pay federal/CA/medicare tax on the 100k profit

Conclusion: The S-election saves me 1,500 in tax (3%* 50k) then I have the cost of preparing the S-Corp tax return 1k-2k (i live in SF) and I would have to pay ADP or another payroll provider to handle my paychecks/withholding W-2 etc that is another 1k or so. 

Does this sound about right? So I need to make something like $150k a year for it really to make sense to use s-corp taxation? Any other things I'm not thinking of that would make it more clear which direction I should go, LLC vs LLC + S-Corp?

I called travelingmailbox, earthclassmail, physicaladdress and spoke to them. But there are ton of them out there! Earthclass is probably the most established but also most expensive. I almost settled on travelingmailbox which is medium cheap and looks great. They can give you physical addresses in most major cities. But they had a small downside which dissuaded me from choosing them. If I use anyone of their major city vanity addresses it added 2 days to process mail since all mail must go through their north carolina processing facility.

Ultimately I chose physicaladdress mostly because their phone rep was nice and funny and they had an address in CA which didn't add any processing time, they were the cheapest for the amount of mail processing they provide and it was in a town that I grew up in which I thought might be lucky for me. :) Their downsides would be no iOS app (it's coming this year) and their website is a bit lackluster and they seem to be a newer player with only 2 addresses to choose from NV, or CA. Travelingmailbox had tons of cities.

Pricing you'll have to look at all their websites but I'm paying $25 month for 200 scanned pieces (great for postcards) plus 100 content scans (they open it up and scan). Additional scans are .20, competitors charge .30-.50 it seemed. +$5 for the CA vanity address, this price is standard with most of them. They give you one address to choose from that is free then other cities cost $5.

One thing I probably should've considered is some offer a virtual fax and other handy office features in their monthly price. And envelopes to mail things back to them for them to scan.

You also have to sign and send them USPS Form 1583 which allows them to legally open your mail. They provided this form to me prepopulated.

If others have more first hand experience with a specific player that they really love, esp if they're cheap, please let us know!

@Ryan Dossey I'm thinking it'll be more flexible in the long run, they scan everything in, shred for free and I won't ever have to worry about changing my address if I move and most have mobile apps. 

My local UPS store has restricted hours, no keyed boxes available (so I have to wait in line to ask for my mail), slow lines, charge for shredding and is $55 a month which is more costly than virtual. No other options were convenient to me and I have no car. I'm also trying to be 100% remote one day.

The only down side I see to virtual is the being careful about costs of undeliverable mail blasts and occasionally needing them to forward certain pieces. If I expected actual packages then I'd probably deal with UPS store. 

I guess I'll find out if I made the right choice. :)

@Tim Lindstrom, that's right, I was referring to mail returned as undeliverable. Thanks for the advice 

Any lists you tend to stay away from due to your reasons mentioned above?

Side question, do you have an automated way to send out bursts of mail like that?

Thanks, good to know I might need a bigger mailbox. :)

What's the average amount of return mail you get as a wholesaler that does direct mail? I'm looking into using a virtual mail box and seeing they'll 80-100 pieces of mail then it becomes .35 cents per piece. 

I'd love examples of how much mail you send out and how much returns? I know this depends on what lists and frequency of mailing. Maybe I can stagger my mail blasts so they come back in pieces instead of all in 1 month.

Thanks to those that have reached out! Spoke to some great people so far, would love to interview more real estate attorneys esp those that have knowledge with real estate investing and wholesaling and do either themselves.