This is episode number 2033. We will overview and talk about the highlights of using partnership funding for you, your land, and your house-flipping deals. We spent the last several days talking on air about how we do it and how it works for us. We will recap that and tell you why it has played out and why it works for us well.

Partnership Funding Vs. Debt

Monday was why it’s better to use a money partner than take on debt. On Tuesday, we talked about how much money you can make. I already gave you some real math. We went step by step through the whole process of everything and how it works from purchase to sale. Not just now we own it. Now, we sell it and we each get paid out. We covered all that. Jack talked mostly about the difference between land and house funding, and the things there, why they’re different, how much money each takes, and how fast houses can go. On this episode, we’re recapping. This is excellent.

Each day on the show, we answer a question from our Land Academy member Discord forum, then we take a deep dive into land-related topics at your request. Jill, we have a question.

Buying Property Vs. Buying the LLC

Roy wrote, “I have a seller who owns a large property via an LLC. The LLC had multiple members and are all willing to sell. The property is a mix of vacant land, and farmland, and has current leases, an old home, and some barns. The sellers are offering to let me buy the LLC directly to avoid transfer tax and triggering a re-elevation of the property taxes, plus a couple of other benefits. This sounds good, but buying the LLC sounds like I’m opening myself up to potential legal issues unless I have amazing corporate due diligence. Does anyone have any experience in determining whether to buy the LLC or to buy the property directly?”

I have a lot of experience in this. In one way or the other, I’ve spent my entire career in acquisitions of some sort. Now, it’s manifesting itself into buying and selling land and has for a lot of years. What you’re talking about, and I’ll translate very simply, is buying the assets or the stock of a corporation. When you buy the stock, you buy the assets, the liabilities, and every single thing that’s associated with it. If there are strange assets that a company might own, you get them. Whatever is listed on the financial statement or the balance sheet, you buy, including the debt.

We all know what asset acquisitions are because that’s what we do here. We just buy the piece of land. It’s not in a company. We buy directly from a person. It’s like buying a piece of personal property, like a broom out of the garage for $15. It’s that simple. I would be very leery and we’ve had multiple opportunities like this. Jill and I have elected to never purchase the stock of a company. There are too many things that could not come up through the change of ownership.

It also opens you up to a lot of questionable ethics. Great. Form over substance, it’s changing ownership, but we’re not going to get a tax re-evaluation because it’s not hitting the radar of the taxing authority of the county. Is that ethical? No. Is it great from a tax standpoint? Yes. When you start to buy the stock of a company, you travel into gray areas, which has never made me comfortable.

For me, the biggest point that you brought up that I agree with is, how many of the properties they bought and sold under that LLC the stuff that could come back. Maybe it wasn’t done right. I don’t know. I don’t want to be responsible for that.

In some extreme cases, you would transfer the bank accounts into somebody else’s name. Whether or not there’s a tech solution for that in this day and age, probably. You would be transferring domain names. You don’t want that. You don’t even want the headache. You would buy the EIM, all that Tax Identification Number.

What if they had an employee years ago and they didn’t something went wrong. I don’t want to deal with that.

What if three years ago, the LLC filed a fraudulent tax return? You’re going to inherit that problem.

There you go too.

You don’t want to do this. Plus, if the assets are great and the price is great, just buy the assets.

Thanks, but no thanks.

Using Partnership Funding

This episode’s topic is highlights of using partnership funding, the stuff we’ve been talking about all week for your land and house flip deals. I want you to retain this one concept. This is the original no-money-down real estate deal. Jill and I, for a decade, have avoided saying this. It sounds schlocky. It sounds like you’re trying to sell somebody something.

How many times have you seen this on the internet or if you’re old like me, on late night TV, “No money down. You don’t need to bring your own money. You can make tons. You too can be a multimillionaire with doesn’t require any money.” I can’t stand that stuff. You should not put up with it in this day and age because you have many options on the Internet to choose where you get quality education.

I’d like to think that Jill and I are one of those sources. This is not a no-money-down thing by any stretch. You have to purchase the education, put your time in, energy, and all that, but if you find a great real estate deal within our group, people will be pounding your door down to buy it with you and be your partner. You don’t need money to buy real estate. A good attractive real estate transactions, you just need to be in the right group.

I would like to point out something big that I’m surprised that it didn’t come up this week earlier and I know you’re thinking of it because it’s what a lot of other people do. Remember the whole process we talked about? I’m partnering with you. We’re buying the deal. You heard me open an escrow. There’s a deed there.

People’s names, probably mine, if I’m going to be funding the whole deal 100%, my name is going on the deed. One of the things we didn’t talk about is sometimes, I do partnerships too. Where you’ll say, “Jill, I have half of it. Could we do 50-50 and both of our names go on the deed?” Absolutely. I love those deals too, because then I feel great because you have real skin in the game. It’s not just my money.

I think you’re even taking it even more seriously when you and I both put up. We each put in $30,000 to buy it for $60,000 and to sell it for $150,000. I think these are great. One of the things that we don’t do and don’t advocate is shopping. Keep this in mind. You just talked about the no-money-down thing. This is how some people I’ve heard in the land space actively promote, “Don’t even buy it. Nobody buys it. Get it under contract and we’ll have an equitable title and we run around and try to sell it, and then it’ll all work out in escrow.”

My goodness. There are a lot of things. We aren’t those people. If you don’t believe in it and you don’t trust in the deal much, don’t do the deal. I won’t do the deal if I don’t believe in it, but if I believe in the deal and you come to me and say, “We got to buy this thing. Look at it. How great is it?” I’ll say, “Yes.” I’m buying it. My name is on the deed. In a perfect world, it’s only on the deed for 90 days. You’ve sold it for us and then we move on. You are my partner in this.

If you do not believe in it and do not trust the deal very much, do not make the deal. Share on X

I said this earlier on the Monday episode, “All you need to do is find and put under contract very attractive real estate transactions.” If you do one more thing with the rest of your life professionally, it’s that. You are going to do amazingly well financially and professionally.

Under contract till we buy it, we own it, and we sell it. For the other people now, the term is “Wholesaling.” It’s misused and overused now and we don’t do that.

No. I was trying to leave them with one. All you need to do is locate and put under contract great real estate and if you’re within a group like this, we’ll get funding. You’ll get all the advice you need and we won’t let you make bad decisions.

I think we covered it.

Join us next week for another interesting episode. You are not alone in your real estate ambition. We are Jack and Jill. Information and inspiration to buy undervalued property.