All Forum Posts by: Brian Tome

An colleague closed on a single family house for $68K. He anticipates $40K in repairs and a rental income of $1400/month. The ARV will be $160K.

Based on that limited information, Rent or Flip and why?

Go!

@Sharee Mason

Good luck with your sale!  Is the property a flip?  If so, have you posted a description of the deal and your experience?  I love to see what others are doing in our area.

Best regards.

@Brandon Turner @Joshua Dorkin

... is it me or does Josh look like Jimmy Stewart?

I know Brandon says "Adam Levine" but I am not seeing it.  Jimmy Stewart on the other hand ... just sayin'!

@Charles Salumn

Welcome to the forum.  Two pieces of advice:

1. 1.  Read everything you can and listen to the podcasts before you spend your "life changing money" on any deals.  Be very careful and spend your money wisely. 
2. 2.  There are no 'one chances'.  We get a new chance to do something with our life every day.  So, when you make mistakes (and unfortunately you will) just get back up and keep moving in the direction of your dream.

You will do very well.  I can tell.

Best regards!

Once you locate one of those guys, you could always ask them for a referral from a couple of satisfied customers.  The ones who will actually let you stop by and look at the work in question are the best, but any contact is good.  Also, try Angie's List.  They go to a lot of trouble to keep their ratings system trustworthy, so if someone has a good recommendation on there, they are more likely than not credible.

@Luis Aviles

Good advice here, but I would offer the following tips to what others have said. 

There are three main things to consider when determining how much earnest money to offer:

1. 1) Is there consideration for the contract?: @Eric H. is technically correct.  Under the law, a 'promise to pay' is sufficient consideration to secure the contract.  That being said, I am an attorney and I have seen many judges find ways around binding a party to a contract where the other party had 'no skin in the game.'  Out of an abundance of caution, I would encourage you to provide an earnest money deposit sufficient to show you are serious in case anyone ever needs objective proof of that.  Also, keep in mind that unless you are doing a million dollar deal, you should avoid litigating over one of these deals, because the deal won't be worth it in the long run.
2. 2) Does your buyer know you are serious?: Sellers sometimes get antsy the closer you get to settlement or the more they think about your deal.  If you haven't given them a good reason to trust you, they start to ascribe all sorts of motives to your behavior and before you know it, you could be the "guy who is trying to cheat them out of their house."  When you demonstrate good faith in your dealings by giving them some money right up front, they don't have as many fears and you establish yourself as a professional who cares about their needs right out of the gate.  Once you have that advantage they are unlikely to change their opinion.  Also consider that in order to back out of the deal, they know they will have to give back your money.  If they have already spent it, it is a lot easier to let the deal go through than try to scrap it, and any subsequent investor trying to steal your deal would have to be willing to give them a deposit sufficient for them to pay you back, while knowing they are willing to back out of a deal with you.
3. 3) What does your earnest money deposit say about you?: Other people who hear about this deal (or who you wholesale it to) will form an opinion of your skills.  A small or no earnest money commitment says a couple of things.  It says "I don't have enough money to be in this game," "I don't have any faith in this seller," or "I don't have enough confidence in my analysis to put any money on the line."  If you are ready to invest, have a good deal, your analysis has been careful, and you have honestly sought to understand the needs of the seller and give them good options, you shouldn't have any problem putting down between $1-100K in earnest money (depending on the size of the deal - I like Eric's breakdown by price range).

Ultimately, make your deals more about serving the seller's needs.  Look for the deals where the sellers just want a way out of the property (ie. estates, moving, foreclosures, etc.) and give it to them.  Then your earnest money is like icing on the cake and you have established a position of trust that will benefit not only that deal but all your future deals as well.

Best of luck!

@Lian Shi

I will email you one I have used.  If you receive another from anyone else, please share with me.

@Benjamin Morris

This is a great question for a planning and zoning attorney in your area.  These type of determinations often hang on the whims of neighbors and local elected officials, so knowing the landscape and having a consolidated strategy is paramount before you breath a word of your plans to anyone else. 

Be very cautious and work with an attorney to develop a good sales pitch and solid legal argument.  You could literally mention your plan to a neighbor who nods his head and agrees one day and have folks picketing the property a few days later.  Your 8 plex could become the subject of a game of telephone and end up being described to half the town as "a Section 8" project.

@Dilip Gandhi

Forming an LLC is a complicated legal issue. You should get legal advice from a professional. Delaware is definitely the way to go and in my opinion Scott Swenson at Connolly Gallagher is the guy to talk to.

http://www.connollygallagher.com/attorneys/scott-swenson/