Before The First Thing

Hello! David J here again bringing you more of the steps on my journey toward financial independence.

Enough talk - it's time to start building a business.

However, I'm going to start from a different place than you might be expecting.

Most folks start building a business before they have laid a foundation. The foundation of any business is its structure as a legal entity.

Now, understand: I am -NOT- an attorney or a CPA, and this blog post is -NOT- intended to offer either legal or financial advice. Take whatever you learn here to your own legal or financial professional and get qualified advice and assistance BEFORE you take action on ANYthing. I can only suggest topics to discuss when you meet with your professional person.

Now, that said, let's consider what the REAL foundation is in any business - YOU! ... ME!

I chose the title of this post intentionally: "Before The First Thing". One of my adopted mentors, Robert Allen, posited this in his "MasterPlan" strategy: "Feared Things First".

Now, what do most of us usually say or think? Don't we say "First Things First"? How many of us are experts on analyzing a situation and determining what the most important task should be? Most of us believe we can do that effectively, and most of us are correct. However, even in making that distinction, we still apply our own "filters" to those distinctions.

The concept of Feared Things First forces us to consider which of the tasks before us we see as being the most daunting: what do we look forward to the least for whatever reason?

Now, what happens when we get that "800 pound gorilla" out of the way? Makes the rest of it seem like a walk in the park, doesn't it?

So, one bit of advice I will put forward to you, my good reader, is to dig in your heels and face that daunting task. Get it done, get clear of it and enjoy the rest of the process.

As to the actually laying the foundation for your business, you might think the first thing to do is to line up some funding, select letterhead and business cards, design your marketing plan and materials, and so on. Those are all valid early steps, of course.

In truth, the first thing to address is to structure your business so that your assets - your personal possessions and personal property, real and otherwise - are protected, and that your tax liabilities are limited within the law and what it allows.

Structuring your business involves working with your legal and accounting professionals to design a business entity structure which achieves these basic goals.

Now, again, I am not qualified to advise anyone on how to do that. So, I'm going to make some recommendations as to where to find some information to help you get started with the process of structuring your business entities.

The people I'm going to recommend here have come to my awareness by way of the many webinars and teleconferences I've been attending as mentioned in my earlier post, So Many Gurus, So Little Cash and Wealth, Youth, Dignity and Pop Culture.

The Short Sales Riches guys, Chris McGlaughlin and Nathan Jurewicz have an attorney on their team by the name of Jeff Watson. Now, Chris is himself a licensed attorney, as well. Jeff Watson is someone they have hosted in their webinars and who has worked with them in developing their strategies. If you search the web for "Jeff Watson attorney real estate" you will find a number of resources through which you can gain access to the information he has compiled and which he offers for sale.

No, I haven't forgotten No Cash, No Credit. Stay with me and read on. I do have a suggestion on how you can get started generating cash even before you have yourself properly structured and protected. In fact, lack of funds is probably the biggest reason why people go out and start generating income before they have their business structure in place.

That's very dangerous because then complacency takes over. "We've done this much without the business entities, we can go a bit further and address that later." So, we go a bit further, and a bit further and ... next thing you know, the letter from the lawyer or the IRS arrives and then its too late. Old habits die hard, y'know.

Another fellow who is highly knowledgeable on the topic of business entities is Darius Barazandeh. In fact, its a specialty with him. I've listened to a number of his presentations and he puts out a lot of information to help the listener understand the importance of properly structuring your business entities and then properly operating those businesses to protect against lawsuits.

It's no big secret, I'm sure, that in today's society people look at lawsuits as a way to easy money. Just go after the "deep pockets" for any reason they can find. If we don't protect what we have built, we can easily lose it all.

So, what about "No Cash, No Credit"?

Well, in later posts I'll provide details on how to do this. I'll just lay out the basics here.

Essentially, what I recommend is to stick your neck out - quite literally. As is said, "The bumble bee cannot fly according to aerodynamics experts. However, the bee does not know this. So, it flies, anyway." I once saw a poster in a recruiter's office which said, "Consider the tortoise who makes no progress - until he sticks his neck out."

No, I'm not promoting being irresponsible or unethical. All I'm saying is to have the courage to learn how to do this by going through the process. Take each step deliberately. Notice what knowledge you need to accomplish each step, find someone, or a book, a free webinar, etc., so you can learn what you need, then take that step and proceed to the next. Then, "lather, rinse and repeat".

The first step I'm going to recommend is not usually the first step most folks think of in the process of buying and selling properties. The step I'm going to recommend taking first is to locate buyers. One little-to-no cost way to do that is to find a real estate agent who will provide you with a list of properties which recently sold in your area. Preferably, you will want to find those sales within the last six months where the transaction was all cash. This is where you will most likely find buyers who are in a position to acquire other properties and probably do so as part of their own real estate business.

Now, the list you get from the real estate agent is not likely to contain all the information you need. You may only get a list showing the property address, some limited description of the property, and the price for which it sold. It might not give you the buyer's name, address or contact information. That's going to be the part where you put in your "sweat equity". You can take that list to the county courthouse or, if your county keeps its on-line records fairly recent, you may be able to get the information you need from the county's on-line resources or website. Once you have the buyer names, you might find some phone numbers in the public listings. Business people usually prefer to be found. Private owners usually want to be left alone.

Once you get the contact information for the buyers, do a mailing to them. You WILL have to pay for postage when using the USPS. No getting around that. Handwritten letters are best, but automation is a valid second choice. You want to let them know that you can offer other properties they might consider and how they can get in touch with you. The ones who respond will become the basis of your buyers list. Correspond with them and find out what types of properties they want to buy. Then, find properties for them to consider.

There are other ways to attract buyers, but we're going for "No cash, No Credit" here.

Next, you need to find properties for sale below market value. Real estate agents will be helpful here, as will FSBO (For Sale By Owner) agencies such as "BuyOwner", "Help-U-Sell" and others. There is no shortage of motivated sellers these days. You really "cannot swing a dead critter without hitting" one or more, much less walk down the street without tripping over them.

So, there's the key pieces: finding buyers, finding sellers, and matching buyers with properties for sale.

All you need to do now is read up on assignment of contracts and you've got the basic pieces of a real estate wholesaling business. You get an assignment fee for letting some other investor buy you out of your offer to purchase a property which meets their investment criteria.

Be advised, also, that simply offering a contract to buy a property will require SOME "good and valuable consideration" to make the contract valid. So, you will need to find SOME funds you can use to make your assignable contract a valid offer to purchase.

That's the basics of what you'll find in those real estate home study courses that the "gurus" sell for anywhere from two to eight weeks worth of take-home pay. I've only provided a thumbnail sketch of the process. There's a lot more to learn as you go through it.

So, now you can have a way to make enough money to get the information and assistance you will need to build a business entity structure which will allow you to continue to acquire income and assets, and keep them both - and yourself! - protected from lawsuits and an unnecessary tax liability.

Let me say this again (copy-and-paste, really):

I am -NOT- an attorney or a CPA, and this blog post is -NOT- intended to offer either legal or financial advice. Take whatever you learn here to your own legal or financial professional and get qualified advice and assistance BEFORE you take action on ANYthing. I can only suggest topics to discuss when you meet with your professional person.

We'll talk again soon!

Take care - be well!

Much Success!