From Courtrooms to Closings: The Bold, Successful Journey of Real Estate Attorney Bishoy Habib

Transcript

[Mattias]
Welcome to the REI Agent, a holistic approach to life through real estate. I’m Mattias, an agent and investor.

[Erica]
And I’m Erica, a licensed therapist.

[Mattias]
Join us as we interview guests that also strive to live bold and fulfilled lives through business and real estate investing.

[Erica]
Tune in every week for interviews with real estate agents and investors.

[Mattias]
Ready to level up?

[Erica]
Let’s do it.

[Mattias]
Welcome back to the REI Agent. This is Mattias. Today we have the honor of interviewing Bishoy Habib.

Bishoy is an expert real estate attorney, specifically investor-friendly in Tampa Bay. And he is a co-owner in a brokerage as well, so has a lot of experience in real estate-related things. And we’ll get into some awesome tools to have in your tool belt, whether you’re an investor, whether you’re an agent that’s going to work with an investor, whether you’re an agent working with a difficult situation that needs some creative options.

There’s some really, really cool things that we talk about in this podcast. So definitely stay tuned. I am personally in a crazy state.

I’ve got hopping in and out of recording today while I’m trying to manage a few details on a closing. Always last minute fun. Moving is incredibly stressful.

I think it’s always wise for an agent to move every, I don’t know, five to 10 years just so they have some sort of frame of reference for what’s going on with their clients. It’s just a stressful time. So the other thing that’s happening is Erica actually had meniscus surgery on her knee.

The surgeon thinks she had a minor tear for a long time, and then finally it just kind of wore to a point, it got bigger and bigger to a point where it became quite painful. So she had an MRI on Thursday and then had surgery on Tuesday. I have seen her through a lot.

Childbirth, C-sections, and we’ve had epidectomy. And all those things I think kind of were not as painful for her as this one. It’s been pretty tough.

And the adjustment with the kids and everything has been rough. They’re not sure how to exactly handle this whole situation. We’re hoping that we can get Erica back on the podcast soon.

It might even be that she is going to be in a different, this is our basement, so stairs are not a great option for her right now. She’s kind of made a temporary office for her clients doing telehealth in our son’s bedroom. So we might be doing this whole thing from, she might be tuning in almost as if she was a guest as well when we co-host in the future.

So we’ll see what that all looks like. But really for the time being and in all these crazy moments, I mean, all you can do is the next best thing, I think it’s a Disney quote actually, all you could do is take another step, keep working at it, keep being diligent, do the best you can, and see if you can get some support to keep your mind right. Because I’m going to probably go to the gym after this recording to try to make sure that my head is on right.

So anyway, without further ado, we have a really great episode again, like I mentioned, Bishoy, enjoy. Welcome back to the REI Agent. I’m here with Bishoy Habib.

Bishoy, thank you so much for joining us today. Thanks for having me, Mattias. Bishoy, you are, it says there on your little name that you’re a real estate attorney, but you actually also own a brokerage, right?

[Bishoy]
Yeah, real estate attorney, real estate broker, and real estate investor. So I just didn’t want to put all that down there.

[Mattias]
That’s amazing and perfect for the show. So I’m really excited to talk to you today. What kind of got you started in, did you get your law degree first before you niched down into real estate investing specific?

How’d that all go?

[Bishoy]
Actually, the other way around. So you were going to ask what got me started in real estate, and it’s a journey I share a lot nowadays. My dad had been investing in real estate since before I was born.

So parents were the immigrant story moved here from Egypt with no knowledge of the culture, no, barely any English, no money, came over here and just did the damn thing. And so my mom was a dentist, but my dad was actually a pharmacist, realized that the way to create wealth and pharmacists were doing well back then. It wasn’t like today where they’re frowned upon, but they were making money back in those days.

And he said, looked around, saw the landscape, and saw that real estate was the real way to create a lifestyle that you want, which is the purpose of this podcast that you have. And I love it. And so he was doing that before I was born, buying foreclosed properties on the steps of the courthouse.

I grew up in that. I would go to his office. I love that he made his own schedule.

I love that he could drive around in the middle of the day and do what he wanted. He picked us up from school. He dropped us off.

He worked like a dog. He worked more than anyone I know. It wasn’t that he had it easy, but he could make his own schedule, which I always thought was neat.

I negotiated my first commercial lease at the age of 15. It was the state of Florida. It was my dad’s building.

And I don’t know how much I actually contributed, but in my mind, I contributed a lot. And so I think I was hooked at that point. I always knew I wanted to do real estate.

I always liked the idea of passive income, unlimited income, although the word passive income is kind of a misnomer, right? But at least unlimited income, it’s not dollars for hours. And so I always liked that concept.

I went to law school just to get the degree. I really didn’t plan to practice law. And then I got out during the great financial crisis of 2008.

I graduated law school in the middle of it. Well, let me go practice law. Went up to New York for a couple of years, practiced there, working with a large hotel developer on just $100 million deals that you could never imagine in central Florida at that time where I had grown up.

So I cut my teeth there for a couple of years, moved back down to Florida, and just kept going, kept going. And then I kind of was not sure how long I’d be doing. And then one day I looked up and I was like, damn, I’m getting pretty good at this.

I might as well stick with this. And so I did. Now here I am, I’m in year 13 now of being an attorney.

And I started my own law firm last year based here in Tampa, Florida, Levis Illegal. And because of my background, right, we focus on investor-friendly real estate attorneys. That’s how I pitch myself.

Because I understand more than the law, the business side of real estate, right? And the business side of business. And so we’re responsive, we’re investor-friendly, and we’re trustworthy attorneys.

And those are three things that are very hard to find in this day and age in an attorney. And I’m only telling you what all my clients tell me when they first sign up with me. So I think that background lends itself extremely well to the path that I’ve taken.

And it’s almost like a real estate investment first approach. And every situation is different. And it’s not, we’re not just attorneys who are going to mark up a document because we want to prove our worth.

It’s like, what are you trying to accomplish? How much leverage do you have? When do you need this done?

And we find a holistic approach, as you like to say, to real estate law, right? And working with investors. So that’s our bread and butter.

But I think my background has set me up tremendously well to interact. And that’s why our investors love working with us because we get it.

[Mattias]
Yeah, that is so invaluable. Like I recently kind of added an attorney to the tool belt. You know, had worked with others, but really just, you know, got my person.

Makes a big difference, right? A couple of years ago. And then, you know, everybody talks about it.

Like, you know, get your team together, right? Like in the investing space, like at your agents, if you’re investing in different areas, it does. It does make a huge difference.

And I think that their style is probably very similar to yours, where it’s maybe a little bit more collaborative than what you often hear or think of as attorneys are. Like you talking about, like, you know, just crossing out lines and arguing over punctuation because you got to feel worthwhile or whatever. But like finding, because investing in real estate and creative finance, all that kind of stuff is, like you said, so unique to each deal that like, you know, you kind of have to find, weave your way through and find that, how that puzzle piece all fits together.

And that doesn’t really happen over arguments. That usually happens over like trying to find win-wins for everybody.

[Bishoy]
Yeah, a hundred percent. A hundred percent. Yeah.

You got to be collaborative and, you know, my big, one of my biggest strengths is just the ability to negotiate. And you got to understand what’s going on. You got to have a sense of what’s going on.

You have to be willing to compromise, but also not budge on the things that are important to you if you have any leverage. But that’s the name of the game. And there’s too many attorneys out there who are just, they don’t understand the deal.

I always pick on family law attorneys and I don’t like have anything against them, but it’s just always the family law attorneys. It’s like someone that did your will five years ago or did your divorce five years ago. You’re like, hey, can you help me with this real estate deal?

And then these guys get in the mix, guys or gals, these attorneys, and they have no idea and they start… I can tell, I’ve seen it so many times now. When I get that document, I’m like, this is not a real estate attorney on the other side here.

Again, I don’t mean to pick on them because I could never do a divorce, but it’s just like you got to get someone in your corner who knows what it is, understands it and has seen it from every angle.

[Mattias]
No, it’s true. And then it sounds like maybe just being a little bit too, like maybe arguing more than is needed just to try to like preview doing something when you don’t really understand.

[Bishoy]
That’s it, that’s exactly it. That’s exactly right.

[Mattias]
I had a closing once. This wasn’t a creative investment or anything like that, but I had a closing once where we had a family member recommend their kid use the attorney for whatever reason they knew that attorney for. That’s how it goes.

For this deal, for a closing, and it was the longest, most inefficient closing I’ve ever seen. It was the most expensive closing that I’ve ever seen. And literally like in the middle of this really long arduous process, the attorney kind of gave up and just said like this, I don’t know exactly what this says, but if you want to buy this house, you have to sign it.

[Bishoy]
And I was like, if I could describe that in one word, it would be painful or inefficient or painfully inefficient. Two words. It’s amazing.

I just, again, I mean, it’s just, let’s even take it on a more macro level. If you want to do big things, you need to have the best in your corner. I mean, that’s just the way it is.

It’s the way I operate now. Everybody wants to cut expenses, but at the end of the day, you get what you pay for. And that’s probably not even a good example because it sounds like they paid a lot.

They paid more. But you need to have the best people in your corner because look, the whole thing about having a good attorney or a good CPA or whatever in your corner is that you can rely on those people and you don’t have to sit there and think about it. You know that you’re in good hands when you send them that contract or when you send them your tax documents or whatever.

And I think that’s even for me, like I’m hiring right now and my biggest criteria is I need attorneys and paralegals who I know, I don’t mind if I got to pay a premium, I get that. What I do mind is you need to get this stuff done when it needs to be done at a high level. And that’s that.

That’s the most important thing that I can rely on you because if I’m sitting here wondering, are you doing a good job? It’s taking me away from what I’m good at, my core business, right? And that’s the same for everybody else.

You may need to understand on a high level what’s going on on the documents, especially if it’s something basic. But if you’re getting into like $50 million real estate deals, the principle shouldn’t be that in the weeds on the documents. That’s not something that’s your best use of time if you’re a developer or if you’re an investor is sourcing the capital, is repurposing the property, re-entitling the property, is getting the permits, the higher level stuff.

It’s not sitting there and figuring out what are the covenants and representations and warranties that the seller’s making. That’s my job to do. So put your faith in the right people and your business will explode, honestly.

[Mattias]
Yeah, a hundred percent. And the one I was talking about was a very, very basic standard. Like we have title companies and we’re not an attorney state.

So like that, it would have been much more smooth and cheaper to do it that way. There’s definitely times where that’s not, like having an attorney to go through the details and everything is definitely needed. And that’s sounds like what, yeah, exactly what you’re doing.

So yeah, talk to me a little bit more about how that brokerage kind of came about and yeah, what that looks like for you all.

[Bishoy]
Yeah, Capstar Real Estate, based in Tampa Bay, started in 2023 now. So almost a year and a half old. So it’s me and two of my good friends in the real estate game.

I mean, personal friends, definitely, but also both in the real estate game. Top producing agent, Jake Schmidt, closed many deals with him as his attorney or as an attorney on the file. We’ve just, he’s just a great dude.

We’ve been friends for probably six, seven years. And then he’s approached me with this time and time again. And eventually it kind of stuck.

He’s like, hey, I think it’s time. It’s one of those things we would say, we were out having a drink. He’d be like, let’s do it, let’s do it.

And then we wouldn’t talk about it for six months. Anyways, we finally put pen to paper and we brought in our third partner, Gabe Kozel, who’s an absolute savage on the wholesale side. And he brought that whole off-market aspect to it.

And so we put together a team of really good agents about a year and a half ago here in Tampa Bay. Like I said, we’ve now kind of expanded into South Florida and we’re in different areas, but all here in Florida. And so we’ve just been, obviously last year was a slow year for everybody, but we have a good team.

We’re very excited about the future.

[Mattias]
Yeah. Is it focusing on investing or is it going to be just kind of in general? I mean, you’re bringing the wholesale side in.

So what’s that?

[Bishoy]
Yeah, it was probably intended to be more so of that. It’s turning out to be a little bit more retail, but we absolutely do creative deals all the time. I wouldn’t say the majority of the deals, but we definitely do creative deals.

[Mattias]
Yeah, no, that makes sense. And I mean, I think it’s, I’ve definitely toyed with how being a one-stop shop for real estate needs, how I could maximize that. I think there’s a bit of a balancing act with it all.

But when you get into actually buying a person’s house, how you do that, that makes sense for you to gain a profit if you’re going to flip it or whatever, right? But how it all just, it’s got to be open, win-win for everybody. And be honest, you might make more money if you’re on the open market.

So there needs to be probably some other sort of motivation to sell it without hitting the open market. But yeah, that’s awesome. Tell me a little bit more about some of the different creative investing strategies that you work with and maybe that can lead into how that could really benefit agents to having their tool belt, like if they’re interacting with people on a day-to-day basis.

[Bishoy]
The most popular creative financing deal structure that we’ve seen over the past few years is the subject to transactions. And so Pace Morby obviously made that pretty big. And the subject to transactions, the reason there’s been a rise in them is because when interest rates went up, people had properties at three or two and a half or 4%.

And now if they sold them, the new buyer would have to get a loan at seven or 8%. And they couldn’t make the numbers work, right? If you’re an investor.

Or even if you’re living in the property, but obviously I deal with more investors. So you’re paying double the interest for you’re not getting anything more. You’re not getting, it’s the same property, right?

You just cash, the cashflow is just being eaten up. And so this whole subject to idea is, let’s say Mattias, you have a property and you bought it for 300,000 at 3%. I want that property at 8%.

I can’t make the numbers work, but at 3% I can. So what happens is you deed the property to me or I take control of the property on title and how we do it. We do it through land trusts, right?

But I take control of that property. We don’t tell the current lender, but we keep paying them, right? Because if we tell them there’s something called the due on sale clause in which they could call the whole $300,000 due or whatever the loan balance is.

And then we’re kind of in the same spot, right? So we don’t tell the bank what’s going on. We just continue to pay them, right?

We don’t default on the loan. We continue to pay that loan. And then I’m in that property or I put tenants in that property and then we cashflow it.

So the name subject to, I’m buying the property subject to the mortgage, right? Subject to, so it’s still existing. It’s a lot of risk in those transactions.

I have to say, they can make sense and I’ve done plenty of them and they do make sense sometimes. Typically where it makes the most sense is like you bought a second property and you’re over leveraged on it and you just can’t make it make sense and you want out. You moved, you bought a property two, three years later, you wanted to move.

That’s what we see a lot of here in Tampa recently. But there’s risk involved to both parties, right? Because I always say like the parties are still married after the transaction.

It’s not a clean cut after the transaction because I as a buyer still can hurt your credit, right? And the lender, if I don’t pay is coming after you. You sign the note, not me.

So you have a ton of liability in theory and you can get, you know, screw me over if you tell the lender what’s going on because we get in an argument. You say, you know what? I don’t care.

I’m going to call it due. I’m going to tell them what’s going on. They’re going to call it due.

Well, if they call it due, I lose my equity. Assuming I put some money down, which typically you do in these transactions, whether it’s to reinstate the mortgage or to you as kind of to close the deal, like 10, 20K. And then maybe you put some money into the property.

So, you know, you got to play nice. And that’s why the documents on the subject to transactions, in my opinion, are so extremely important because the parties have to play nice with each other. And I’ve had situations where they didn’t after closing and it just, it gets ugly very quickly, you know?

And some of it, like one of them was on insurance. You know, they couldn’t agree on how much insurance needed to be placed on the property. And we’re here in Tampa Bay.

So you know how the insurance game is. Insurance has gone up three X over the last two, three years. Or five years.

And, you know, flood and wind and all of it. It’s just so expensive now. And there was a big dispute as to how much because the seller wanted it to be a much higher amount.

The buyer didn’t. It wasn’t clear. So, you know, those things matter.

Those things matter. So that’s subject to transactions. Ton of those recently.

Seller financing. Go ahead.

[Mattias]
Well, I was going to follow up a couple of things that have come up in the podcast in the past. So it sounds like the, you said land trust. So that’s both parties getting into a trust.

And then the trust basically outlining that who’s responsible, I guess, for paying. Or like, so like technically the trust would be both parties in it. And the trust would be owning the, or I don’t know.

Explain that a little bit more if you don’t mind.

[Bishoy]
So I always want to preface when I talk about land trust and say that, you know, Florida has the best land trust law in the whole country. And not every state has land trust laws. We’re, I think, one of six that technically it’s part of the statutes here.

But we have it the best. And the reason we have it the best here, and this is not really relevant to your question, but just to explain because I love land trust so much. It’s the optimal way to hold real estate in Florida.

So if you’re a Florida investor and you’re not using land trust, you need to give me a call. I will set you up. It will keep you anonymous.

So it keeps creditors away. If you get in a car accident, nobody knows what you own, which is the first thing they do when you get in a car accident. Those billboard attorneys, they’re going to search you, see what you’re worth and figure out how much to take you for.

Number two, and this is the big advantage in Florida, unlike any other state, limited liability protection, limited liability. So if someone slips and falls in the property, they cannot sue you personally. If you’re holding the property in a revocable living trust, that’s a cousin of a land trust, but it’s not a land trust.

You do have personal liability as the beneficiary. Very big difference. Land trust is different.

Only state in the whole country where land trust offer liability protection. It’d be like holding it in an LLC, except it’s anonymous because Florida LLCs are not anonymous. And the third advantage is estate planning.

So you can dictate, hey, when I die, the asset should go to this person or these people. And it does automatically. There’s no probate, there’s no court, there’s no attorneys, there’s no fees instantly with a death certificate.

That’s why a land trust is cool in general. When we talk about these subject to transactions, the land trust is a really good vehicle because number one, it’s anonymous. Like I just said, nobody knows who owns the actual property if it’s set up properly.

And sometimes people don’t set it up properly and they give their identity away right off the rip. And then it’s like, well, what was the point of all that? So you need to have a professional set it up so they know what they’re doing.

I set them up all day. So there’s a couple purposes for the subject to transactions. Number one, as I mentioned a minute ago, there’s a due on sale clause in every mortgage.

And what that means is if you transfer the property in any way, the loan could be called due immediately. And guess what? If you have an interest rate at 3% and the current rates are at seven and the bank can recapture that money and lend it at a double the interest rate, what do you think they’re going to do?

They have a very strong incentive to call your loan due. And I’ve seen them do it for way less than transferring the property. I’ve seen them do it because a guarantor dies.

I’ve seen them try to do it on a church with tens of millions of dollars in the bank because one of their guarantors died because they wanted to recapture the loan for $2 million and relend. And when the banks were slow, and I’m giving you insights right now, this is a fact told to me by a banker or several bankers. When the banks were slow in 23, when rates went up and no one was pulling money, they were looking through loan documents to try to put people on default on the covenants, on technicalities, man, on technicalities.

You didn’t give us a notice of the insurance. You didn’t meet these debt covenants. You didn’t provide us your financials within 120 days.

You’re in default 30 days to get… We’re increasing your interest rate because you’re… It’s insane.

So you don’t want the loan called due. And if I transferred it from Mattias to Bishoy individually, it’s very clear on the deed. It takes five seconds to know, okay, this was transferred.

If you move it into a land trust, it’s not that easy to determine. It’s a little bit more difficult to know. And if it’s set up right, it’s a lot more difficult to know.

And so that’s the first aspect of it. The second aspect of it is, even if they do see there’s something called the Garn-St. Germain Act of 1980. And I think it was Reagan that implemented it.

And the whole idea was we want to incentivize U.S. citizens to estate plan, right? To plan for the future. And so one of the things and the most important thing as far as I’m concerned in the Garn-St. Germain Act is a little rule that says, if you’re transferring it into a trust for a revocable trust, for estate planning purposes, they can’t call the loan due. So technically that’s really only for your primary residence. But they don’t know that. And the first borrower probably does have it for their primary.

And so it’s an argument we make. And we went on that argument quite a bit. So those are two of the big reasons we use the land trust.

Inside the land trust though, there’s more reasons, right? I’m giving you a lot of information right now. But inside the land trust, it’s a lot easier to recapture if the buyer defaults.

It’s a lot easier for the seller to recapture that personal property, the beneficial interest within the land trust than it is to foreclose. The foreclosure process here in Florida could take 18 months, could take 12 months, could take two years. If they have money and they have an attorney, it’s going to take several years.

There’s still foreclosures on the docket from 2010 in Florida. So you don’t want to go through foreclosure if you don’t have to. But if you can take back that beneficial interest in the land trust, then nobody knows.

It’s all internal. You don’t have to file with the court. It’s just a streamlined process.

And so it keeps buyers honest. It protects sellers. It protects both parties in terms of the due on sale clause.

And it’s just a great way to hold real estate.

[Mattias]
So that’s, in other words, one of my other follow-up questions is going to be like a wraparound mortgage. That kind of uses that land trust kind of serves in that regard as well with as far as recapturing if somebody defaults like that.

[Bishoy]
Yeah, exactly.

[Mattias]
Exactly. Okay, cool. So that makes sense.

Like you’re looking for basically somebody who can’t, likely can’t afford to sell their house quite. Maybe they bought it too recently or it’s underwater of some sort or there’s some sort of reason they can’t really afford to sell. And the only way it really makes sense is for somebody to assume or to get that interest rate that they currently have, which is way better than it is now.

And that’s where the win is. That’s where the win-win is. The person can get out of the debt that they otherwise couldn’t probably.

And the purchaser is able to get a new property that probably for not a ton down, not certainly not usually 20%. And then it actually works with the numbers because of a lower interest rate. Yep, that’s exactly right.

Okay, cool. So yeah, let’s move on. That was, I know some people that might’ve been a little bit too in the weeds, but I love hearing all that stuff because I’ve heard, land trust, I think specifically was new to me, but that sounds like it’s a Florida thing.

I guess one other follow-up question would be, can I set up a land trust in Florida that would hold property in an LLC? And that’s a Virginia LLC in Virginia.

[Bishoy]
I don’t advise people to use out-of-state LLCs. And I don’t advise on LLCs within other states only because every state is different, right? So the rules here in Florida, and I’m not saying don’t, I’m saying I don’t talk.

I don’t tell people because I can tell you with certainty what’s going to happen in the state of Florida. It’s tried and true. It’s the law and courts have over and over agreed with that.

You take a land trust in Virginia. I don’t know what the state law there is. I don’t know.

There are a couple of states, Illinois, where they started, Hawaii, there’s a couple other states that are in favor of them. But for the most part, you can have them. I just can’t guarantee what would happen in the event of an issue.

[Mattias]
It’s not like getting a holding company like a Delaware LLC or a Wyoming LLC and then having a Virginia LLC that owns the property, but that Wyoming LLC owns the Virginia LLC. It’s not like that, it’s different.

[Bishoy]
It’s not. No, it’s not. A Wyoming hold code, that LLC is governed by Wyoming.

The Florida Land Trust, wherever the property is owned, that’s who governs that, whoever is the governing body there. It doesn’t work like that. I know what you’re asking.

It’s a very good question, but that’s not how it works.

[Mattias]
Okay, cool. Yeah, let’s get out of the weeds. What’s the next?

You said seller financing was another.

[Bishoy]
Seller financing. Yeah, let’s go a little bit more high level here. Seller financing is super simple.

Most people understand how this works. Mattias wants to sell me that same property. It’s $300,000.

I either can’t find a loan or would rather just go through him. It’s going to save me 2% or 3% on the loan fees and maybe I don’t qualify otherwise. We come to an agreement and he’s the bank.

What does that mean? That means he sells me the property. He doesn’t collect all the money up front, but rather I agree to pay him 10% down, 30,000 in this case, and then I’m going to pay him $270,000 over five years.

It doesn’t matter. Two years, 10 years, whatever we agree on at 5% interest, 6% interest, 4% interest, and then I’d pay it. Could it be interest only?

Yes. Could it be amortized? Yes.

Could it be a balloon? Yes. Could it be a 30-year note?

Yes, it could. It’s all what we want. Yeah, everything’s on the table.

The key with the seller financing stuff is you want to make sure you have it all documented properly. You want to make sure as a seller you’re in first position, meaning that you have the first lien and the first rights to foreclose on the property. I will tell you, Mattias, I do a lot of work with private lenders, with all kinds of lenders actually, but private lenders I get a lot of because I speak at these events and end up getting connected with them.

So they are seeing the most amount of defaults that they’ve seen pretty much in my legal career. I would say that the theme in 2025 for me so far has been definitely a rise in disputes, but we saw that last year because the market kind of turned. When people aren’t making money, they’re suing each other.

That’s how it goes. When the market’s good, you don’t see as many lawsuits because everyone’s making money. When things turn, that’s when it’s good.

It’s good to have a litigation department at my law firm, right? That’s kind of a hedge. But the loan defaults, that’s something new.

That’s something I haven’t experienced before because if you think about it, I started being an attorney in 2013. What has happened since 2013, at least in Florida, in real estate and really all over, I mean, it’s just been like this, right? It hasn’t slowed down one bit other than a couple months during COVID and then obviously bounced back like crazy.

So we don’t even count that here. This is the first time in 15 years, the bull run has kind of come to a stop. This is a correction.

This is necessary. But what’s happening is all these people who bought in 21 and 22 are now underwater, right? The property’s worth less than they paid for it and they aren’t going to come out of pocket.

Some of them are kind of scammers and I’m starting to realize that a lot of these borrowers, I mean, believe it or not, I have lenders. I’ve had lenders who came to me, separate lenders, never talked to each other, never knew each other. And I find out that they have the same borrowers on their loans and the borrowers run in the same scheme.

And I don’t want to say scheme like it was a maliciously fraud, but it’s the same scheme where they barely put any money in and now they owe more than the property’s worth. And my clients who I just knew clients are like, what are we doing? I’m like, you’re kind of screwed here.

You’re kind of screwed. You’re not going to recover all your money. I mean, you could try.

So you always want to get a personal guarantee. That’s kind of the biggest thing if you’re selling a property and taking financing. And so that’s if you’re a private lender, but also if you’re a seller financing, you always want a personal guarantee because that’s the only way sometimes to get someone’s attention, right?

Make sure you’re first position mortgage. I had a client that I’m dealing with who thought she had a mortgage on the property. She doesn’t even have a mortgage on the property.

All she has is the loan, the promissory note. So I don’t know how we’re going to get her money because there’s two liens on the property. There’s two mortgages ahead of her.

So I mean, you got to get your documents tight because that’s your requirement money in a lot of cases. That’s the money that you’re going to live off in a lot of cases. And so if someone doesn’t pay you, you need to be ready to take back the asset or sue them or whatever.

But that’s seller financing in a nutshell. And I’m not trying to scare everybody. I’m just saying you need to be cautious.

[Mattias]
What’s the personal guarantee? What’s that usually look like? The house itself or more than that?

[Bishoy]
No, no. So a lot of times these are investors that are buying these properties, right? Because this isn’t like a homestead typically.

It’s easier in Florida. If it’s a homestead, it’s a lot harder to foreclose. So that’s another tip.

If you’re going to do a seller financing, if it’s a homestead in Florida, be careful. I’m not saying don’t ever do it. I’m just saying budget that maybe take a little bit more money down, maybe take at least 20% to 30% down versus 10% or 15% because it’s going to take a lot longer to foreclose on someone that lives in a property versus an investment property, right?

That’s how the laws are here. We always want to give people who live in the property more of a chance to recover. That’s how the courts look at it.

So that’s one. And then the personal guarantee. So most people are buying these as investment properties.

They’re buying them in an LLC. So what happens is the LLC is the borrower on the note. And so you can only sue the LLC unless you have a personal guarantee.

Well, what’s the LLC worth? A lot of times, nothing. A lot of times it’s a single purpose entity, an SPE.

It owns one asset, which is that real estate. If they’re smart and they set it up the way that I advise them to, that’s how they set it up, right? So it’s not 10 properties in one LLC.

So once that property is worth less than the loan, that LLC technically is a liability. It doesn’t have any assets, right? So what are you going to do?

So now you have the personal guarantee. And what the personal guarantee says is you guarantee 100% the full faith and credit of this borrower. So any payments they don’t make, you automatically have to make, including principal, interest, late fees, legal fees, foreclosure costs, all of it.

[Mattias]
Okay. Yeah, that makes sense. That makes sense.

And then so back to the high level stuff. So in this kind of circumstance, the win-win is typically the seller doesn’t want to realize the whole $300,000 windfall in one year. They’re trying to break up the capital gains over a series of however long that note is.

That’s usually the win for the seller. Is that accurate?

[Bishoy]
That’s definitely a big one we see is people don’t want to get that capital gains hit. The other one we see is that somebody who does seller financing typically will get higher offers on their property because the buyer doesn’t have to qualify. They don’t have to pay loan fees and it’s just a simpler, smoother transaction.

So a lot of times it’s a give and take of, look, if I didn’t do seller financing, I might get 280 for this property or the buyer might pay 280. But if I do seller financing, I get a little bit more. I just have to take, it takes longer to get that money.

And then you just have to make sure it makes sense for you.

[Mattias]
And then you’re also getting interest. So you’re going to be getting more money altogether. That’s right.

Yeah. For the purchasers you mentioned, having the closing costs typically is definitely lower in that regard. And then it’s just also terms.

So I think that’s the beauty of seller financing is you don’t have, like a bank is dictating their kind of standards. Your traditional conventional mortgages are like 30 year fixed, 15 or 20 year. That’s like variance, right?

With a little bit less interest and there’s some difference in down payments, et cetera. And there is some nuance to it. But when you get into the seller financing world, it’s like the whole world’s your oyster.

You can figure out whatever you wanted to. I think I heard Pace actually talk about an owner financing deal he did on a multifamily where it was on a 50 year amortization schedule with 0%. And I mean, I don’t know if that’s, that seems too good to be true, to be honest.

But you can- So just a 50 year interest free loan? Yeah. That’s what I remember it being claimed to be.

But I mean, I guess the way you could make that actually work in theory would be to way overpay for the property, right? So you’re paying millions more than it’s worth. Right.

And then you’re kind of just loading the interest in that way. But yeah. So anyway, that’s just an example.

The reason I say that is just so that you can think that everything’s on the table. You can really make it a win-win for everybody. As a seller most interested in the purchase price, you can make that higher if the interest rate’s lower.

It just has to make sense for everybody.

[Bishoy]
Yeah. You’re absolutely right. That’s exactly the point.

Everything’s a negotiation.

[Mattias]
And it’s fun. I’ve done one and it was a lot of fun to think through all the nuances because there was three parties involved. So it was a little bit more complex.

One person was bringing more money. And yeah. So it was just a fun thing to think through.

Yeah.

[Bishoy]
Any other creative solutions here that you can- I mean, we do the wholesales and the novations. Everyone knows what the wholesale is. I find a property.

I lock it up at $280,000 and I sell it to you for $300,000. And I make that difference of $20,000. So I’m not the end buyer, but I’m middlemanning it, if you will.

That’s a wholesale. A novation operates. Most people are not familiar with a novation.

But a novation operates in a similar fashion. It’s just legally speaking, it’s a little bit different. Ends up being the same result.

But the way it works is same property for $280,000. Instead of assigning the contract, it’s a novation. So it’s a brand new contract.

So we basically tear up the A to B contract with me and the seller. Tear it up and replace it with an A to C. And in that A to C, it just has a fee to me.

And so instead of having to double close, just my fees on there, I don’t have to eat the cost of two closings, which usually wholesalers pass along anyways, if they can. But it just streamlines the process. You do have to be transparent with sellers about it because they’re going to end up knowing.

The other advantage to the novations, the way we structure them is we have a limited power of attorney that we have the seller sign. And it says, we can sign a contract on your behalf. So you’re going to get your number.

You’re going to get your $270,000. Don’t worry your $280,000. And we’re authorized to sign a second contract for $300,000 or whatever amount we find.

But they still have to sign the closing documents and everything like that. We can’t deed the property for them. That’s not allowed.

But yeah, that’s what a novation is. So a lot of people don’t understand the nuances. And I would say for the most part, you don’t need to unless you need to.

That’s why they hire you. That’s why they hire me. Yeah, that’s right.

[Mattias]
I was going to say with that, though, if you’re an agent marketing out there as a just the standard resale kind of market, I’d be a little bit careful with structuring those deals yourself, like talking to sellers directly. Unless what your actual fee you’re getting is within a normal kind of range. If you’re getting way more than you typically would because it’s a wholesale structure as opposed to a commission, I personally think that even if you’re not necessarily representing this person and you don’t necessarily have a fiduciary duty with them, I think there’s probably something to be said for reputation and just also how…

I think it’s a little murky. I think it’s a little murky if you’re trying to do both worlds. Yeah.

[Bishoy]
I mean, licensees are held to a higher standard, obviously. And so you have a duty to deal fairly with everyone. And you have to disclose that you’re a realtor to everyone.

And I mean, the name of the game is disclosure. And I think that’s the safest way to start the conversation about this is you can do a lot of things if you disclose it, right? You can’t screw people over.

But I’m saying if everybody’s a willing participant and you go to that person and you say, look, I’m an agent. I’m not going to do this on a commission. I could find you a buyer for an extra…

I’ll lock this up at 280 and I’ll find someone for 300 if you’re good with that. Okay. Yeah.

As long as I got my 280. Okay. No agent relationship disclosure, right?

You don’t want to make that clear. And then same thing on the back end of it. I don’t represent either of you.

I’m acting solely as an investor. There’s nothing wrong with being an investor agent. I mean, that’s what the whole point of this conversation is, right?

How do we get into investing? So the one thing you cannot do though, is if you are representing a client, you can’t take their deal and push it to someone for your benefit, right? So you can’t wholesale like a deal that you’re an agent on.

Right. You know what I mean? You got to be very careful with the people you’re actually involved in.

But if you find a deal on your own, yeah, you can do whatever you want as long as you’re being transparent, you’re not double crossing, you’re not breaking any of the rules. But to your point, you got to be careful. I’m not saying be reckless out there.

I’m just saying as long as it’s clear what’s going on and you’re not doing anything detrimental to your clients, you probably can be fine as long as you disclose.

[Mattias]
Yeah, you’re absolutely right. I think that this is the waters where I think often agents who don’t fully understand this world will start thinking negatively about investors. And I’ll just say that I think often investors can have negative opinions of agents.

And I think in both worlds, there are people that are awesome and operate really a smooth ship. And then in both worlds, there’s people that are probably not the best that are maybe shysters. So there are ways and I think agents often don’t know what to do with the properties that are needing a fast close that are really just like desperate and need to get done and need to move yesterday.

And this is typically the world of the wholesale kind of space. So it’s understanding both.

[Bishoy]
Wholesaling works better for properties that are not in good condition, by the way. You’re not going to wholesale a retail property that’s in good shape because why would you, right? Typically, somebody can wait an extra five or 10 days or 15 days to get an extra 20 or 30%.

It’s typically the properties that need a rehab, that are in bad shape, something happened at the property, and those are the ones you’re going to wholesale. So yeah, that’s something to keep in mind as well. But yeah, wholesale deals, they happen fast.

You typically have buyers that you trust that you could just pitch this to and you might have a list of five. I mean, once you get good, you have a few buyers and you start who likes what and they’ll close and, hey, do you want this? Yes, no.

They’ll tell you their numbers in five minutes and get out to the property and then it moves quick. You can close deals in a week.

[Mattias]
And that’s it. I mean, it’s the speed. It’s that trust.

You’re not having to worry about home inspections and people getting cold feet, financing falling through. Usually this is cash.

[Bishoy]
That’s the advantage. Yeah, that’s the advantage.

[Mattias]
Yeah, yeah. But yeah, I think that’s definitely something to consider, that if you are doing both worlds, just kind of how to structure that. And I think exactly to your point, being completely honest and transparent about it is going to be serving you the best.

And probably, if you want to be extra protective of yourself, is to back up everything you say in an email so it’s on record.

[Bishoy]
For sure.

[Mattias]
For sure.

[Bishoy]
Oh yeah, everything needs to be in writing or it didn’t happen, as far as I’m concerned. And then another thing, we don’t need to dive too deep into it, but just the JV deals. I’ve been seeing a lot of the JV deals.

I’ve always seen a lot of JV deals. I love JV deals. They’re fun because it gives me an ability to do something outside the box.

A lot of times it’s as simple as, I bird dogged the property. I found the property and someone else is bringing the capital. We’re going to rehab it and sell it.

That’s cool. That’s simple. It may be more complicated than that.

It may be one property owner is giving up their property to a builder in exchange for X percent of the commission, not commissions, but X percent of the profits after they’ve already been paid and we establish a baseline for the cost, the value of the property. Those are the fun ones where I got to get creative and make rules and things like that. If you’re going to do a JV deal, you don’t need money to do JV.

That’s why people like them because one person can have the money or the experience or both or neither. One person could just find the opportunity. It could be very flexible.

They’re fun. They’re exciting. Just make sure you’re papering it up super, super tight.

Those are very important to paper up because no two are the same. Some of them could be similar, but they’re not the same. Every party is different.

What I’ve learned is you got to make them as detailed as possible because what ends up happening with the JVs is you don’t lay out the responsibilities well enough. First of all, if you don’t have an agreement, then you’re dead in the water. But if you do have an agreement, it’s usually like some standard.

If you haven’t used an attorney, it’s usually some standard BS document that they found online and none of what’s happening now is contemplated in this agreement. Make sure it’s very detailed. Party A is responsible for this, this, this, this, and this.

Party B, same thing. Party C, if there is, same thing. Party A will have this all done.

These are the deadlines. These are the dates. If Party A doesn’t perform these responsibilities by these dates, Party B can step in, take over the management of the LLC and do da, da, da, da, da, da.

And if Party B has to step in and take over, Party B shall be compensated in such and such a way and that compensation will come from the top line before the profits. Therefore, it’s adjusted accordingly. It’s not coming out of their profits.

We could go deeper and deeper, but the point is, the JVs can be very lucrative. I’m closing one this week that I did for one of my builders and they’re making $3 million. Them and the person that put up the money, okay, it’s not bad for an 18-month return on like $2 million.

They can be very lucrative, but that one was negotiated very heavily on the front end. They had an attorney. I was the attorney on the other side.

We negotiated for two months and we finally got it done. Now everyone’s happy, but it could have been very ugly if it wasn’t negotiated properly because everyone stayed in line and everyone did the right thing. And I’ve seen deals go bad all the time because there’s nothing in writing or there’s a very crappy document that they’re going by that just…

A crappy document is almost as good as no document because it could actually be worse because it’s confusing.

[Mattias]
That totally makes sense. And one of the things I want to pull out of what you just said is I think one of the things a lot of people will do if they want to get into investing is be like, I can’t invest yet because I don’t have money. And one of the key things you said at the beginning was there can be a situation where somebody finds a deal.

And if you find a deal, you can find money often. It’s not that it’s just like easy overnight, but people that are willing to invest in these things are looking for a good deal. And if you have that, that is better than having the money or it’s…

I don’t know.

[Bishoy]
Both are great. But there’s more money around out there than there is good deals. That’s probably the way to put it.

So if you find a good deal, there will be money. But if you can’t get money for your deal, it means you have a shitty deal. That’s just what that means.

Or the lenders don’t trust you. So you need to pair up with somebody that does have the experience, especially if you’re doing a project and you’ve never done a project. Even if it’s a good project, no one’s going to lend you money if you have no track record, right?

Maybe your mom or dad.

[Mattias]
Yeah, that totally makes sense. But that’s just encouragement to people that may be feeling like they’re years away from being able to invest that you can fast track this whole thing by finding good opportunities. And that just takes hard work.

100%.

[Bishoy]
Bird dogging. That’s how it all starts. Bird dogging is when you just find deals for other people and they pay you a small fee or a small percentage of the profit or whatever.

You get your feet wet, you get some experience, and you make some money in the process. And you add value to savvy investors so they’re willing to help you out and show you gain.

[Mattias]
Yeah. Yeah, love it. Do you have any other golden nuggets you’d want to share to the listeners here?

Either real estate business, real estate investing, legal general advice?

[Bishoy]
I would say find ways to add value to people. Just continuing on the conversation about bird dogging, I would say find ways to add value to people that are doing cool things, doing big things, right? So if you just reach out to someone and you have no experience, and I get this all the time where people are, it’s like law students a lot of times, they’re like, hey, can you help me with this?

Can I shadow you to do this? Can I do that? And it’s like, well, I don’t have time for that.

I just don’t. And it’s not personal. I’d like to help everyone, but I don’t have enough hours in the day.

And so what I did, the one intern that I did take on is he offered to do X, Y, and Z for me. And I’m like, okay, I could kind of get with this. And now we’re kind of, I actually have a call with him this afternoon to see if he could help me do some cool things.

So add value to those people because, I mean, you could call them and just say, hey, can you teach me? No one’s going to teach you for no reason. I mean, it’s not the way the world works, but if you go say, listen, I will work for free.

Show me what I need to do. I will find deals for you as long as you give me 500 on the first deal and 2000 on the second deal. And the third deal we share in profit or whatever the agreement is.

However, your situation could be different, but you need to get a foot in the door with the right person. That’s a very, surround yourself with the right people is the best thing. Another tip that I see is going into bad partnerships or another tip that I want to give you is be careful not to go into bad partnerships.

And this is something I’ve fallen into myself as a personal investor is kind of trusting people maybe a little bit too quickly. And as an attorney, I see it every day. And so you just have to vet that person before you just get into bed with them.

Ask around, make sure you get referrals, right? Make sure you talk to other people, especially if you’re in a smaller community. So I’m in Tampa.

It’s not tiny, but people know people in Tampa. If you’ve been here for a few years, someone’s dealt with you. So ask around, make sure they’ve done good deals with good people.

I was talking to a buddy of mine yesterday and very successful real estate guy my age here in Tampa. And he goes, you know what my criteria is for partners now? Somebody that I could trust.

Their track record means less to me than the fact that I can rely on their handshake. He’s like, I’m done being burned. And I said, yeah, I get that.

You know, so that’s something I would absolutely encourage people to be careful when they get into business with someone and make sure you paper everything up. It sounds simple. Even I have fallen into the mistake in the past of just no, I trust this guy and things didn’t work out.

And I’m like, well, I should have known better, right? So I don’t need sympathy because I can handle myself is what I do. But for you guys, it’s a lot tougher if you’re not an attorney to handle those situations.

So make sure it’s all in paper and make sure that you’re not giving your money to anybody that you don’t know exactly what’s going on. Read the fine print, ask about fees, ask about how people are making money if you’re getting involved in the deals. And I just had this happen to me last week.

If you’re thinking of investing money with someone and you’re asking questions and they’re getting annoyed that you’re asking questions, that’s a red flag. I had that happen last week. And the second he got annoyed, we’re going to raise millions for this guy.

And the second he started getting annoyed on the phone, me and my partner texted each other on the side and said, yeah, we’re not investing with this guy because we don’t trust him. Why is he getting mad? Right.

He got short and hung up the call with us practically. So never going to invest with that guy. And those are the kind of red flags you want to look for.

And I’m going to plug myself a little bit. But if you hire an attorney on the front end, it’s going to save you a ton of money and effort and headache on the back. And because we know how to vet these things, we know how to protect you, whether it’s me or someone else.

I mean, if you’re in Florida, I can help you. If you’re out of Florida, maybe I can, maybe I can’t, depending on what you need. But a good real estate attorney really can make a big difference for you, save you a lot of money.

[Mattias]
Yeah, completely agree. That makes a ton of sense. Um, what about, uh, do you have any kind of books that you think are fundamental, um, that you are favorite books of yours or just one that you’re currently really enjoying?

[Bishoy]
Um, yeah, I do like to read, I don’t read real estate books so much. I’m actually reading the art of the deal right now by Trump. Um, I’m, I’m just curious.

It comes up a lot and I was just trying to see what it is. It’s kind of funny so far. Um, it’s not what I expected.

It’s just, he’s just talking about his day to day as a deal maker in New York in like the eighties. So, um, that one’s okay. I love negotiating.

That’s why I wanted to read that book. Um, I think, uh, I think my favorite, one of my favorite books I’ve ever read is grit by Angela Duckworth. Um, that book kind of just, I don’t know, it just makes you want to like go get it, you know?

And I’m, I’m a very motivational person. I love, you know, Tony Robbins and David Goggins and all those guys. And so all that stuff fires me up.

Um, so that was a good book.

[Mattias]
Um, I put that one on the list. I, I did a, um, I did a miracle morning for a little bit. And, um, I think I was listening to David Goggins on audio book while I was running to like kill two birds with one stone, you know, get the exercise, the book reading.

And that was like the most motivated I’ve ever been in my life.

[Bishoy]
I feel like, Oh yeah. Your, your adrenaline’s through the roof, right? That’s so funny.

Yeah. Um, he’s, he’s great. Um, so, so that’s a good book.

I recommend everybody. Um, yeah, the, the, the great by Angela Duckworth, probably my favorite book.

[Mattias]
Okay, cool. Awesome. And if people are interested in, uh, following more of your stuff or, uh, you know, if they are, is it, do they need to be in Florida to, to work with you pretty much?

[Bishoy]
I have clients all over the country and actually I have international clients as well. So reach out to me. I’ll let you know if I can help you or not.

Definitely in Florida, 100% outside of Florida, depends what you need. Um, so, uh, best way to reach me, um, is I’m all over social media now. So it’s attorney Bishoy, @attorneybishoy is my handle attorney.

And then my first name. So pretty easy. Um, same thing on LinkedIn.

You could pull up my name right there. Bishoy M. Habib. You’ll find me.

I have a YouTube channel. It’s also at attorney Bishoy. I start posting, I post videos on there.

And, uh, and so, you know, my, my law firm’s name is Levacy Legal. So it’s a legacylegal.com. L E V A C Y legal.com.

Uh, the name comes from me wanting to help people leave a legacy. So I called it Levacy. Well, I’m buying the words.

Um, we do real estate and business transactions. Uh, we’re, uh, investor friendly, as I mentioned. So, um, be happy to help out if, uh, if anybody needs anything here in Florida.

[Mattias]
Cool. Thanks. We’ll be in the show notes.

So check them out. Bishoy Thanks so much for, uh, yeah, being on.

This was an awesome conversation. I think we gave, got some really good tips, whether you want the high level, you’re kind of getting your feet wet, or if you understand this stuff a little bit more, I think we, we, we really covered a lot. So I love it.

[Bishoy]
Absolutely. Absolutely. Thank you so much for having me on.

This was a really fun conversation.

[Erica]
Thanks for listening to the REI agent.

[Mattias]
If you enjoyed this episode, hit subscribe to catch new shows every week.

[Erica]
Visit REIAgent.com for more content.

[Mattias]
Until next time, keep building the life you want.

[Erica]
All content in the show is not investment advice or mental health therapy. It is intended for entertainment purposes only.