Some Guidance?

Question

Hello, so Im sure you guys get these questions all the time and are probably sick of seeing them and by now have probably seen this introduction too dozens of time but here goes anyway :)

Im a new investor and want to get in getting into rehabbing and flipping properties. As I go I would also like to acquire rental units over time as well. So I have been doing a ton of reading here on the forums and listening to the podcasts. I am going to a REIA meeting in the beginning of August, but IM wondering if in the meantime I should be incorporating somehow and opening up a business bank account. I am eager to prepare for my entry into this and was wondering what preparatory items I should take care off initially. I am abstaining from making any actual moves until I meet people at this meeting and get to talk to more experienced folk, but at the same time I'm really eager to jump in, with caution of course.  Thanks for any advice!

Dennis Mejillones · Answer

Thanks guys, much appreciated. @Joe Harper I have set up the web domain and secured business cards. I didnt think about the facebook page, I will do that right away, thanks!

Thomas S. Im thinking the same thing. Im going to be attending an REIA meeting and see what kind of people I meet and deal I can work out with that in mind initially, at least until I learn a little more.

On another note I had another idea as well. I was reading through the forums and someone mentioned purchasing a new home and cash flowing their existing home. That got me to thinking what if I did the same. I have been interested in moving to a house with a garage anyway. My house mortgage is currently about $1800 which Im gonna refi and probably get a couple of hundred dollars off that payment as a result most likely. Rental rates for comps seem to be starting around $2100. The negatives are that a new home will probably require a 20% down payment which eats up a chunk of my cash reserves for my entry into flipping houses. On top of that a few thousand for refi costs and updating my current kitchen a little bit. Also my current neighbors are awesome. At the same time on the surface, at least to me, it seems like cash flowing this property and buying a new one to move into with today's interest rates seems like a wise idea. What do more seasoned investors think, does $500 a month sound like a good return worth making this kind of move for? Thanks guys!

Dennis Mejillones · Answer

Thanks guys, yes its definitely busy work. I want to get into it immediately but I figured it best to hold off on making any really big moves until I went to at least my first REIA meeting to see what develops from that. In the meantime I was trying to see what kinds of things I could do to be ready for business beforehand. Business cards, bank account and what not. Little things so I have things ready to go. The meeting is next week so Im excited about that and to meet new like minded people there. Initially  I am planning on doing smaller cash deals until I get more experienced.

Michael Totman · Answer

Dennis, what a novel idea you have! All joking aside don't worry about that stuff yet.  Go talk to RE agents at their offices to see what properties they know about in your area that fit your target, go talk to lenders to find out what your financing options are, and start driving around the areas where you want to invest to see what's going on.  Having a new bank account with no deposits and a corporation with no income won't get that property for you.  A good offer, solid plan, and funding will. Good luck!

Al Williamson · Answer

Hi @Dennis Mejillones

Congrats on getting started.

Sure you can open an account. No harm, but doing so is not investing. It's busy work.

Going to the REIA and placing offers is how you'll move the needle. Best to you - go place some offers.

Thomas S. · Answer

Don't waste money setting up a LLC. It serves no purpose.

I suggest you start by being a cash investor with someone already experienced in renovating homes. You would be amazed at how many first time flippers lose money.

Joe Harper · Answer

I wouldn't get the llc or bank account going yet, especially if you're not going to hold a property long term until you pivot to rentals. That's about $500 expense in Florida - with the $250 minimum initial deposit.

However, if you have a killer company name, I'd look into locking up that web domain, and business cards are a must, and a facebook page for the company to get your friends' antenna perked up. Get the inbound word of mouth marketing machine fired up today so that maybe you can bring a deal to your first meetup. Jump in the pool and make some waves!

Some Guidance?

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