Amy Wan is the founder of Bootstrap Legal and a former attorney from California who believed that small business entrepreneurs are the drivers of innovation and job creation. Yet, small business entrepreneurs often lack affordable access to quality legal counsel. They are building tools to bring legal help to entrepreneurs in a non-intimidating way, at an affordable and predictable price point.
Insight of the Week:
What are some of the best places to find a “mentor”?
- Your local REIA’s
- Meetups in your area
- Researching online and reaching out
- Pay attention to signage and marketing from other investors.
- Talk about what you want to be doing, people will reach out or connect you.
- Online resources like biggerpockets.com or realestateinvesting.com
And whatever you do, whether it in word or deed, do all in the name of the Lord Jesus, giving thanks to God the Father through Him.
In this show, you’ll learn:
- Amy’s background story
- The kind of people who would be interested to use Amy’s service
- Requirements to justify putting a fund together
- How to raise a fund for just to the people that you know
- How to know if your money is safe if you want to invest to someone or to a company
- Paying out from the fund
- A good return is 8%-10%
- What her tagline “Welcome to a new kind of legal” mean
- The price of her service
“I feel like justice right now is very much for those who can actually afford it.”
Profile: Amy Wan
Thanks for Listening!
Jaren: I want the truth. You can’t handle the truth. You think you’re something? You can’t do no syndication. I got men with machine guns on walls trying to get in here and get these documents. What are you talking about?
Brett: Man, I don’t sweat you. I don’t sweat you.
Jaren: Are we clear?
Brett: Crystal. This is the Simple Wholesaling podcast.
Welcome to Simple Wholesaling, a Christian podcast that supplies simple, yet effective content for real estate investors and business entrepreneurs. Get advice, tips, and tricks so that you can stay true to your values and achieve your dreams with real estate investing you can trust. Now, introducing your host, Brett Snodgrass.
Brett: What’s going on, everybody out there? Thank you for joining us again on another episode of the Simple Wholesaling podcast. I’m your host, Brett Snodgrass. I’m with my co-host, Mr. Jaren Barnes in the house.
Brett: What’s up, man? You gonna rap it? Jaren didn’t know where that movie came from and if you guys are from the ‘90s, A Few Good Men, Tom Cruise, Jack Nicholson.
Jaren: I was born in the ‘90s. I was in diapers.
Brett: Yeah, that was one of my favorite movies, man. Anyways, the reason why we did that for today’s intro was we have a special guest on today’s show named Amy Wan.
Jaren: Amy Wan.
Brett: Amy Wan from Los Angeles, California, and she has come up with a software that is revolutionizing the legal industry called Bootstrap Legal where she gives affordable legal advice.
Jaren: I would call her like the AirBnB or the Uber of the legal industry. At least in her very niche, but if she grows bigger, I think that’s her future.
Brett: Yeah, definitely. Very cool stuff, guys. If you guys are in real estate at all, you know that having access to an attorney for documents, for structuring some of these entrepreneurial things that we’re doing and Amy’s talking about syndications which are super complicated sometimes to me. She’s going to go through all that and how they are able to serve just the normal person. Not the rich people but her goal is to serve just the normal every day person—
Jaren: The underdog.
Brett: Yeah, to do a syndication.
Jaren: The Rocky Balboas out there in the world.
Brett: So cool intro, man. But how are you doing?
Jaren: Man, I’m doing all right. A lot of changes. A lot of changes in the air..
Brett: Like your bald head?
Jaren: Well yeah, I started shaving my head. With a razor. Because I figure this, man, I’m going to go bald anyway so I might as well embrace it young so that my body has time to adjust to the bald look. I don’t know if it works that way but that’s how mine works.
Brett: It looks good, man.
Brett: I can see myself in it. It’s like a mirror.
Jaren: I just shave it just like you shave your face, son.
Brett: Yeah, I don’t shave my face very much.
Jaren: Yeah, I’m going to try to start shaving every day. It’s a personal discipline. I used to shave like once every two weeks or something.
Brett: It just kind of gets, you know, I don’t know you forget about it and it just gets old, doesn’t it?
Jaren: I almost thought of getting like just laser surgery over all the places I don’t want hair.
Brett: Yeah. That’s over the line.
Jaren: I’m glad—I wasn’t talking about—I was talking about like my face, my neck, my head. But if Gary Town, our transaction coordinator was in the room right now, there would be a line that was crossed. We’ll just leave it there. How about you, man? What’s new in your world?
Brett: Things are good. Yeah, I just got back from San Diego. I took my wife, Karen, and we went to Mastermind conference out there and the Collective Genius and I got to speak, which is really cool out there and I got some great feedback from it and just learning a lot. People are just learning what success means. Sometimes, people think of success as just growing businesses, making more money, and I really learned that success can be defined in a lot of different areas of your life.
And if you’re super successful in business or in your financing but you’re failing miserably at being a husband or a dad, then you’re not successful and next year, I would rather make $100,000 in less money and spend 100 more hours with my family. And that is where I’m trying to define success. So, just thinking a lot about that, man. Thinking a lot about life. God’s been really good to me, though.
Jaren: Yeah, man. All right, Brett. So anyway, let’s move on from there. Any iTunes reviews of the week, man?
Brett: Yeah, I think we do. Yeah. Why don’t you hit it off?
Jaren: Man, this isn’t scripted at all. All right, I got it. Check this out, guys. So, “Love These Guys” by YoureaD.
Brett: You’re a D. I wonder what the D means.
Jaren: I don’t know.
Brett: No, I’m just kidding.
Jaren: Family friendly. All right, “These two shenanigans have put out some of the best real estate podcasts I’ve heard. One of the struggles I had in the beginning were the quirky intros. I would always say, get to the guests! Now, after months of listening, it’s my favorite part. Man, continue spreading the Gospel and being brutally honest in all you do”. Aw.
Brett: That’s cool.
Jaren: YoureaD, thank you.
Brett: Thank you so much, YoureaD. That’s awesome, man.
Jaren: Yeah, that was the best iTunes review I’ve ever read. That was awesome.
Brett: Thank you so much, guys. If you guys are just enjoying what we’re doing and appreciate it, go into iTunes, leave us a review. We’ll read it on the air, even YoureaD. That’s good stuff, man.
Brett’s Insight of the Week
Now, simple tips and tricks that make real estate investing easier, faster and better. Brett’s Insight of the Week.
Brett: So, today’s Insight of the Week, I’m just going to really hit home with again, talking about what Amy’s going to talk about in her interview and that’s, if you’re in a market and you don’t have a good relationship with an attorney or you don’t have access to certain documents that you need to get access to, we’re not attorneys here at our Meet Ups. We always say, whatever we say, this isn’t legal advice. We’re not attorneys. But it’s good to have access to a good attorney.
Here in Indianapolis, we have a company that’s called Hocker and Associates and Jan Hocker is one of the leading attorneys that I truly trust and she’s helped me out with so much and that’s an attorney that we really love to work with. We also work with another attorney called Jynelle Berkshire and she helps with a lot of our evictions. And just things like that.
You know, if you have a property and you have to evict somebody, instead of us going down to the courthouse that really doesn’t know what we’re doing, I don’t really know what paperwork to file and all the legal hoops that you have to jump through, hiring an attorney is a great way to do that. And that’s obviously what Amy is talking about so in your market, if you don’t go to Amy’s Bootstrap Legal and she doesn’t offer the service that you guys want, find a local attorney in your area. Build that relationship.
I would start off with you know, investors that have been doing this for a long time. Have them introduce you to their attorney and just getting advice. You’re always going to need documents in the real estate game, whether it’s a note, a mortgage, a purchase agreement, a lease. Have them read over your existing documents because I’m sure there’s language in there that maybe you should add or take out. It’s very important to just have a “get your ship tighter” and I don’t know, that’s just my advice today.
Jaren: Yeah. No, that’s really good. I think that’s a really good way to find anything that you need. Like, something you highlighted, I think was really finding gold. If you’re going into a new market or you’re just starting out, ask what everyone else is doing and whatever the area and that’ll probably get you at least 80% there of where you need to be, at least, if not 100%.
So like, if it’s purchase agreements—hey, who do you get purchase agreements from? Or you know, who’s your direct mail guy? Or what direct mail strategy are you doing? And if you ask enough people those same questions, you’ll get like the two or three options that everybody is pretty much doing.
For example, with title companies, the three main title companies that are investor-friendly in Indianapolis are Merty and Title, Hocker and Associates, and Paramount Title. You know? Right?
Brett: And then there’s another title company that just came out, they’re pretty new. They’re called Investor Title Services.
Jaren: So those are the four and how we know that is because everyone uses them. So if you’re starting out, that’s a really easy way to find out anything that you need to figure out in your market.
Brett: Yeah, definitely. And how I got introduced to Hocker and Associates was from a friend in California who she was doing a lot of owner financing, a lot of land contracts. I don’t really talk to her much anymore but we used to talk like once every month or so just to kind of, how things are going, she used to invest a lot in Indianapolis. And I said, I need an attorney and I said, who’s the best attorney that you know? Because I knew that she would know and she introduced me to Jan Hocker over at Hocker and Associates and that’s how I got to know them. So I actually found them by asking for a referral.
Jaren: Yep. Awesome.
Do you dream of a life that is purpose-driven and makes a difference? Spiritual Foundations.
Brett: So today’s Spiritual Foundations, guys, I’m going to take the reins on this a little bit and just something happened this week which I thought was really cool and I think it was a God thing and He used my family to just really kind of tell me something.
So I just got back from this Mastermind group Collective Genius and my daughter, Kailyn, she had gotten me a Christmas present. She went out with my parents and she had gotten a couple of presents and she was super excited to give me this Christmas present and typically, my daughter is ten years old and typically in her elementary days she would go to her school Christmas function where they have a shop set up and they buy different things and cheesy like—it’s pretty cool because I’m a dad but it’ll be like a little trophy that says #1 Dad or maybe a coin tray or it’ll be some little knick-knacky game. And that’s cool. That’s just what I usually expect.
But this time, she wrapped up my present and she gave it to me last night or a couple of nights ago and it was a book. And a book, I always feel like, is such an acquired taste. It’s like, I don’t know. What’s my ten-year-old daughter going to get me in a book? Is it going to be about puppies? Is it going to be like about gymnastics? Or what’s it really going to be about? So I open this book and the first word is “driven” which is a word that we use a lot as entrepreneurs. Are you driven?
At the Collective Genius Mastermind group, they always talk about being so driven. We’re so type A. We wake up and we’re just, we have that internal drive in us. And that’s just who I am. I’m a very driven person. Whatever I do, I want to do it 150%. So that’s the first word, “driven”, and then the rest of the title was Driven by Eternity.
And that was just a book and it kind of threw me for a loop and I was like, wow. Like those are some very powerful words and I opened up the book and I read this first chapter and it really has just kind of been hitting me lately. As an entrepreneur, what are you guys driven by?
Jaren: Wow. That’s a really good word.
Brett: Yeah. So like, what are you driven by? Are you driven by this life? We talk all the time about the most money that you can make and then it’s going to be gone and you’re going to die, and you’re going to die and go to eternity. And at first, it talks about just defining eternity and what does that even mean?
And eternity kind of is just a word that our human brains can’t even really comprehend because everything in this life is finite. Everything comes to an end. So to think about an eternity as something that is everlasting, when we say the everlasting God, we can’t really even fathom what that even is because we don’t have that here.
So, it’s like, first it defines eternity and what that is and then it says on this Earth, God talks in Ecclesiastes 3:11, it says, “He has made everything beautiful in its time. He has also said eternity in the human heart yet no one can fathom what God has done from beginning to end”. So we can’t even comprehend what this is. And this book really is all about what are you really driven by?
And I have just been thinking, am I driven by the finite things of this world, the things that are going to end? Or am I really driven by eternity because God talks about our rewards in eternity. He’s going to give us rewards in eternity. So it just really hit me. I have not found the answer yet but I really just going into this next year, I just want to be driven by eternal things and not, I think they called them temporal things. You know. Just things that are temporary. And that’s just the word that I’ve been kind of feeling today. Just that drive.
Jaren: That’s a really heavy question.
Brett: And I get this from my ten-year-old daughter and I’m like, man, God must really be speaking to me because this is a really heavy book from a ten-year-old. And I don’t think she even knows. She’s like, are you going to read it? And I’m like, yeah. And she’s like, really? And she really was concerned that I might not read it and she really wanted to give me a good gift and I’m like, man, this is amazing. So yeah. So it’s cool.
Jaren: Yeah no, that’s awesome, man. I’m going to go do some reflecting like what is driving me? I don’t know. Because I definitely am not a naturally-driven person. I think I learned how to become driven this year. I definitely am just starting to walk and just stumbling a lot, crawling on my knees a lot in what it means to be a driven person. But I definitely have developed some drive. But what’s the source from, you know? That’s a really good question so I’m going to go do some soul-searching. Praise the Lord.
Brett: If you guys are listening, I recommend, again this book is called Driven by Eternity and obviously the #1 book you should be reading is the Holy Bible but this book really gives you a lot of Scripture and verses that you can go to the Bible and get that from and what does eternity mean and how can you live for eternity now? So go there.
Brett: All right, guys, we are so excited for today’s guest. We are interviewing Amy Wan from Los Angeles, California and Amy is the founder of an amazing company called Bootstrap Legal. And Amy believes that small business entrepreneurs are the drivers of innovation and job creation, yet I know for me personally that finding good attorneys or legal documents and legal counsel in general is so difficult for us. We have to jump through all these different hoops. Well, that is why Amy created Bootstrap Legal and they’re building tools and a software that brings legal help to entrepreneurs in a non-intimidating way and at a very affordable price. Did I sell that good? That sounds awesome.
Jaren: We must be like 90 episodes into a podcast or something, Brett. You sound like a professional.
Brett: Awesome. Well hey, thank you so much for joining us, Amy. How are you doing out in the West Coast?
Amy: I’m good. It’s sunny out here so I am very lucky.
Brett: I know. I just got back from San Diego and I couldn’t believe the weather. We’re sitting here in 20 degrees here in Indiana and I could actually go outside and I could wear a short-sleeve shirt or a suit and I’d still feel amazing.
Jaren: Yeah that’s the one thing that, you know I would actually argue though that outside of the winter months, Indiana is more beautiful than California.
Jaren: I would. I think especially like fall, spring, summer—because Indiana, because no one cares about this but I’m going to tell you anyway—it’s the furthest west Eastern time zone state. So you have the longest days in the summer. Like in Indiana, the sun goes down around 9:30 in Indiana and it’s really, really cool. I mean, it’s beautiful here outside of the winter. So my suggestion, have like a vacation home in Florida that you go to in the winter months and then come back to Indiana.
Brett: That sounds awesome, Jaren. I should be an entrepreneur.
Jaren: Yeah, you should. So, to kick this thing off, Amy, let’s dive into your background story a bit. How did you get into law? How did you kind of come up with this process and this idea of Bootstrap Legal?
Amy: Yeah, sure. It’s really funny. I actually went to law school to be a human rights attorney, right? I actually genuinely wanted to help people. I remember my first summer of law school, I was working at a human rights commission in a country where basically that spring/summer, they turned from a democracy to a dictatorship. At the time, that’s how I learned that human rights does not cross borders but money does. So, you know, I talked to my mentor. He said, hey, follow the money. There are ways to tie money and morality together, so I kind of pivoted, switched to international trade.
After graduation, I worked for the federal government for a while doing basically like international trade law, policy, so we were negotiating with like President, go to the WPO and help negotiate free trade agreements and while I was in D.C., I met my husband. He ended up needing to move to California for his job. And that’s where I’m originally from so I was happy to move back. But obviously, in California, there’s no free trade agreements that need negotiating.
So I pretty much had to start all over, ended up becoming general counsel of a very early stage startup for real estate crowdfunding at the time, which was a very new topic at the time. After that, that’s how I got my background in real estate and securities. That company, I joined it because I thought it was really interesting. This was 2013, right? And you know, the housing, the real estate market was still not what it was after the recession.
The founders were from Chicago and there were just so many abandoned, dilapidated houses in Chicago that people could flip. Except they didn’t have access to capital to do it. And so, I thought wow, this is really intriguing. You can use money to help put a house back in really good condition that a good American family can live in it, right? That’s why I joined that company.
And over the years, I left that startup and ended up being a partner at a law firm that focused in real estate syndication and basically last year, I got to a point in my practice where I thought—the first thing was, if I have to keep writing the same documents over and over for the next 30 years, I was not going to be very happy.
There are parts of legal where there’s a lot of creativity, a lot of intellectual stimulation. For me, that’s like actually structuring or crafting the deals or advising the clients. But then there are other things that are just really lull, really boring and to me, not a good use of my time and not a good use of the clients when they pay me to do that stuff. And that’s like sitting there and making sure that for this deal, a property across more than a hundred pages of documents. You can’t just do a control find or space alt for that kind of stuff. It didn’t quite work that way.
And then the second thing was you know, I had a client that I met at a real estate event. He was just starting out at the time. One day, he called me up and he was like, hey, I want to do a $300,000 syndication. And I was like, okay, well I will tell you how much we would have to charge at the firm and then I know you’re not going to hire us. The transactional costs didn’t make sense. I told him the price. Obviously, he did not end up doing a syndication.
And it just, the entire ordeal made me realize that for a lot of people who are doing smaller deals, you want to use an attorney just to dot your I’s and cross your t’s but it didn’t make sense. A deal is too small. And so I thought, if there is a better, cheaper, faster way of doing this, then the client saves money. He saves time. I don’t drive myself crazy for the next 30 years and I think everyone will be a lot happier. So that’s actually why I started this company.
Jaren: Well, I’ve just got to say that you are really not ambitious at all. I really think you need to get motivated and accomplish a few things in life. Just not cutting it.
Brett: Let’s go, Amy. Come on.
Jaren: Come on.
Brett: Get out of bed in the morning.
Jaren: Yeah, it’s amazing. That’s quite the track record. And I think you really stumbled upon a really unique service, especially for real estate investors because I mean yeah, I know especially for our audience, for most people who do real estate wholesaling, they’re not licensed so they don’t have access to good contracts. They don’t have access to standard industry—to have a fair price solution to that, it really is a game-changer. So yeah, I’m really excited to dive into this interview, man.
Brett: Yeah, definitely. Me, too. So Bootstrap Legal. I was talking to a gentleman when I first got started in real estate and he told me that if you’re going to do any type of real estate investing, eventually you’re going to be in a legal situation or in the courtroom or something like that. It’s just going to happen. And I actually spent the first six or seven years and I never was, I never really had to do that besides just you know, going to title companies and things like that.
And then the crap just hit the fan and all of a sudden, I was in like a bunch of legal situations all at one time. And I had been doing this thing for like six or seven years and I don’t know anything about any of this stuff. So again, I’m super excited to dive in. So talk about this service that you guys have. Who would be interested in going and using your service? When you’re talking about wholesalers, buy-and-hold investors, and even talking about syndications which is something that, again, I don’t have any idea how to do. So who would be interested in going to your platform or your site?
Amy: Yeah. So what the software I built specifically does is it automates the first draft of real estate syndications documents, private equity funds, and basically anything that involves the raising of capital, right? Now, I think traditionally as an attorney people who use this service or retain an attorney or a traditional law firm to do this for them were going to be people who were changing or raising capital for larger commercial real estate sorts of things.
Like, oh, I want to bring down this 300-unit multi-family apartment or this mixed used thing and it’d be at least a couple million dollars. Now, it’s really interesting, ever since I launched this software, I’ve actually been getting calls from the revenue folks, too. So in terms of what that looks like, because I think the cost and the turnaround time has gone down, I still definitely thinks it makes sense to say real estate crowdfunding isn’t necessarily just like one house, especially if it’s like a house in the Midwest as opposed to like New York or Beverly Hills where every house is like a million dollars, right?
But what I do think makes sense is being able to go and say, okay, I’m going to raise a fund for I don’t know, half a million dollars or a million dollars and this fund, I’m going to deploy to, use to houses. I can go to a trustee sale. I can go to an auction. I can go to whatever and I have the money ready to acquire those houses.
If you’re a wholesaler, right, to the extent of wholesaling or to the extent that you go to a lot of houses at one time and you don’t necessarily have the capital that you can work with. If the bank is not going to give you a loan or something like that, go and start your own fund. And it’s basically your own personal line of credit to go and do your business.
So basically, our softwares are going to do everything under this assignment, highly specialized and pretty much only for people who are raising money. But the one thing I found in life is, or at least in the real estate world is, everyone is always needing money.
Brett: I need more money today when we’re a lot more successful than we were like six years ago.
Jaren: So dive into what the process would look like to set up a fund like that. Let’s say I’m Brett Snodgrass, so I’m not just some Joe Schmoe off the street but I’m really good-looking and I have blue eyes and all that. All right, I’ll give you $100,000. Okay. No, no, no.
So if somebody has ten years’ experience or a lot more experience in wholesaling than just some guy that just got started finishing up a course or whatever, what are the requirements to justify putting a fund together? Like, obviously you need to have some people to give you money.
But beyond that, what’s the next step? Let’s say he was five people that routinely kind of give him money case by case but he wanted to pool a fund together. What would that look like?
Brett: And the legalities behind that, too, because I’m kind of really in that spot that I have a lot of private people that want to give money that’s just wanting to give the company money but I don’t really know how to legally set that up and I think that’s where you come in. So I’m super excited.
Amy: Yeah, sure. So the first thing is to actually sit down and come up with a plan, right? So there’s a couple of questions that you need to be asking yourself. First of all, the first thing is, how much money do you want to raise, right? Is your fund going to be half a million dollars, a million dollars? Are you going to am for $3 million dollars? You kind of have to have like a goal in mind.
The second thing is you should know who you want to raise your money from and when I say who, it kind of means like, you don’t have to already have specific people in mind but you kind of have to have a general idea of what is their level of sophistication and are these going to be people you already know or are they going to be strangers, right? And this is where we dive into securities law a little bit. Now, securities law, generally there are a couple of different categories of people. There are non-accredited investors and there are accredited investors. Accredited investors are basically rich people. Like, technically, the definition is if their net worth is a million dollars or more, including your residence, or their annual income is $200,000 or more for the past two calendar years, right? So basically a rich person and then there’s all the non-rich people. And then in terms of who you’re raising money from, are you going to people you already know, like people in your network? Or are you going to be doing what we call general solicitation. So that basically means advertising. It means you are going out and reaching out to people that maybe you’ve never met. So say I was raising a fund and I went on your podcast and I was like, hey everybody, I’m raising a $2 million dollar fund to wholesale houses or houses over the next 30 years. Come on back with me. If I get that out of your podcast show, that would be general solicitation, right? I’m going up to strangers that I’ve never met before.
So those are two key questions because that basically determines your legal strategy. There are different laws around which you can raise money and if you decide who you’re raising money from up front, it’s much easier to strategize around which law you’re going to use because you can’t just do everything under the sun when it comes to raising capital. That’s why we have securities law.
Brett: Yeah. Well, let’s just take one of those routes. So I know people that I already know—I mean, I’ve been doing this thing for ten years. I know a lot of real estate investors and investors in general, so I want to raise capital, non-general solicitation. People that I know. So what do I do and how do I get around the law?
Jaren: Somebody’s taking notes over here. Calling him out. Talk to them on the show there.
Amy: This is totally not legal advice. We’re totally talking in hypotheticals. But for someone like that—
Brett: This is legal advice. You can invoice me after.
Jaren: No, that’s a joke. That is a joke. Don’t ever say that to an attorney, bro.
Amy: Oh, man. So yeah, for someone like that who, they’re pre-experienced, they already have their own network, they are actually going to rely on probably the oldest regulatory exemptions. The one that has been around for decades. And that’s what we call Rule 506B or Regulation B. That’s just a lot of fancy terminology.
That just means that you can’t advertise but you can go out to people in your pre-existing network and the people that you can raise money from is basically as many accredited investors as you want and up to 35 non-accredited investors. That’s pretty much it.
For the non-accredited investors, you just want to make sure that they’re sophisticated, that they understand what they’re investing in, that they know they could lose all their money and it’s not like grandma and her last five social security paycheck, you know what I mean?
Jaren: So, recap. So you said 35 non-accredited investors and as many accredited investors as you want, right?
Amy: Yes. Mhmm. And you can raise as much as you want.
Jaren: So then going down that route to invest with an accredited investor, do you need any like sort of documentations or licensings or anything like that?
Amy: Sure. So you don’t necessarily need any licensing, especially if you are raising all this yourself. In terms of documentation, yes. You need that. So I think generally in the world, there’s things that you’ll want to use an attorney for and then there’s things where it’s like, not that necessary, right? When it comes to raising capital, this falls under securities law. So I don’t think people should want to mess with the SCC and you’ll want to keep pretty compliant especially since the consequences of not doing things compliantly can be very severe.
But generally, what people need is a couple of documents. They need whatever documenting for their… whether it’s a corporation or an LLC that might be bylaws or operating agreement. You need a PPM. A PPM is a private placement memorandum. Basically like a 40 to 100 page document that basically lays out every single risk that an investor should know about with regards to whatever happens. And the last thing is just a subscription agreement. It’s just like the document that an investor signs to say like yes, I am investing in this deal.
Brett: Cool. That’s awesome. Well, that gives us a good start. So the question that everybody is going to ask if they’re going to invest with me or any other company is, I’m going to take $100,000 of my hard-earned dollars, I’m going to put it with you—how do I know that it’s safe. Is it just, I’m betting on you? And you’re the jockey and I’m putting my money down on you and you better—if you fail, my money’s gone.
Or is there any collateral? Is there any security that they know that there’s obviously risk involved but is there anything besides just saying, I’m good and I’ll make it work, and they’re just betting on me.
Amy: Yeah. So there are two answers to that question. The first thing is, whenever an investor, especially a real estate investor, is investing in a deal like this, they’re really looking at two things, right? They’re looking at the sponsor and they’re looking at the actual property. And those are really the two main steps of underwriting, right? Now, for the larger commercial deals—remember where I said, oh, the transactional costs make a bit more sense? Because they’re buying one huge apartment building and sell it like $20 million dollars and they’re raising $4 million in it or something like that. So you can both underwrite the sponsor and the actual property if they’ve identified it.
For something like what we’re talking about right now, like something for residential. It doesn’t necessarily make sense to go and syndicate things property by property. So if you’re doing a fund, that’s pretty much what we call a blindfold. There is no property or properties to underwrite so the trust factor is really you, right? And that’s basically why when people approach me for wanting to put together a small fund for something in the residential space.
There’s basically two strategies. It’s either the beginner who will start in a really tiny fund and it’s pretty much limited due to their friends and family who there is already trust with or if it’s someone a lot more experienced, they can go and start a larger fund but they’re got a track record that everyone generally knows about and so there is that history of trust, right?
Now, in terms of is there securities? Now, that depends. It totally depends on how you are structuring your deal, right? I mean, I’ve seen things where they’re insecure. Typically, and you’ll see, there is. And there’s a lot of different ways to get at securities, right? You can directly secure something or the property can be directly owned by the fund. It also depends on what kind of fund you’re putting together. Is it going to be an equity fund? Will it be a debt fund where you’re just paying people with simple interest rates, right? And typically, I mean there’s so many different variations.
Just because everyone has a different goal and a different need, so that really comes down to sitting down for a couple of minutes and figuring out like, okay, what if it’s a distribution of the store want to pay people and do I want to give them security? If you give them security, obviously, the returns are going to be a little bit luck, there’s a risk with that. If you don’t give them security, it’s going to be a lot more.
Brett: So a follow-up question on that—how do you pay out from the fund? Like how would you structure it? Would you have essentially established like quarterly dividends or like how do you pay out returns?
Amy: Yeah, so it really depends. Again, right? It kind of depends on what does it mean of the sponsor and what will investors accept? Now, I’ll tell you that normally, from what I see, you could pay monthly, you could pay quarterly, you could pay annually. I usually recommend quarterly because annually, it’s kind of too long. People sort of forget about you and then monthly, if you sit there and do your monthly, it might drive you crazy. In terms of how you structure your distributions, generally we have this concept called a waterfall of return. It basically means that, okay, so any money that we have actually a profit, right? We are going to give back to investors but investors get paid back first to some sort of an extent and afterwards then the investor and sponsor will have some sort of split.
So, I would say in the commercial world for an equity fund, normally it’s something like an 8-9% preferred return. That means investors are getting an 8-9% return first, right? And once you reach that 8-9%, then there’s some sort of split so it might be like a 70/30 split, 70 to investors, 30 to the sponsor. Now, on the revenue side, it depends on whether it’s an equity or debt fund and of course, everything is kind of a sliding scale.
Like, you know, I’ve done deals where someone promised like a 16% preferred return, which is super high, right? Although it was new construction. But at the same time, the actual split once investors reach that 16% was just 50/50. Better than 70/30. I’ve seen other things where there was no preferred return. It was just a straight split.
And then I’ve seen other things, and this is more common in debt funds or where people are really looking more to pay something that looks more like interest and like potential return on the whole thing. But not having a split and having just a straight preferred return. So once investors get x percent preferred return, the sponsor gets everything afterwards.
So it really depends on what type of fund you’re putting together? And it depends on who the sponsor is, I mean what their investment audience is willing to accept.
Brett: So I’m typically working with private investors, obviously, and the real estate is collateral or I had to give them a fixed rate return. Is that typical in a syndication to say hey, we’re putting a fund together for a million dollars and you’re going to get 8.5% interest every quarter. Is that typical or is it always kind of based on 8% plus you know, a split of the revenue or something?
Amy: I would say in the residential world, that’s a lot more typical. Yeah.
Brett: Okay, interesting. So the typical, on average across the board, a good return, if you’re putting something together—a good return is what, 8, 9%, 10%? That’s pretty average on what people should give or expect?
Amy: Thag like 205t’s an interesting question. You know, it’s a really hard question to answer because every region kind of has like its own standard of living. It’s not a big deal. And then, of course, it depends on what you’re doing, right? Are you doing equity? Or you doing residential/commercial? I would say in the residential world, you’re giving back like a straight preferred return, something like 8-10%. That’s pretty standard, I’ve seen.
Brett: Interesting. I guess it’s all in the perspective because you know, in the investor world, if I’m paying 10% interest, sometimes I’m like, well, that’s a really good deal. But if I tell my neighbor and they’re used to the standard traditional bank loan terms at 5% or whatever it is, you’re like, man, that’s a ripoff. Awesome.
Jaren: That’s why I laughed a minute ago when you were like 8.5% and I was like, what? Because in hard money, everyone is looking at like 12%, 15% plus two points, you know, right? Interesting.
Amy: But it’s funny. Like hard money depends in geography too. It’s like, is your lending oil or anything hard in Calfornia? The rates are so much lower than the rest of the country because there’s so much more capital in California and very competitive. Everyone’s trying to deploy capital versus the rest of the country.
Brett: Because your real estate has gone up by like 10%. Everybody’s equity loans out.
Jaren: So the goal is what you should do is you should invest in Indiana and get your hard money lender from Californai for both. That’s good.
Brett: Boom. Boom. Awesome. Well hey, this is great stuff. So just to kind of go back to Bootstrap Legal, so is this really the only thing that you guys do, is syndication, documentation, and settling these things out?
Amy: For now, yes. Yeah.
Brett: Okay. Cool. That’s good stuff.
Jaren: No, that’s awesome.
Brett: Because it varies. You make it sound really simple but I always thought it was a pretty complicated process.
Jaren: Well, that’s what they do. Their neck is important. They should change their name to instead of Simple Wholesaling, Simple Bootstrap Syndications.
Brett: Cool. We just probably got time for one more question before we go into the next section of the show. So my question is, your tagline is “Welcome to a new kind of legal”. What exactly does that mean? How are you able to be that new kind of legal when—
Jaren: It’s catchy, by the way. Good job.
Brett: Attorneys have been around forever. So what does this mean, new kind of legal?
Amy: Yeah, you know, the funny thing is, I don’t think anything in the legal industry have changed in like a couple hundred years except for the fact that now we have Microsoft Word and e-mail, right? I mean, people were doing it the same way and I think what I have repeatedly heard from clients and remember, I used to be a clerk myself. I was general counsel. I had to hire other attorneys, right?
The process is so expensive and so intimidating, I would say there are a demo graph to the dream that you might describe as like curmudgeonly and kind of grumpy, you know? And so, I wanted to really make the legal process a lot more friendly, a lot more affordable, a lot more for like the every day Joe or Jane, and not for like rich people. Because that’s pretty much who can afford legal services, like large corporations and rich people.
I was like, that doesn’t make sense. This is the law. It applies to everyone. How come only rich people can be compliant with the law? So we’re really trying to get something that’s less intimidating, a lot more friendly, a lot more users from me. Right? Everyone hates the billable hour. Attorneys hate it. Clients hate it. Why do we have it? I don’t know.
Brett: It’s so gray. Like I have no idea how much I’m going to get charged. It’s so gray.
Amy: Yeah, and that happened to me, too.
Brett: We’ll start out with $1,000 and go from there, you know.
Amy: Yeah, I literally sent e-mails to attorneys like, I’ll have a simple question and they come back, they write like a four-paragraph answer, and then the next month, I get like a $2500 bill for it. I’m just like, I just wanted a probably yes or probably no. I didn’t want you to invent work for yourself. So I just want a more practical approach to law.
Brett: I just want to have at your heart, Amy. I really appreciate—just even in your story where you started off, the type of law that you were pursuing, human rights, and just see your heart, to fight for the underdog and to make a difference in the world.
That’s very much our heart here at Simple Wholesaling and so I just commend you for that and keep that going because I know it’s easy. It was dark, cruel, evil, disgusting world sometimes. Sorry for being so harsh, but definitely this last year, I definitely had a big dose of realism of how ugly the world can be. And you know, especially you. You see it every day as a lawyer, you know? It’s kind of like an acquisition manager.
Amy: We’re the outcasts of society, that’s what lawyers are.
Brett: Is that why you guys are always the butt of everybody’s jokes.
Amy: I guess so.
Brett: That’s funny.
Jaren: Well hey, real quick, I need to mention the Show Notes before Brett fires me because I always forget to mention them. So guys, there’s going to be a lot of links and mentions and so forth. At www.SimpleWholesaling.com/Episode90. And my final question before we go into the next section—what is the price for you guys’ services? I think that’s a good segue from where we were at. It’s like, free!
Amy: Yeah. So basically, it depends on how much you’re raising but for any fund that’s less than $3 million dollars, we charge an all-inclusive flat fee of $7500.
Jaren: Wow, that’s not bad.
Brett: Yeah, that’s pretty awesome.
Brett: Sounds good, sounds good. Well, that’s all the questions. We’re going into the next section of the show. You ready?
Jaren: I was born ready.
Brett: All right. Let’s do it.
Jaren: One, two, three. Going Deep.
Brett: In this section of the show, Amy, we’re just going to ask a little bit more about your life and thank you so much for opening your heart and sharing your story. But you give a lot of legal advice and money matters and you’ve been on countless podcasts. I know I’ve seen your name out there quite a bit. You’re building your own business and you’re someone that has given that much advice.
You always go back and can you share a little bit about just your purpose again in all this? I know you probably already shared a little bit already but share your purpose. Why are you giving out very affordable legal advice? Most legals—I’ve sat literally in a room with five attorneys and they like to, you know, I remember one attorney was bragging about how he won this case so he could put in his swimming pool. It was always about how much money they could make. But you kind of come from a different place. So what’s your purpose in all this and really trying to shake up the legal industry?
Amy: Yeah, you know, I think I know there’s definitely a lot of attorneys who still look into the legal profession because it’s supposed to make really good money. Not quite my motivation for going into law. At the end of the day, the way I see it is that justice and fairness are the two things that you’re supposed to be able to achieve with a good legal system.
I don’t think that we have a good legal system today. I think today, the people who have a ton of money can out-litigate people who don’t have money. They hire these armies of attorneys whereas most people can’t even afford one attorney, right? I feel like justice right now is very much for those who can actually afford it. And to me, that doesn’t make sense because at the end of the day, if you go back to like where all these laws come from, where they’re made, they’re supposed to be made by your elected representatives and it’s supposed to apply to everyone.
I remember when I was a young attorney, the moment I found out that you know, as a regular citizen, you might not even have access to know what the law is. Like, that blows my mind. And so, I don’t see myself here as in charitable work, I just see myself as I guess kind of revising the legal profession and reframing it to what I think it should be in the first place, right? It should be accessible to all and it should be affordable to all. It is very difficult to do that. It is very difficult to combine the same level of quality of service.
But I think with today’s technologies, it’s also very possible. It’s just that a lot of attorneys maybe aren’t as technologically forward people in the world and then at the same time, you don’t see a lot of investment into the type of technology. Now, I would say, maybe over the past year, that’s changing but still. We’re still, I think, today, pretty far away.
Brett: Yeah. I think it’s cool. That’s a good answer. Thank you very much. Technology is changing so much. Everything.
Jaren: Yeah, it’s real crazy. Especially for you—I mean, I was listening to a podcast interview with Tim Ferriss on the Rich World podcast today and they were talking about, like there’s the future of artificial intelligence. It’s pretty scary, interesting stuff.
The context of the conversation was that like, just as like a chimpanzee right now, no matter what you do, you can never get them to the point where they understand the concept of a plane in the sky because they just don’t have enough brain matter. There’s a lot of assumption that AI will get to the point where it will understand things conceptually that we don’t have the capacity to understand. And that’s like really scary. Anyways, sorry for going nerdy, not real quite.
But talking about technology, you know, and since you are such an avid technological player in this space, how do you see the future of the law industry changing by technology? Like, do you understand my question?
Amy: Oh, yeah. Yeah. I think it’s going to change a lot, right? I think it’s going to really democratize access to legal services and legal help for a lot of the population. I think that the attorney’s role is going to change a lot more. I think attorneys should be doing things where they add significant value and not necessarily the places where a paralegal or first-year associate type of work. Like, that type of work isn’t that valuable to the clients.
So whether it’s like automating the documents or automating a lot of research or whatever, I see the future job of an attorney really being the person who brings a lot of experience and saying, you know, hey by the way, you should consider this. Or hey, here’s some advice for your particular situation as opposed to like, oh, let me just help you on this transaction.
Jaren: That’s awesome. More of a trusted advisor. I love it. Awesome. I think that’s what every industry is going towards, you know?
Brett: Yeah, I think every industry, it’s crazy how technology has changed every industry and I think that every industry right now should be kind of thinking about, I need to change.
Jaren: Or else.
Brett: It’s everywhere. It’s like, grocery stores. People don’t go to the grocery store. They get it delivered right now. Uber shook up the taxi industry. I just got back from this Mastermind conference and they were talking about tech companies in California or whatever are really, really trying to shake up the real estate agent. Are real estate agents needed anymore? I don’t know. Maybe in five years, they will not be. So it’s like, really, it’s crazy how people are really trying to move this needle on tech just changing every industry. It’s crazy.
Jaren: It’s awesome.
Jaren: It’s a great time to be alive.
Brett: That’s right. Before we go into the last section, Amy, do you want to say anything else to our audience about your service, about what you guys do? Why should they go to your site or anything like that?
Amy: Only that you know, we do offer free consultations. So if anyone is interested, they can just go to BootstrapLegal.com, they click on ‘Learn More’ under ‘Real Estate’ and there’s a button where they can schedule a consultation.
Jaren: That’s awesome.
Brett: Awesome. Sounds good.
Jaren: I love your heart, Amy. Thank you.
Touch of Randomness
It is time for a touch of randomness.
Brett: All right. Well, we’re going to end on a fun note. A quick random note. So this is called A Touch of Randomness. We’re going to ask you a couple of questions. Kind of feel free to answer the first thing that comes to your mind, Amy. Are you ready?
Jaren: I like this first question.
Brett: All right. So Amy, you were named in the “Top Ten Women to Watch in Legal Tech”. So if you were to be named in the Top Ten in any other random category, what would that be?
Amy: I would one day be Top Ten Women Who Have Raised Capital or VC Money in the Tech Starter Space.
Brett: Sounds good. We’re going to actually create that category for you and name you #1.
Jaren: #1. So let me see here. The Winter Olympics are coming up in February. If you had the physical gifts to compete in any event, what would that event be and why?
Amy: Ooh. That’s an interesting one. Figure skating, man. That’s like the one thing I watch every Winter Olympics.
Brett: It is pretty cool. It’s fascinating.
Jaren: Brett, what about you? I’m curious on that question. What would you want to compete in?
Brett: I don’t know. Probably bob sled.
Jaren: Bob sled?
Brett: Bob sled. Yeah.
Jaren: I’d want to only do it for like team Jamaica. That’d be the only one I’d do it with.
Brett: Awesome. Well hey, sounds good. Thank you so much, Amy, for being on the show today. I know that I got so much out of it and I know I took down some notes here and I’m getting ready to probably contact your company and try to do a syndication myself.
Jaren: Let’s do it.
Brett: But again, tell our audience where is the best place for them to go to get in contact with you?
Amy: Yeah, sure. It’s just BootstrapLegal.com and then can find Bootstrap Legal on all the different social media channels. LinkedIn, Facebook, Twitter, Instagram. All that stuff.
Brett: Cool. That’s it, guys. Go to BootstrapLegal.com right now if you’re interested in raising capital and building a syndication. This is the place to go. And that is a wrap with Amy Wan on today’s show. Thank you so much, Amy, for being on the show and we wish you so much success.
Amy: Thank you so much for having me.
Brett: No problem.
Thank you for listening to Simple Wholesaling. If you enjoyed today’s show, please head over to iTunes, give us a rating and leave a review. Be sure to pick up a copy of our free e-book, This Simple Wholesaling System by joining our community over at www.SimpleWholesaling.com/OurDashSystem.