JF1695: Can’t Find A Job? Start Your Own Business! With Sabine Franco
Sabine was out of law school and struggling to find a decent job. Rather than settle for something less, she started her own firm. FRANCO LAW FIRM, P.C. is her firm and they focus on real estate law and business law. Needless to say, Joe and Sabine will be covering a lot of real estate investing law in today’s episode, but we also hear her personal story which we can all learn from. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
Best Ever Tweet:
“Start early, a lot of people spend a lot of time learning, but you learn more by doing” – Sabine Franco
Sabine Franco Real Estate Background:
- CEO and Principal Attorney at FRANCO LAW FIRM, P.C.
- Established in 2012, her practice strategically focuses on Real Estate Law and Business Law
- Has 5 years experience working in the mortgage and real estate industries
- Based in NYC
- Say hi to her at http://www.franco-lawfirm.com/
- Best Ever Book: The Four Agreements
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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast, where we don’t get into the fluffy stuff. With us today, Sabine Franco. How are you doing, Sabine?
Sabine Franco: Hi, Joe. I’m good, how are you?
Joe Fairless: I am doing well, and nice to have you on the show. A little bit about Sabine – she is the CEO and Principal Attorney at Franco Law Firm. Franco Law Firm was established in 2012; her practice strategically focuses on real estate law and business law. She’s got five years experience working in the mortgage and real estate industries. Based in New York City.
With that being said, Sabine, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Sabine Franco: Yes. Like you said, I had worked in the mortgage industry way back, and prior to 2008 I worked at mortgage companies, and was a loan processor, and then I worked for a mortgage bank, and after that, around the time of the crash in 2008 I went into law school. Then after law school I started my own practice, and naturally, part of that was real estate law. Now I’m currently helping individuals, businesses buy and sell and invest in real estate.
Joe Fairless: Got it. Once you graduated from law school, you immediately started your own practice?
Sabine Franco: I did, I did. I braved it.
Joe Fairless: Yeah, that’s a big deal… Why did you choose that direction, versus joining someone else’s?
Sabine Franco: I always tell people I was a little bit snotty about it, because of working in the mortgage industry in my early twenties; I made good money, and I was expecting that coming out of law school. So when I graduated in 2011, the market was kind of just starting to rebound itself, so it was fairly hard to get a good paying job… So because of that, I decided “You know what, I’m gonna go out on my own”, which in hindsight to me now, it was crazy… [laughs]
Joe Fairless: But it worked!
Sabine Franco: It worked, it worked.
Joe Fairless: But I imagine the first six months probably didn’t work out like you planned… So what were some challenges starting the law firm?
Sabine Franco: Getting business was a challenge in the beginning. I kind of just told everyone I knew that I had started out on my own, and I got referrals here and there, but it came slowly. I did work for other firms in sort of like a temp capacity; I covered cases for them, and stuff like that… Until the business kind of built itself up to where I didn’t need to do that anymore. But it took a while.
Joe Fairless: What type of work were you working on in those early days?
Sabine Franco: In those early days, other than real estate I did also business formations, and helped businesses with simple contracts back then. And when I was working with for other firms, I would cover a lot of landlord, tenant and foreclosure cases. It was good, because I learned a lot about tenancy and how the landlord/tenant courts work, and dealing with that in New York, so it kind of helped build some background for what I’m doing.
Joe Fairless: Now what are some typical cases that you would work on?
Sabine Franco: Now?
Joe Fairless: Yeah.
Sabine Franco: Now I don’t do too much of the going to court for tenancies, except for current clients, if they own buildings and multifamilies and stuff like that, they’ll ask me, so I’ll help them out sometimes… But mostly I do residential purchases and sales – single families, multifamilies; well, you call them multifamilies, but they’re multi-units here.
Joe Fairless: There’s a lot of red tape in New York… Especially New York City has its own set of red tape, doesn’t it?
Sabine Franco: Right. In New York it just takes so much longer with respect to searching the titles, the title reports take longer to come in, with respect to violations, and liens, and judgments… When those things come up on title, it takes a while to get it cleared. Dealing with the Building Department, and housing and buildings department… It takes a while. So if you have something that needs to be cleared off of the title, or inspected, you have to make an appointment and it usually takes them a couple of weeks, and then you can’t rely on the date they give you… So the whole side of things – it kind of makes it much more difficult.
And then when it comes to landlord/tenant laws in New York, it’s extremely tenant-friendly. It could take anywhere from six months to two years to get a tenant out in a New York residence.
Joe Fairless: I knew six months, I didn’t know up to two years… What’s a circumstance where it would take two years?
Sabine Franco: It basically would depend on the tenant’s living circumstance. If they are older, or if they are disabled, they’re gonna get more favorable treatment from the courts. If they have young children or small children, they’re gonna get more favorable treatment. They can keep going back to court and asking for more time. There’s no limit to how many times they can go back. Even if you set up a settlement with a tenant and they say they’re gonna move out on this time, they sign it, so basically it’s like a contract… [laughter]
Joe Fairless: It sounds like it’s like a contract, but it really isn’t a contract…
Sabine Franco: [laughs] Exactly. The way the courts treat it is it’s not so much like a contract, because when the time comes for them to be evicted, they can go back to court and just file what’s called an order to show cause, and get more time… And depending on if the judge feels their reasoning is sound, or worth it, they’ll give them more time. So it’s really open to a lot of discretion by the courts, so that’s what makes it so lengthy and difficult here.
Joe Fairless: Anything as an attorney you can do to try and shorten that timeframe, if you’re representing a landlord client?
Sabine Franco: Well, a lot of times what attorneys do is enter into — we call them stipulations, and they’re kind of those agreements… Because even though tenants can ask for more time to stay, it’s the quickest way, because if you have to go to trial with a tenant, then you have to wait for a trial calendar, and that could take even longer than just trying to put in an agreement… And depending on whether or not — if it’s rent-stabilized apartments, you can only get somebody out if they didn’t pay… So if you enter into agreement with them and they pay, then you can no longer evict them. But the best way to do that is to enter into an agreement and just stay closely on top of the deadlines, to see if you can get them out by acting immediately upon those dates.
Joe Fairless: Got it.
Sabine Franco: And those are pretty much what you–
Joe Fairless: You don’t have much. You can’t do a whole lot.
Sabine Franco: Yeah. It’s almost like “Who’s gonna get more tired?”
Joe Fairless: Right, yeah. How much would an attorney like you be compensated to stay on top of that process over the course of 12 months, for a landlord?
Sabine Franco: Attorneys charge by the hour, so anywhere from — your average attorney is gonna be like $350, to your white shoe big law firm could be over $1,000/hour, depending on who the landlord is and how much money they wanna spend… So imagine that – filing petitions, filing documents to put into court, drafting documents, filing documents, appearing in court over and over again…
Joe Fairless: That’s the big one, right? Appearing in court…
Sabine Franco: Yeah… [laughter]
Joe Fairless: Because travel time and everything – that’s factored into the hourly rate, isn’t it?
Sabine Franco: Right. Sometimes a lot of attorneys won’t do flat fee if it’s gonna be that you have to continuously go to court, because of the fact that you don’t know how long it’s going to take. So on a case-by-case basis you may be able to get that, but generally you won’t.
Joe Fairless: Talk about whatever you can talk about obviously, but what’s a challenging case that you’ve participated in?
Sabine Franco: With regards to buying and selling, or…?
Joe Fairless: Yeah, yeah.
Sabine Franco: In New York and in the Brooklyn market it’s a very hot commodity right now; there’s a lot of competition, and a lot of times there’s investors that want to put in offers on multiple properties… So you can be in contract with an investor, on the seller’s end, you can expect for them to close, but then the times comes and they’re not ready to close, or they wanna back out of the deal, so it kind of makes a lot of mess for the seller.
I had a client who had a multifamily that she was selling, was in contract with an investor buyer… The property had some issues that she needed to get up to date, which she did. Finally, she got them up to date, and the investor is like “Well, I wanted the property vacant”, and the contract actually didn’t call for the property to be vacant, but the seller client wanting to accommodate, did try to get rid of all the tenants… Then come to find out the investor buyer now was not even ready to close, was not capable of closing. So after almost nine months of being in contract, which I know in other states it’s unheard of… [laughs] After nine months of being in contract, not having tenants to cover the cost of the building, now having to break the deal, basically, and the buyer wanting to back out and just walk away clean… So that ended up having to go into litigation, to sue over that buyer’s deposit. And I represented the seller.
Joe Fairless: Who won?
Sabine Franco: It’s still going. [laughs]
Joe Fairless: Oh, man… Everybody loses when that takes place… Except for the attorneys. They make out pretty well.
Sabine Franco: [laughs]
Joe Fairless: What’s some advice you give your clients to help mitigate the likelihood of litigation whenever you’re drafting up a contract, or even reviewing a contract if they’re purchasing something?
Sabine Franco: One of the things that I think is extremely important is even when you’re a savvy investor or buyer or whatever it is, it’s important to keep your attorney informed of all of the issues that may be going on. A lot of times parties will have conversations on their own, either buyers and sellers directly, or just outside of the knowledge of the attorneys, and then when they have these side agreements, there’s nothing we can do to protect you if we don’t know that it exists. Because you can’t cover everything under the sun in a contract. You can cover a lot, but you can’t cover every single scenario, so it’s good to keep their attorney informed, so that we can cover particular things.
I had a weird situation with a single-family property… The buyer was buying the property — so we got into contract, the seller’s lawyer calls (I’m representing the buyer) and says “Well, my client wants to take the shrubs out from the outside of the house. He’s not gonna leave a hole in the ground, he’s gonna replace it, but we wanna take it.” So I said, “Okay, let me speak to my client.” I’m thinking it’s not a big deal; it’s bushes, or trees, or whatever they want to take… So I call my client, I’m like “Yeah, the seller wants to take the bushes. He’s not gonna leave a hole in the ground, he’ll replace it.” My client is like, “Absolutely not! That’s the only reason why I bought the house. I went to school for botany…”
Joe Fairless: Oh, my…
Sabine Franco: Yeah. It turns out they were bonsai trees. It was just a ridiculous situation… But if I didn’t know that, I could have committed malpractice by just saying, “Yeah, sure. That shouldn’t be a problem.” [laughter] So it’s good to keep your attorney informed. I just think we have a certain level of confidentiality that we owe you as far as we’re legally bound to do, so… No reason to leave your attorney in the dark on things that you’re doing, so we can include it in the contract and cover it, and make sure that the thing that you’re concerned about is protected.
Joe Fairless: Based on your experience as someone who represents real estate investors, what’s your best real estate investing advice ever for them?
Sabine Franco: I would say start early. A lot of people, when they’re looking to get into investing, they spend a lot of time just collecting information and not starting. The quicker you start, the quicker you learn, because you learn a lot doing, versus just thinking about it… So I think the best advice would be to not wait too long, and just start as quickly as possible.
Joe Fairless: What type of investing do you do?
Sabine Franco: Personally, I have a couple of single-family and multifamily property. I’m looking to invest more. I kind of didn’t take my own advice, I didn’t invest as much as I–
Joe Fairless: It’s tough in New York City.
Sabine Franco: It’s tougher in New York City, but it’s still possible.
Joe Fairless: Yes, true. True.
Sabine Franco: Especially when you know your way around things. It’s harder to have properties where you have tenants, and things like that, but it is a flipping market here; you just can’t be afraid. That’s one of my biggest mistakes probably, because I was in and around the mortgage industry, and real estate, and financing since I was in my early twenties, and I didn’t start then… So that’s why I said to get in earlier than later is better.
Joe Fairless: Where do you live in New York City, what area?
Sabine Franco: I’m in Long Island in Nassau County.
Joe Fairless: Alright, you’re in Long Island. Where are your properties?
Sabine Franco: One in Nassau, and also in Brooklyn.
Joe Fairless: Oh, cool. Alright. So what type of deals — will you just give an example? Maybe the one in Brooklyn… What did you buy? Just to give some homework.
Sabine Franco: Okay, it’s a four-family property. It’s fully occupied with tenants. The purchase price was actually $900,000, which I know seems like a lot…
Joe Fairless: Not for Brooklyn. Where at in Brooklyn?
Sabine Franco: It’s Brownsville.
Joe Fairless: Brownsville, okay.
Sabine Franco: The properties there are a little over a million now, and that’s the beginning of that area being turned around… That area is on the come-up, and the areas surrounding are already in the multi-million.
Joe Fairless: Did you do anything to the property, or are you just leasing it out to tenants?
Sabine Franco: Right now just leasing it out to tenants, and kind of just letting it appreciate, but in the near future we’ll be renovating. The issue with that is because of the tenant laws here, it’s harder to get people out quickly. You kind of have to strategize and do it strategically.
Joe Fairless: Got it. What is an example of doing it strategically?
Sabine Franco: Well, kind of making sure that you have everything in order in terms of being able to cover all of the rents and everything, and while you’re in court with everyone, trying to get them removed… Because it’s gonna take a while. Because as soon as you put somebody in court, they’re gonna stop paying rent. So basically make sure that it’s one at a time, and make sure that you’re able to cover everything.
Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?
Sabine Franco: Yeah, okay.
Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.
Joe Fairless: Best ever book you’ve recently read?
Sabine Franco: The Four Agreements.
Joe Fairless: If your business collapsed today, what would you do next?
Sabine Franco: I’d probably start a podcast. [laughs]
Joe Fairless: Why would you do that?
Sabine Franco: I like talking to people. I like talking about ideas, and learning about people, and helping people… Either that, or a YouTube show, or something like that.
Joe Fairless: What’s the worst deal that you’ve invested in?
Sabine Franco: The worst deal I’ve invested in… I don’t think I have one yet.
Joe Fairless: Well, if you’ve invested in multiple, then what’s the least profitable one? …I’ll phrase it that way.
Sabine Franco: The least profitable one… Probably the single-family that I live in.
Joe Fairless: [laughter] Ditto. Alright… Best ever way you like to give back to the community?
Sabine Franco: I like sharing my knowledge with people that I come into contact with. I’m happy to share anything that I know, to try to motivate people, to get them to just do the things that they desire. Opportunities are everywhere.
Joe Fairless: And how can the Best Ever listeners reach you?
Sabine Franco: My Instagram is @Sabine_Thepurposelawyer, and you can also reach me on my website, franco-lawfirm.com.
Joe Fairless: Well, Sabine, thank you so much for being on the show and talking about some intricacies with New York and New York City. Those things that you mentioned, like that six months to two years – is that New York City specific, or is that New York?
Sabine Franco: That’s New York City, so Upstate and Long Island – you’re looking at more around six months for Long Island; Upstate – it varies, depending where it it, but New York City is where it takes a really long time. That’s where you’re gonna see six months to two years on some — two years is on the extreme, but it happens.
Joe Fairless: Well, thanks for talking about that, as well as your journey as a real estate investor and what you’re doing, and your business plan. I appreciate you being on the show. I hope you have a best ever day, and we’ll talk to you again soon.
Sabine Franco: Thank you. I appreciate you having me.