Laying the Foundation
1. Get educated on purchasing real estate whether you want to do flips or long-term rentals. This industry can be brutal to people who do not know what they are doing and it is easy for a new investor to lose their shirts and thousands of dollars by making mistakes.• Jennifer attended both the John Adams Investor Institute and the GAREIA Boot camp. I would recommend the GAREIA boot camp. You can attend any other real estate guru’s boot camp.
• Read about real estate investing. There are many excellent books on the subject. Our personal recommendations are: (not limited to just real estate)
a. Flipping Properties - Bill Bronchick
b. Rich Dad/Poor Dad –Robert Kiyosaki
c. Make Millions by Buying Small Apartment Properties In your Spare Time – Brian Friedman
d. Investing in Duplex, Triplexes & Quads – Larry Loftis
e. The complete Guide to Buying and Selling Apartment Buildings – Steve Berge
f. Apartment House Riches course – Dave Lindahl
g. Secrets of the Millionaire Mind – T. Harv Eker
h. The Maui Millionaires – David Finkel & Diane Kennedyi. Goldmine of Brilliant Tax Strategies – Albert Aiello
j. 2 Years to a Million in Real Estate – Matthew Martinez
• Take advantage of the subgroups offered at GAREIA. I got started in real estate investing with the help of an agent that taught at the GAREIA boot camp.
2. Find a Partner. Both Brad and I had invested in real estate before we decided to join forces. Our investing really jumpstarted once we became partners. We recommend that you partner with someone that has skill sets different from your own so you can compliment each other. Besides if one partner is on vacation or traveling for work, then the other partner can step in to take care of any necessary items.
3. Know your credit score and your debt-to-income ratios to determine if you would qualify for aninvestment mortgage. If you cannot qualify for a mortgage then you will have to use creative financing to purchase properties. You should know about creative financing from your education that you accomplished in step 1.
4. Establish a business identity.
• FIRST determine what the name will be of your company then check that that name is not in use by another company in the state of Georgia. I wouldeven go so far as to verify that the website name of our company is also available. We did not pick a company name until we found one that was not registered in the state of Georgia and that we could reserve the domain name.
• Create business cards. Vistaprint is dirt cheap in printing costs.
• Create a business logo.
• Create and print letterhead.
• We used the website www.sitepoint.comto create a contest to create a business identity for our company which included a logo, business cards and letterhead. The contest cost $350 and we had over 30 entries from which to choose. Later we used that same website to run a contest to create our CD labels, inserts and spine labels.
• If nothing else do this for asset protection.
• The main reason for incorporating isto build your business credit.
• Minimize or eliminate the risk of an IRS audit. A Schedule E (or C) form is audited more than a Partnership return under form 1065.
• Make sure you use the correct business entity depending on whether or not you are doing flips or long-term holds. If you are doing both then you will need to have 2 separate business entities.
• You can either hire an attorneyto incorporate yourself for about $500, do it online on the internet for about $150 or you can do it yourself for about $60.
• Create your Articles of Incorporation
6. Establish a business checking account
• Do not think of co-mingling your personal funds with your business funds. If you don’t understand why then have your tax accountant explain it to you.
7. Establish a tax-id