Experienced Flippers How are you scaling the business??

Question

Hey BP,

Have any of you used gap funding for your flips to cover the closings costs so you can scale and do more at a time or what are you doing? I can do about 2 at a time but the closing costs and budget overages kill the scale aspect of it for me for me to do more.

Chris Tarpey · Answer

We use a combination of hard money and private money. This has allowed us to scale exponentially, and essentially flip houses with $0 of our own money. Sure we sacrifice some profit by doing so, but it allows us to take down 4-5 deals a month.

Definitely recommend using OPM to scale.

Jake Baker · Answer

@Jan Kutrzeba

I would suggest a simple JV agreement between you and their LLC. You could create a single-member LLC for yourself if you don't want to partner with your personal name. This agreement will just be for the first deal.

If it goes well and you commit to a long term relationship with them, you can create an LLC with your LLC and their LLC as members.

I would consult a real estate attorney for this. Hope this helps!

Jacob Sherman · Answer

First thing before scaling is to secure a contractor where there won't be any budget overages . usually you maybe want to have no more than 10% in overages .

Sean O'Keefe · Answer

@Jan Kutrzeba Most real estate investors that flip properties use an S-Corp. It has something to do with reducing self-employment taxes of 15.3%

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LLCs are generally used for passive income like buy-and-hold investments.

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*This post does not create a CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.

Jan Kutrzeba · Answer

@Jake Baker what legal structure are you using for partnerships?

I'm going over a general partnership agreement I was sent from experienced flippers where I'd be the minority equity partner while they handle all operations. I want to start with one deal with them to see how it goes and do more if we work well together. My attorney suggested I set up an LLC that partners with their LLC on this one specific deal. However, they do all their flips using that one LLC alone, which - I'm told - exposes me to too much risk. They said from the get-go they don't want to open up a new LLC for every single flip they do (they're doing one a month on avg.).

Jake Baker · Answer

@Ashley Larsen

My company does 15-20 flips/brrrs per year in Jacksonville FL. We use DSCR loans to refinance our BRRRRs.

We use Hard money for most of the funding of the purchase price and rehab. We raise money from investors to cover the difference and holding costs. While we give up equity by doing this, this allows us to do as many projects as our deal flow allows us.

OPM - Other Peoples Money

Kumar Patel · Answer

what is best software to find unpublished land on RE sites?

Bob S. · Answer

Correct, its all about volume,

Keep crushing it bro

Experienced Flippers How are you scaling the business??

Experienced Flippers How are you scaling the business??

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