Epic Real Estate Investing - Navigating Real Estate Law with Mitchell Beinhaker: Insights for Investors | 1411

Episode Date: January 18, 2025

In this captivating episode of the Epic Real Estate Investing Show, host Matt Theriault welcomes esteemed business attorney Mitchell Beinhaker. They dive deep into Mitch's legal expertise, especially in real estate and commercial transactions, and explore the pitfalls and best practices for investors navigating complex legal landscapes. From the potential misuse of AI in drafting contracts to crucial legal strategies for protecting interests in real estate investing, Mitch shares invaluable insights. The episode also touches upon trends in tenant laws, the importance of meticulous documentation, and Mitch's compelling journey to becoming a successful podcaster with 'The Accidental Entrepreneur'. Tune in for a wealth of knowledge and practical advice that every business owner and real estate investor should know! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Hey, strap in. It's time for the epic real estate investing show. We'll be your guides as we navigate the housing market, the landscape of creative financing strategies, and everything you need to swap that office chair for a beach chair. If you're looking for some one-on-one help, meet us at rei-aise.com. Let's go, let's go, let's go, let's go, let's go, let's go.

Let's go. All right, please help me welcome to the show. Mr. Mitch Binehacker. Mitch, welcome to the Epic Real Estate Investing Show. Thanks, man. I appreciate it. Yeah, good to see you again. And I had the pleasure of being on your podcast, in which I enjoyed. And I really like talking to you.

So I wanted to have you on because I think your expertise could serve us well over here. And I might have a few self-serving questions, but I think I want to get a kick out of it or get some value out of it. Kick. Now I sound like my mom. So I love to hear what the self-serving questions are. They're not self-serving me. They're not serving you. Yeah, right.

So you're an attorney. Tell me a little about you and your business. Sure. So I'm a business attorney for the most part. And I do a fair amount of real estate work and commercial work, buying and selling businesses, leasing, you know, contracts between partners and agreements, things like that. Probably the other half of my practice is estates and trusts and probate.

But, you know, for the most part, I'm a transactional attorney or a drafting's attorney. I don't go to court. I don't litigate. I do negotiate and I do settle, but I don't litigate. So if it gets that far, I send you off to a colleague mine. Got it, got it. Yeah. You know what?

You just brought up the word negotiators fresh off of my last call that it is. So I was going through this little AI platform and you can connect, like you can kind of similar to chats, custom GPs. Have you played with those at all? Yeah, I use those all the time. Yeah. Okay. So he said one of his clients does is when they're answering emails and everything.

They have a chat connected. directly to Chris Voss's book, never split the difference. Oh, really? And so it'll ask, every response, how would Chris Voss respond to this? And then it pulls right from the content of the book. That's funny. Now I'm going to negotiate forever via chat now. So a Chris Voss has a GPT that you can use?

No. You just say, how would Chris Voss respond to this? But they got a digital version of the book and connected the book to the chat. Got it. And I was like, wow, that was genius. I learned something every day about with chat. I have clients that get agreements, you know what they do? And they load them up into chat GPT and say, what would you suggest and rewrite this?

And then they come to me and say, this is what chat GPT said? What do you think? Like, are you kidding me? Well, that's good because I'm guilty of that myself. And it sounds really good. They're like, wow, the contract sends great. I said it does, but you have no idea why these provisions are there. They go, no, we don't.

We have no idea. Right, right. So tell me what are some of the main flaws you see and not being able to keep up with a real live attorney? Well, the biggest problem is you don't really know, like when there's, paragraphs in there why you should have them or why you shouldn't have them. So I was doing one for somebody. It was like a, I guess it was a settlement agreement. It was some sort of an agreement. And chat GPT put in like an arbitration clause. Now, I like arbitration clauses in some cases. Some cases I don't like arbitration. It just depends on where you are. You're dealing state to

state. You're dealing locally. But they had no idea. So they were just like, oh, I guess we do arbitration. Now, arbitration can be very expensive. It can be good. It could be bad. you know, sometimes you've got to go to court to enforce the arbitration award anyway. So it really depends. So you don't really know why things are in there. Maybe you can figure out what they mean, but it's hard. And that's what I see in a lot of agreements that check GPT kind of puts together, like operating agreements. Why have these different paragraphs in there. They just don't know what they mean. So it lacks, I guess, discretion. Yeah, because there's certain paragraphs you should put

in there that like, at least in New Jersey, if you draft the agreement, so if you're the draft of the agreement and there's something ambiguous in the agreement, often a judge will hold that against you as the person who drafted the agreement in terms of interpreting those ambiguous clauses. But if you put a paragraph in that it says that this contract was drafted by this person, any ambiguities will not in and of itself be held against the drafter. You've covered that thing or non-disparagement clauses, you know? Got it.

Things like that. So, yeah. I mean, make another that real quick. Yeah. It's like creating the scripts and everything for it lacks taste when it comes down to like doing art, right? Yeah. Oh, the graphics are terrible. Also, you know, you can't rely on that it's completely accurate.

So just because it comes up with clauses, maybe they're not properly drafted or they're just not. Yeah. So at this point, I don't think it's reliable enough. That's how he got me in trouble on YouTube once. Yeah, like I could use it, right? Because I know what I'm reading. So I can then read the contracts out of that's not right and fix this and change this and move that around. You can't do that because it's not what you go.

Exactly. You're a real estate guy. Yep. And that's all I know. Don't listen to me for anything else. Stick with one thing. That's always good. Well, great.

So I'm interested. What inspired you to start the accidental entrepreneur podcast then? How does that fit? Oh, sure. Well, so I've been practicing 32 plus years, I think. And along the way, many times, clients have come to me and said, you know, after the fact and said, hey, I need help, like working this out. I got to close the business. I'm going to get out of the lease. I leased all this equipment. I got employees, what do I do? And I said, what did you do?

Like, I thought you opened like four or five months ago you sent me a text. And maybe I helped and set it up, but I wasn't involved in that stage. And they're like, well, you know, we didn't do this, this and this. Then I find out, you know, they didn't write a business plan. They didn't have any strategic things in writing, you know, no partner agreements, whatever. They were just doing it. They were so excited about the product or whatever it was the service or whatever, you know, all the marketing. Because we're all right brain like fanatics that they forgot about all the other stuff, which is like figuring out whether this business can actually make money. Just because you can sell something for 10 bucks and because that's what the market allows for. Maybe you can't make money because your expenses 12.

I don't know. So I find that a lot of people didn't do the work. So what happened was I liked, I think I like podcasting. So we all have to produce content, right? So I put out blogs. I do a lot of stuff now. But then I don't know what I was going to do. So I said, well, I'm going to do a podcast.

So I think I saw one of Pat Flynn's videos or something about, you know, you for 75 bucks. You can start your own podcast. I'm like, you can. I thought you need like roadies in the studio and a boom mic and things like that. So I bought the package, whatever was, 75 bucks. It was really crappy equipment, but I upgraded since then. And I called a buddy in mind, my friend Jack, who was a mentor, Omani, unfortunately, away about two years ago, two and a half years ago.

And I said, Jack, come to my office. We're going to do a podcast. And he's like, well, what's a podcast? You know, just come to my office. He comes to the office. We sat down. He told me his whole story. It was like three hours.

It ended up being two episodes. And his story was fascinating. There was things about him. I didn't even know that he went through when he's young. He was with McKinsey. He took over a magazine. He made all kinds of famous people, all kinds of crazy stuff. And I was like, this is what I'm going to do.

And then one day, I was looking for a name. and I came across that old movie with William Hurd called The Accidental Tourist, and it just popped in my head. I'm like, the accidental entrepreneur. Like, that's what everybody does. They accidentally go into business. They do things on a handshake. They don't do anything purposefully.

And they fail 80% of the time and probably another two-thirds of the 20% struggle for the rest of their career. And we could do better. You know, we definitely can do better. And you know that too, that there are, if you become a student of what you do, there's methodologies that are working for people and some things that aren't. But usually it's the people that don't do the work. Yeah.

Yeah, I can actually relate. That was in the music business. I made music and people paid me for it. Let's put it that way. Wouldn't have called it a business. Right. Right. You're a performer.

Right. Yeah. Yeah. I've seen this pattern. I've started noticing about five or six years ago that, and I've gotten much better since because I had this epiphany. And too bad it was late 40s when I figured it out. But I had just.

Notice that, you know what, I'm really good at making money. I'm terrible at running a business. So it was really tough for me to put systems in place and it was tough for me to delegate and outsource and just get out of the way, let me go do it. Right. That never works. No, I mean, it's good for making money, but you've got to maybe working for the rest of your life. You're working for the rest of you.

You're basically an employee of a company that you happen owned. Yeah. That's it. You're not really a business person, business owner. business owners build systems and they have employees and they build companies and they scale and they do all kinds of stuff. And if you do it strategically and you plan and you are purposeful about what you do, I mean, you can increase chances of success by fivefold. You know, because I know the guys that I've met, I've interviewed, I don't know, 350, 400 people all over the world. And I could give you on a couple of hands, maybe a couple of handfuls of people that as soon as you talk to them, you know that they're successful.

and they've been successful because they, it's not about what they do, it's about how they do it. And that's really what it comes down to that. There are much better ways. We don't have to like wing it. Struggling is not a sign of like being tough. You know, you're a tough guy, right? You're going out being your own entrepreneur. It's like a wild world and, you know, you're going to be tough and I'm going to fail.

And failing definitely helps you because you learn a lot quicker, but you can also avoid the big failures like by learning from people. that, you know, like us. Look, I've been involved in several businesses. Most of them didn't make it. Like you said, took me a long time to figure it out. I think that's one of the ironies of life, right? It takes you until 40 to 60 years old to, like, figure things out. But if you knew when you were 20 or 30, you'd be in a much different place.

You hope you share the wisdom. So maybe people in their 20s or 30s can, some of them can have a chance of the people that I didn't meet when I was at that age, you know, couldn't figure it out. It's just doing whatever I was doing. So that's why I do it. And that's what I think, hopefully it does the, sends out the right message and we're reaching a couple of people and making some people's lives a little bit better.

And I connect with guys like you. And then you connect and you're on the show. And then, yeah, I'm just trying to move the needle a little bit. Well, you moved it. So I think you're doing a good job. So sweet. When did you start the podcast? How long ago?

February of 2019. 19. Okay. So six years next month. All right. Well, congrats. Yeah. All right. So, hey, this should hit the air here a few days, but as we're recording it,

we're what, three, four days away from the inauguration? What's new for entrepreneurs and business owners, do you think, in the next administration? Well, that's a good question, right? Because I'm not a huge Trump fan, but we know that he's very pro-business because, you know, rich people are pro-business generally. Right. So I would guess we're going to probably still see opportunities in real estate, like qualified opportunity zones, tax breaks for real estate, step up in basis, you know, 1035 exchanges. I don't think those are really going anywhere.

But I also anticipate there will probably do some other deductions and things for small business owners when they, to help them small business corporation. Remember those rules that they put in place originally? So we'll have to see unless he gets distracted with, I don't know, with playing with world leaders or something. I don't know. But, you know, there are other people luckily running the government. So, right, right. Get some other things up. But that's what I'm anticipating.

I don't think you're going to see a lot of social-based programs, which is more on the liberal side, right? I think you'll see more investment in the economy, business breaks. I wouldn't say trickle-down economics because that didn't really work. But, you know, those types of things. That's what I'll see. It should benefit your industry, that's for sure. Lord, I hope so, from your mouth to odds years.

I don't know much about tariffs. And I don't know if you do or not, but there seems to be a mixed bag on those are going to help the economy. They're going to erect the economy. Is that anywhere in your legal sphere of knowledge? Well, it's not really my legal sphere, but, you know, I mean, look, you could tax incoming goods from another country, but we live in a global world now. This is in 1945, well, that was coming out of the war, but you know what I mean?

In the 50s where America was top with a lot of things, and if you wanted to sell your goods here, you had to pay a fee. Well, now, if we're going to tax their goods, they're going to tax our goods. So I listen to a lot of economic podcast and business podcasts and shows. and read and stuff. And it's a mixed bag. That's a very tough tightrope to walk on. You know, because, I mean, like, he's big on China, right?

So if you put tariffs on all kinds of Chinese products, they control a lot of stuff that goes on. I mean, they're not stupid, but trying to corner the market on lithium, they're trying to do what, you know, become the place to go for lithium because that's the, we're in a different age now. I generally think those kind of regulation stuff is bad. You got to watch prices and price gouging and things like that. But I think, ultimately, I think we pay the price of tariffs.

And listen, if you even take American products, right, most American products, significant portion of our made other parts in other parts of the world. That includes automobiles. It includes computers. You know, it includes a lot of things. So if you're taxing, if you have a tariff on steel, for example, to help the steel industry here, what does that do for the products that are buying steel and metal products and things around the world? Does it triple the cost of our computers? Does it make cars expensive? You know, whatever.

So I think that, you know, got to be careful about it. It's not a me only, you know, we, we're Americans. This is way we do. We don't get that choice anymore. So we'll see how that plays out. Yeah, I'm interested in it because not so much of what we do, but there's a lot more we can do if the interest rates work on our favor, right? They come down.

So I'm thinking about that. And then they say tariffs are inflationary, so it would cause prices go up. They tend to be. Yeah, exactly. It's that caused prices to go up. That would kill the incentive to lower rates. Right. And I don't know about by you, but as long as the inventory, the real estate inventory around here doesn't improve.

Yeah. It keeps prices up. Well, that's another thing. If we have the materials to build houses where it's such a deficit already. Yeah. So now the prices are going to go up by two ways, right? The materials, it's more expensive to build. And people are paying, you know.

And the supply demand, right? Yeah. We'll be looking at interest rate. And, you know, 15%, 20%, I mean, it was like that. Before Radiant took office, I think. I remember my grandfather, he lived in Florida, and they put all their money in CDs, right? Fixed income. He would, like, he'd go an extra mile to another bank to give him a quarter of a point.

And he was getting like 18% on CDs. Now, inflation was 22%. But it was a crazy time. And I hope we don't say that again, you know, but who knows. I mean, I thought there's a lot of things we wouldn't see, like a pandemic that was like reserved for like 18, 1912 or something. Yeah. What the heck?

They said the swine flu that we had, well, it was like eight, nine years ago, whatever that was, that was just as big. The news decided not to cover it. Nobody talked about it. Exactly. Well, we didn't have lockdowns either, right? So it wasn't like big news. It'd have wipe your all your food down.

And yeah, maybe we should have wore a mask. Nobody was talking about it at a time. Exactly. Or maybe we should not have on this one. You go either way. I've noticed some trends with the law when it comes to real estate, particularly when it comes to, say, seller financing, properties. And I've also seen some trends now with wholesaling properties, assigning contracts.

Yeah. What kind of trends have you seen? There's a few states that have really pushed to make it illegal and they've written in their code, I guess their civil code, is that the criminal code, gotten really clear on it, but not actually saying wholesaling is illegal, but they've put these other things around it that makes wholesaling almost impossible. For example, like it's a real estate license, right, to do it almost. That, yep. So that's more of an Illinois put. right. South Carolina did something very interesting. I think it's south. It might be north. I think it's South. They said you can't enter the B to C contract until the A to B contract is closed. Then you can't wholesale. Exactly. So they didn't say wholesaling is illegal.

No, they just said you can't do it. Yeah, you can't do it, right? Right. So I just wondering, like, if you've seen anything as far as the law and trends being more restrictive on, you know, just people being able to buy and sell their own personal property. I mean, in New Jersey, we've always had pretty strict consumer fraud laws, right? So the Attorney General's office and the Division of Consumer Affairs is always going after these guys who are, you know, trading in small properties and they're going to people who are maybe distressed and they're buying their properties for a discount, basically title rating because they're buying it for a ridiculous discount. They're making a lot of money on the deal. You and I could argue that in a free economy, people put themselves in bed. positions and here's somebody who's willing to come and take a risk and buy you out, make money doing it. But if the attorney generals are, they're was looking for blood. So they always make an example of these guys. So it's become harder and harder for the small investor to kind of flip houses and do things like that because the homeowners then just complain to the attorney general.

Next thing, you know, it's on the news and they're dealing with consumer fraud. And the consumer fraud laws here are very, very, very stringent. I mean, these guys can get up with huge penalties, these five, $800, $800, a million in penalties, you know. Do you see that as a continuing trend? Do you think it's going to go that way? Yeah, it seems to be that it is going that way. The consumer side of it is trying to protect these homeowners that probably shouldn't be homeowners to begin with, you know, because they feel that there's people to end.

And unfortunately, the problem is that there's legitimate investors out there, right, that make a decent buck but still help people doing it, right? I think you can do both. but there's always people that spoil the party, right? There's always something that comes and it takes advantage. So New Jersey's always been that kind of place where, you know, we're very consumer focused and protective. And some of those laws just end up penalizing the wrong people.

Yeah. But, you know, it's becoming, New Jersey marketing in itself, is becoming more difficult because it's just hard to make money here. The prices are so high that it's hard to flip and make money unless it's really distressed and it's really distressed, then you got to put money into it. And you got all the other issues you mentioned, right? prices of goods are higher and supplies and things like that. So I know you, I mean, 30 some years in your profession, and I know you've seen a lot.

I'm going to ask across the board, like just for business owners, but if you could narrow it, the answer down to real estate investors, that would be fantastic. But if not, we're kind of one of the same in my opinion. Is there a common mistake that you just see like over and over and over again that real estate investors make legally? legally? I mean, one common mistake they make is they, everybody wants like to, especially if it's a small house, right, two family, three family, whatever. They want to get lower, especially with the pressure on interest rates.

They want to get lower interest rates. So they buy the home in their own name, which from a liability standpoint is a really bad thing to do. New Jersey, if you have a mortgage, it's impossible that nowadays to transfer to an LLC. You can do it if you don't have a mortgage and paid cash. But if you have a mortgage, you're going to pay tax. a transfer tax on the mortgage amount. So they try and have their cake and eat it too,

and it becomes difficult for you to structure a transaction like that. So I see a lot of that kind of stuff. And I also think sometimes people don't plan out things from financials, right? So they don't look at the cash flow of the business and say, well, what if this tenant doesn't pay for six months? Because in New Jersey, you know, it could take you three to six months. First of all, the tenant's going to play games for a while. And then you're going to file it.

It's going to take you two or three months to get to court, maybe longer, depending on the county. And then to get this person out is difficult. And then that just gives you possession of the property. You're still out of rent and legal fees and everything that you've got to sue separately for. We rely on the court systems to deal with tenants and things like that. So I find that a lot of real estate investors get involved with tendencies and it becomes difficult. They buy properties that has a tenant in it. They don't get the proper documentation for the tenant, then it doesn't have a lease.

It's a month to month. And now they get this guy who's paying rent. they can't raise the rent because we have very strict anti-eviction laws from the 70s that you can't. If somebody's in your property and they're paying your rent, sure, you can increase it 5% a year. You can change some of the rules. You can even offer them a lease and say, hey, here's the new lease. But if they sign the lease or they accept the increase, which has to be reasonable, you can't add 20% to the rent in any given year, then you can't throw them out. And we have some exceptions to that.

If you own a home or two, it's four families or less, if you own a home or two families or less, you are selling the property and the owner's going to move in to that unit, 60 days notice he can even with a written lease, you can break it in New Jersey. People, they don't do their research. They think, oh, real estate's a great investment. I'm going to buy a piece of property. And here's a good. And next thing you know, they own this thing and it's sucking money out of their pocket.

I'm on your side of the fence. I think real estate's a great investment. It's a great way to build wealth along with other things, right? Great way to build cash flows, all kinds of tax benefits. If you get good tenants and you manage your property's right, you have cash. cash flow, you have your mortgage balance going down and you have your equity increasing, right? All those things are good. But if you don't do your due diligence and you buy the wrong property, you're going to be the one guy that said, oh, yeah, well, we used to own a townhouse and it was terrible.

I'll never buy real estate. That's your sample, like one property. That's the accidental investor, right? Exactly. And people think it's easy and it's not. But you can go to guys like you and learn how to do it the right way. You know, there's all kinds of ways to do it. There's all kinds of ways to do it. There's all kinds of different investors. Same with business. Business is just people do not put things in writing. They do things on a handshake. Everybody's happy.

They just get going. And next thing you know, there's a problem. They got no way to prove anything. I don't have it with me, but I wrote a book called 10 ways to get sued by anyone and everyone. Yeah, a small business owner's guide to staying out of court.

And most of the theme of the book is, you got to write a business plan. You got to have an operating agreement with your partner. You got to have contracts with your vendors and with your customers. Got to make sure you have proper insurance in place and everything. You got to make sure you know the employment laws. I mean, all those types of things because you said as a business owner, you've got to do those things or else comes back to, you know, you get screwed. I've had clients fight over the biggest, you know, they're a bakery or they're a flower shop and they're fighting over like bowls and spoons and vases and.

Yeah. Come on. So then it comes out to who's got more money that they don't care about. So if the one person has money, you're screwed because they got the money to make your life difficult. Because you touched on something that I know is a concern, it comes up quite a bit. And I know New Jersey is one of those states and you just confirmed it. I think New York is certainly one. And then if you look at Washington, Oregon and California, also the same with regard to really strong tenant laws.

Yeah. So if someone is going to be a buy and hold investor and own income property there, what can we do before they actually own the property to, I guess, protect themselves legally from those types of laws. Is there anything they can be proactive about or they just kind of have to go with what the law says and take their chances?

First of all, there's certain things you want to get from your tenants, right? There's letters that the landlord should provide, the seller should provide to you. They're called letters of attornment and it basically says,

actually, no, there are estoppel letters. Atorment letters are notices from you to the new tenants. So a stop of letters that basically say, listen, this is what your rent is, this is what your security deposit is. Right.

This is what you owe, your current, you're not current, whatever. And you get those representations from the same. seller knowing that if they're wrong, you can go after him, right? Because very often what happens is tenant goes to leave. Now you bought the property six months from now.

They go to leave and they go, well, I want my $5,000 security back. They go, you're, what are you talking about? And you find out that either maybe they did pay security and the seller took it or there's no evidence that they paid a security. So I'll tell you something. The judges are going to sign with them probably. Right, right. So Estabble certificate, that could be signed.

that could be from the tenant also, right? It would be from the tenant. You'd make the landlord, get them from the tenant, and give to you, make sure you have all that proper paperwork in place. I find these, I'm brought into more tenancy situations where the documentation is so poor. If you're buying a property and you've got tenants and they don't have a current lease, you want to make sure you tell the seller, get them on a new lease, and these are the terms that I want.

And set rules, you know, certain, that are reasonable in the lease about keeping the place clean and maybe you got to pay $25 bucks towards any repairs, things like that, and get them to sign a new lease. And if they won't, then you can give them a notice to what's called a notice to quit. Or they sign a new lease. And if they want to stay, they're going to have to sign one. Got it. So, okay.

I like that. All right. So estoppel certificate and having a new lease in place, so you want your paperwork signed. Is there anything, and I don't know what the laws were, so you might have to help me with this. Is there anything that you could? put in to the lease or a separate agreement where, I guess, the tenant would waive some of its tenant rights.

That's a sticky, at least in New Jersey. That's a sticky slope in New York. Just a level of the playing field, nothing like. Yeah, but judges don't like that. They don't feel there is a level playing field. They feel the tenants don't, you know, the landlords have an upper hand over the tenants. And you come in with a lease that has things where the tenant waived their rights and they'd be like, well, they give me a choice.

I either had to sign it or I can't to leave. Right. Right. Judge will lead you alive. I mean, I've seen judges give six months, 12 months free rent for things that the tenant, the landlord did that's egregious. You know, I've seen tenants make representations to buyers. Let's say a guy's buying a property, a couple of families, and they do a walk through Mitchell, you come. So every once in a while I charge, but I'll come. So we go through there. Tendant says, oh, sure, I'll agree to a new lease and a new rent, whatever.

I'm peripherally involved. So then the guy closes. He finds that there's rent control in the town. They go to raise the rent because that was the only thing that worked the numbers. And the tenants and letters say, you can't raise the rent. It's rent control. And then you're screwed. You know, I see a lot of misrepresentations by tenants.

They're very accommodating until you become the landlord. And then they learn all these games that they can play. Now, New Jersey, you literally can sue them to leave. And if they pay the day of, you've got to keep them. Now, they can be habitual late payers. And you can try and get them out for being late payment. and that would be one of the rules you put in the lease, still hard. Judges are hard to, you know, they're reluctant to throw people in on the street.

They're like, you're getting paid. I mean, come on. So would your professional advice, Mitch? Don't ever go into real estate, no. Would it be to avoid being like a normal buy-and-hold landlord in those types of states? Oh, no, no, no. I just think you have to be careful about what you buy. I have certain clients that have 15, 20, 30 properties, and they have relatively small problems.

when we do, we have everything properly documented. We filing court right away. The tenant either comes up with money or they leave. I even had some situations where they've had to deal with towns, where the towns came in to do a CEO for the new tenant and said, oh, this isn't approved to be a two-family house. And this is a one-family zone. I said, yeah, but this is a 60-year-old house.

And the zoning requirements changed 20 years ago. It's grandfather. And then you've got to go to the zoning board. You got to deal with that kind of stuff. But even that, those guys who have properties make money, I just think it's very hard to do with like one or two. You got to be committed to building a smaller, a little bit bigger portfolio. And if you don't want to do that, you can invest in deals where you're a passive owner and get distributions and you get chair of the equity and so forth and not get involved with that kind of stuff as a direct owner.

Well, most of the people that come to me are that private investor and they got to start somewhere, right? Yeah. So they pick up their first property, their second property. I mean, that's the thing. It's like anything, right? You've got to kind of see it through it. You can't like dabble in it and try one or two and then say, I don't know, I'm not making any money. Well, that's because you only have two.

Something goes wrong. You lose half. It's like condos, right? I tell people, if you're going to buy a condo in an association, it's got to be at least, let's say, 20 units. If you're in a building, and they do this in Hoboken, near the city in Brooklyn, you're in a building that's been condo. It's got like five units. And two of those units go upside down because the economy changes. They lose their job, whatever.

They get pissed. You get in a fight. and two of them say, screw this, I'm not paying. Now the other three have to carry the whole building. And they got to take legal action. They got to pay a lawyer to, you know, make sure that condo fees are paid and the whole thing. There's no collective group because there's no group, just a bunch of people living in a building. So, you know, you always want to be careful about that kind of stuff.

And it's the same thing with buying real estate. Two properties are not enough. You know, if you're a franchise owner, two locations, probably not enough. Right. I agree. You need as many as you can possibly get. Unless you're going to work there. and it's a lifestyle choice,

you know, fine. I do all the work. Yeah. Super. So let's turn all the negative stuff into positive advice. Okay. So actionable stuff. So first is you need your paperwork.

You got to have everything in writing. Yeah, you make sure you form a company, corporation LLC. You have bylaws. You have operating agreements signed with your partners. You set up the rules from the beginning. This is what I do. This is what you can spend.

This is what I can spend. This is what we have to vote on. What we don't have to vote on. All that. stuff. And it also protects you. If there's a lawsuit, first thing in a lawyer is going to say is, well, let me see your operating agreement. And, you know, frankly, I don't, maybe there's an unscrupulous attorney is an oxymoron. But you'd have to get somebody to falsify records for you at that point. So you don't want to do that. Do it from the beginning. And then make it a habit to document things as you're going forward, right? Write a business plan. I don't care if you're real estate investor or you're starting another business. Write a business plan and use that as a working document, right? Change it. adjusted because the numbers are going to change and that your ideas will change and some things will work and some things won't work. Do that kind of stuff and make it a habit to do that. Somebody once said to me, I figured it was that we're talking about contracts. Like you deal with a customer and certain

businesses you can't do this and certain businesses require they use contracts like in real estate. So like I'm an attorney and ethically I have to give you a retainer letter, right? You sign the retainer and then pay me a fee or whatever. And I have all my stipulations in the retainer letter about what you can do, can't do what I can do, can't do. to when I can fire you, you could fire me, so forth. And this person, I forget it was that, oh, I can't, I'm not comfortable with, you know, just whip it out a contract and showing it to my customer. I think they were in, like, home and, like, home theater or something like that.

And I said, well, first of all, you definitely shouldn't look at it that way. Like, you're whipping something out like it's bad. But you have to make it part of your normal business procedures. Like, it should be normal that professionals put together a quote and then create a contract. If quote's not necessarily a contract, by the way, could be close to one if they, sign it, but I would still want more in there. Make it your practice, business practice to do business a certain way, a professional way that protects you because all this stuff and doing business the right way doesn't matter until things go bad. And then you can't call

up the client and say, oh, by the way, can you just sign that contract? Because before I sue you, I've got to make sure I have everything in writing. Right? And it's funny, but they won't do that. Yeah. Good luck. Yeah. All right. So I've got, you need your business entity. You need your operating agreement and you need your business plan. Right. You need to create contracts for the people you do business with vendors, customers, partners, right. Exactly. Very good. And one of the reasons, Matt, is that I did part of the chat, there's a section of one of the chapters about memory, right? We don't remember anything. Like, very few of us remember things accurately. I don't. So I make sure I write things down and make notes and tasks and so forth because, you know, you will be certain, right,

that you were there that day and you said, we were talking on the podcast on this date. I'm like, no, Matt, we were talking. I remember it was three days before the inauguration. They're like, no, no, it was. And it was in the spring. And, you know, and we're both confused. And that's why you have to, from a business standpoint, do things of writing. Now, I know in our personal lives, we don't always do that way and we can probably manage most of the time.

But business, right, you're doing it to make a profit and to stay in business and to pay your bills and take care of your family. Got to do it. Got to make it a habit to put things. writing a document, don't trust your memory. Right. Don't trust your memory because it won't, it will let you down. Our minds are big boxes with sticky notes for things that are stuck on all the wrong stuff. Then it's not like a file cabinet in your head where everything's like in a neat folder.

Maybe some people are like that, but very few of them. Yeah. All right. I think that's a good little kickstart plan. Okay. For 2025. Perfect. I like it.

What do you like best about what you do? I like helping people and figuring things out. You know, I like when I get a. into a situation where somebody just is frustrated, they can't get something done, and I figure it out. I had a woman who was a long, some of it I can't disclose, but basically she had trouble getting money that was hers. It was kind of locked in an account that wouldn't be released. And the company that was managing the account said, you got to talk to the people that manage their systems on the other side and the people of the assistance that you got to talk to.

So I went out and somehow I found the general counsel of the company and turned out they went to my university, and I didn't know them they were younger than me. And I literally sent him a letter and said, listen, it would be a real shame for me to sue you for my client's money. Like, that is absurd. And I had been sent this person by a financial advisor who had been already trying to help the person for like two years trying to get this money. I get a call about a week later from this woman who's very quietly, she's, Mr. Baimacker, this is such and such. I don't know. Chris, I'll make up his name. I don't know. Chris Johnson told me to call you. I have to. to resolve this today, he said. So they like overnighted or a check, close the account out,

chat. You got the money. It was resolved. Nice. Yeah. And, you know, I have a friend who's, I'm trying to close his company. The company hasn't been in business for at least 10 years, maybe more, but he's never gone around to just dissolving it. Well, I can't even tell you. They've been trying to dissolve this company for two years. They keep running into problems. This one department says, no, no, no, you got to talk to this department because there's something wrong with the paperwork over here. and then I've been bounced around to six, seven departments. Just today I spoke to, I think was the right person who told me exactly what the problem was and why we were not able to move the needle on this thing.

And he says, I'll send you a letter tomorrow. I'll tell you what needs to be done. We're going to figure it out. Nice. Problem solver. It's fun to do that. Yeah. It's fun when it works out.

It doesn't work out. I get frustrated. But I don't usually give up. You don't sound like it. Not at all. Yeah. Persistent. It's the word, right?

Very good. You licensed just in New Jersey? I'm admitted in New York also. I waived in about a year ago. All right. New Jersey. And I do some of the federal tax planning I do all do across the country as long as they have local council. All right.

Perfect. Yeah. Cool. So that leaves us, what are you most excited about for 2025? I'm excited about some of the business opportunities I have to build the practice. I've been adding some staff. I've been adding some new systems, which has been making it easier to do business. Well, we started a blog like about four months ago.

That's been getting really good feedback. I want to keep the marketing going and, you know, just enjoy what I'm doing. I like, look, I'm 58 years old, which I know is not old, but I go in when I want to go in. I work out on the days I want to work out. If I get to the office at 10 o'clock, that's fine. I can work late, work early, work from home like today, and have control on my schedule. I'm not at the point where I have to answer to anybody, which is part of being an entrepreneur, right? That's the benefits, the rewards of the hard work you put in when you're an entrepreneur.

Because, you know, working for somebody, you just don't get any benefits. And sometimes you work harder being an entrepreneur. Sometimes you don't. But the lifestyle that it gives you is I would never go to work for a firm. I get approached all the time because, you know, there's no attorneys that are very good at business development. So if they know you can bring a business, they want you to come in. But then when I say, okay, but this is what I need. This is what you're going to pay me percentage of this and the salary, whatever.

They're like, oh, we can't pay you that. Well, then that's less that I'm making now. Well, we have all these resources and I don't need resources. I have systems that I put in place and built that run my practice for me. I don't go to courts. I don't need a power legal and a person who manages my calendar at all. I don't need that stuff. Thank you.

Life's good. Well, Mitch, the intentional entrepreneur, buying a hacker, nice to move. And host of the podcast, the accidental entrepreneur. So check him out wherever you listen to podcasts. And if someone wanted to get in touch with you, is that the best place or is there somewhere else they should go? No, the law firm is bindhackerlaw. dot com.

I also have a Mitch Beinehacker.com website for the podcast and books. There's some e-books on there, and you can order the regular book I mentioned. Speaking, like when you release this video, I'll put a link to it on that site. I'm also on LinkedIn and Facebook, and I think my VA put stuff

on Instagram Reels, something like that. Awesome. I'm on most of the platforms. I'm hard to miss. You can find you. You said 58 years old? 58. 58?

Running business like a millennial. I love it. trying to. Yeah. Gary Vitton came out, said, if you're not on social media, you don't exist. Yeah, it's true.

And I think a lot of attorneys are like, oh, we have a website, but there's no business on web. Totally not true. Most of my leads come from clients, right, and networking. But probably 20% of them come from leads generated through marketing on the web.

And it doesn't come if you just like post every once in a while on LinkedIn. You've got to be consistent about that stuff. For sure. Super. Well, Mitch, let's stay in touch. to re-engage after we've got this slew of executive orders that are about to be signed and see what happened. Yeah. Awesome. Unbelievable. All right, buddy. Thanks, Matt. You bet. Bye.

And that wraps up the epic show. If you found this episode valuable, who else do you know that might too? There's a really good chance you know someone else who would. And when their name comes to mind, please share it with them and ask them to click the subscribe button when they get here and I'll take great care of them. God loves you and so do I. Health, peace, blessings and success to you. I'm Matt Terrio. Live in the dream. Yeah, yeah, we got the cash flow You didn't know home boy, we got the cash flow

Okay, only 10 more presents to wrap You're almost at the finish line But first, there, the last one Enjoy a Coca-Cola for a pause that refreshes This podcast is a part of the C-Suite Radio Network For more top business podcasts, visit c-sweetradio.com Thank you.