2006 Is The Year!

Hello All,

I’ve been reading a lot of posts in this forum and also posted a couple of questions myself. My wife and I planned to start in REI 7 years ago but never got going since we were starting a family, bought a new house, and focused on our careers. Now we are regretting that we waited this long when it is becoming a buyers’ market. So we decided 2006 is the year we get it going. Because of Robert Kiyosaki’s late night infomercials, we are going to a two-day seminar in San Francisco in March. The big guest speakers will be Kiyosaki, Trump, Orman, and Robbins. I’m sure they will try to sell us a lot of others things while we are there. We live in the San Francisco Bay Area (Contra Costa County) and plan to begin here. We will branch out as we become seasoned veterans. After extensive research of our local area, we plan to rehab and flip properties. We will also buy and hold when it makes sense. It was kind of ironic that TLC had a marathon of “Flip This House” on New Year’s Day. We stayed glued to the tube. We realize there are risks and it doesn’t always happen as it was on TV.
I make $110K a year, she makes $45K a year, and we have a good amount saved up in the bank. Our credit score is around the mid 700s. We have been through two new house purchases for occupancy, not for investment. I have read a few books regarding REI – flipping and renting. I will also be joining a club soon. As you can see, we have no more excuses not to start. I realize others have started with less and are very successful now. We do have jitters because of our lack of experience. But I know we’ll get over it once we get our feet wet.
First, any words of wisdom based on my situation or any words of encouragement are really appreciated.
Second, here are a couple of questions.

  1. I’ve been reading it’s not a good idea to do business as a sole proprietor. Instead, try forming an S or C corporation. Is this true? If so, should I form one even though I haven’t bought an investment property? Or should I wait until I have a couple under my belt? For that matter, should I form a team before I make my first offer?
  2. Before making an offer, how can I be sure there is no major damage that will skyrocket the rehab cost? Can I bring an inspector before making an offer?

Thanks in advance.

Howdy Flipsoninc:

If you find a deal get an offer in asap. If you mess around and get inspectors and others to look before you even make an offer you will possibly miss the deal. You can always make the offer subject to inspections.

Several ways to set up ownership. If you have to borrow money you will likely need to sign personally to get the loan. You can set up trusts etc to hide the true ownership. You may want to do a few deals befor spending hundreds to set up a Corp or an LLC. LLC’s are popular these days. There are several discussions on this topic under asset protection.

With your credit and assets and income I would own several millions of dollars of commedrcial deals.