Brand New Investor, Looking to Connect!

16 Replies

Hi BiggerPockets! I'm SUPER excited to have joined the BiggerPockets community. I've been reading as much as I can from this forum for a few days now, and figured I'd make my first post. I'm a cyber security specialist (i.e. still an employee) looking to transition into real estate. Currently, my chosen niches is flipping small single family houses and then hopefully transition into short term vacation rentals (the plan is still a WIP lol). Anyway, I just wrapped up the The Book on Flipping Houses and looking forward to joining the DFW community and getting started and connecting with everyone!

Additionally, I'd love some general guidance around the following as I work towards finding my first deal. 

1. Should I spin up an LLC before my first flip? Or wait until I'm a little more established before operating as a business entity?

2. As I'm building my team/network, I believe I have my GC and Private Equity Partner(s), Cleaning Crew, Pest Control, and Inspector. However, is it recommended at this stage I find a wholesaler? attorney? CPA? appraiser? Anything else? 

As you can guess, I'm filled with questions as I continue my journey but there's no need to bombard a forum in a single post :) 

@Mark Clayton Congratulations on beginning your journey into Real Estate, it is always a WIP! We are in the San Antonio area doing flips and long term rentals. There is lots to learn as you move along and alot of it comes from the experience itself. Putting yourself in a position to have access to off market deals is definitely helpful but the key to success is learning how to do your own due dilegence to determine your purchase price, renovations needed, renovation cost and estimating ARV (as repaired value) for your exit or refi. Good luck and I look forward to seeing your progress along this journey. John Sledge

@Mark Clayton Hi Mark. Welcome to BP! I see that you are in Frisco. I'm in downtown Dallas! I'm new as well but my current focus is on buying distressed properties using the BRRRR strategy to hold long term. Eventually, I will get involved with flipping since the only difference from BRRRR would be to sell the property instead of holding it.

As far as the LLC, it's really up to you and what business you are doing. For me, I'm in the process of talking with hard money lenders to see if they only lend to business entities. If that's the case, I will setup the LLC (will have to setup one in the future anyway as I grow). If I don't start with a LLC, I will save money from not setting up/maintaining it, and I will just have liability insurance to make sure I'm covered from any slip ups with tenants. When setting up your LLC, I've read to do it as a disregarded entity so that everything passes through to your personal taxes.

I've made a list like you of people I need on my team. I would say network and add to your team as you progress. You don't have to have them all at once but make sure you have people in mind before your first deal.

@Travis Fairbairn Thank you for that fanning Ma tip on the LLC

I'm new at BP and I'm glad I found this App also..looking & hoping to network with someone from DFW I'm new to this side REI and have LLC and got land trust set up I just need to make my first deal..

These are amazing tips, I'm scrambling trying to right down some of these down. @Yolanda Brown you mentioned you got a land trust set up, this allows you to hold the title of the property for another? Referring to "make my first deal", what would be your immediate next steps? 

I just got done reading The Book on Flipping Houses, and I'm trying to match the book to how it all actually plays out :) 

In terms of off-market deals, do these primarily come through wholesalers or is it more from general networking (i.e. driving for dollars, marketing funnels, etc)? 

Originally posted by @Mark Clayton :

In terms of off-market deals, do these primarily come through wholesalers or is it more from general networking (i.e. driving for dollars, marketing funnels, etc)? 

I would say mixture of all. You can definitely find off market deals from wholesalers, but I'm going to first try driving for dollars to see if I can scope out properties myself.

 

Welcome. The DFW market has been very good to me, but it's getting tougher and tougher. The two biggest things are finding deals, and accurately estimating reno costs. Dozens of wholesaler deals come across my email every day, and only a small percentage are actually deals.

If you've good deep cash reserves - i.e., you can afford to make a mistake without it killing you - then do the best you can and just jump in. There's no book learning that can substitute for actually doing it. (Plus, the "team" you're describing is only really a team if you have projects for them to work on.) If money is tight and you can't afford to make a mistake, maybe see if there's a way you can make yourself useful to an established investor, go through a project with them, and soak up learning.

I do recommend spending the $100/mo or whatever it is for a Propelio subscription and learning how to run really good comps.

Good luck!

@Mark Clayton

It’s complicated to explain when there is land trust set up, each entity or property must carry its own name to sell from a trust..

Things can become complicated when you start gathering holding property inside of a trust if It’s not set up correctly

it’s away one can secured and protect their Assets before /after each sale on properties

First rule I learn in REI Game 🤑

It keeps prying eyes at bay I’m Specialist

Hi Mark!

It's really great to learn that you're starting your real estate investing journey! It's a big step, and not for the feint of heart, and is exceptionally rewarding!

Previous commenters hit a few good points: lenders don't tend to lend to companies like LLCs and S Corps. However, if you purchase in cash, you can purchase in an LLC. If you need a loan and really want it in your LLC's name, you can drum up a quit-claim deed to transfer the property to your LLC after purchasing in your personal name.

Disclaimer: I'm not a licensed financial professional.

From what I understand thus far, if you decide that this will be your surefire capital-builder, I would ask a CPA about starting an S-corp that owns an LLC. The S-corp will help you with tax savings, and the LLC will keep you (99.9%) safe from liability. Usually the advice is that you start an LLC with an S-election until you make around 40k/yr in profits, then you'll want to switch it over to an S-corp. Companies like S-corps are taxed at a lower rate than typical income tax rates.

Be very careful with wholesalers. There are some good ones out there, but carefully analyze the deals to make sure you have a cushion built in, in case renovations cost more, or you don't sell the home for as much as you'd hoped. Run all your own comps, or ask a realtor to help you if you're not comfortable. In fact, we always recommend that you take a contract with you to the house for a better estimate of costs. If you have a realtor or contractor on board whom you trust, I highly recommend asking for their advice about market trends, and trusting their advice when determining the items on your list of renovations! They'll be able to help you get the most return on your investment.

@Mark Clayton

Focus on the bare essentials of what you need to get to get started in real estate.

You should focus on a market that you want to invest in.
Feel free to make offers directly to the seller agent. If you don't feel comfortable running your own comps or want the assurance of another professional, feel free to work with a buyer agent.

The next professional you likely want to work with is a property manager / contractor.

All the rest can wait - equity partners, cleaning crew, pest control, attorney, cpa, etc.

@Mark Clayton

Remember that buyer's agents are "free" to you. If the seller is using an agent to help them sell their house and represent them, I highly recommend finding an agent to represent you as the buyer. It doesn't cost the seller any more $$ in this situation, and it won't cost you anything. In fact, a good buyer's agent will be able to walk you through the selection and purchasing process of an investment property.

Remember that real estate is a very big field, with a large variety of specialties, and not every agent out there understands investment real estate. Interview several of them to understand their scope of work before signing on with them.

After you close a few deals, you'll start to feel comfortable running comps, making offers, and seeing the transactions through to closing. At this stage, if you decide not to work with an agent when dealing with a homeowner directly (instead of a seller's agent), just remember to be just as diligent as the buyer's agent throughout the transaction, so the deal doesn't slip through the cracks for a missed deadline of something minor.

Hi Mark! Congrats on making your first move into the real estate market, how exciting! I myself have worked with a team to rehab a small multi-family property in Dallas, TX. A big passion of mine is interior design and I would love to work with you in any capacity I can. I can capture the current market style at a very affordable price, overall boosting your return! If you're interested in learning more, I'd be happy to show you the work I did for the multi-family property and discuss further. Thanks!!