All Forum Posts by: Stan Butler

This can be done without the 'title switcharoo' game, but your attorney is right in that it falls under the commercial side of lending. The closing is not more expensive, it is actually cheaper because all the underwriting is handled in-house and you dont have all those mickey-mouse fees that brokers love to charge. The reason you are having trouble is that you are working with large banks that are issuing "conforming" notes that can be sold on the open market. You need to find smaller community banks that hold their own paper and issue what is called "portfolio" notes. You will definitely pay a premium in interest rate (about 2% higher) but all the recorded paperwork will be in the LLC name. You will have to sign personal guarantees but the loans do not show up on your credit report, at least in my experience. I think the actual industry term for these are Agency (conforming) and Non-Agency (non-conforming) loans.

I think the title switch scenario would be low risk in a declining interest rate environment because the lender wouldn't want to call the loan and then have to lend out the funds at lower rates. But in a rising rate environment, which we will soon be in, it makes the DOS clause more appealing to the lender because they will be able to lend at higher rates.

I purchased a home awhile ago and its about to be free & clear. When this happens, I will change ownership to another LLC. Will I need a new owners title policy?? Will it matter whether I use Quit Claim Deed or Warranty Deed to do the transfer??

You should view deals from them just as you would from any other wholesaler. You need to do your own due diligence and evaluate if the deal is worthwhile. I have received several of their emails, ran my own comps, and not proceeded any further. I have found that their ARVs are unrealistically high, but their repair estimates seem reasonable.

Their business model is identical to another Texas based company, so one of the companies is just copying the other...

Here is what I look for:

12% in the good school districts because Im willing to offset it with the price appreciation. I also tend to get more stable tenants in these areas that stay for much longer and thus reduce turnover

20% in the areas that will not be appreciating anytime soon. Since these are usually job-hoppers or new renters, I dont get more than a couple of years out of the tenants. When you factor in the turnover cost I need the higher ROI to make it worth my while.

I haven't yet found the need to stage a house. We flipped about 6 houses last year between $125k and $350k and none were on the market more than 30 days. It might have made a difference back in the 2007-2009 timeframe when it was a heavy buyers market and you needed to differentiate your houses. Nowadays, we just renovate our homes nicer than anything for sale in the neighborhood and price it at the same level or slightly lower. Buyers can easily spot the value proposition and it hasnt been tough to sell.

Hey Jennifer, welcome to BP! This place is a wealth of information and one of the best resources around. There are so many great contributors on this board and you can learn a ton in a really short time.

Hey Chris, we own many properties and spread out ownership across several LLCs. Here are some of my experiences:

* We have only used financing from Private Lenders and Community Banks (Portfolio Loan). We have always closed in the name of the LLC.
* If you have to close in your name first, it seems to defeat the purpose because now you have a paper trail with the title in an individuals name.
* Lenders will require a personal guarantee on the loan no matter how you title it.
* When you setup your LLC, you can also go the extra step of finding an out-of-state person to be your Registered Agent. Im not sure how much this helps, but its an option.
* If you really want to go further, you can look at using Trusts to hide ownership. It all just depends on how far you want to go...
* We have insurance through traditional carriers and they have covered the property with the LLC on the title. I think this is getting harder to come by. I have looked into a blanket LLC policy but it was prohibitively more expensive.
* Sometimes it can be a pain to setup utilities for a residential property in a business name. Some of our utility providers used to ask for much larger deposits.

Thats my brain dump for now.... Im sure there were other nuances...

Welcome TJ, you will find lots of good resources on this site.

I am in Cobb County along with you and JScott....

Hey Brian Feltz, thats a fair point about the holding costs. A lot of it would be buyer specific. I always budget in 4 months worth of taxes, insurance and utilities for my flips. You really couldnt budget in financing costs for the reason you mention. In my case thats always ZERO anyway since we use cash.

As for rehab costs, I would list out the repair items and materials that you think are needed. With the detail provided, the rehabber can run their own estimates of the cost. I am always going to inspect the property myself anyway, but its nice to know if its going to be worth my time beforehand.

Just some suggestions.

As a rehabber, here is what I would look for:

* Your package should include an accurate detailed analysis of the deal, including all acquisition, rehab, holding, and closing cost estimates. I cannot tell you how many times I get a package from a wholesaler that completely ignores holding and selling costs. These are not trivial.

* If your buyers include both flippers and rental owners then you might want to include a rental analysis with cash flow and yield projections.

* Package should include multiple comps in the same neighborhood or general area within the last 90-180 days. In Georgia, school districts make an enormous difference so I want to make sure comps are in the same district. Too often I get ARV estimates that are 25% higher than anything that has sold in the area. This destroys credibility.

* Communication is another key ingredient that cannot be overlooked. Be honest with your potential buyers and do not represent deals that you do not have under your control. I do not want to negotiate with someone that is 3 or 4 levels removed from the deal.

* Make sure the deal meets your buyers criteria. You need to collect information such as geographic area, bedrooms, bathrooms, year built, pool, neighborhood, garage, %ARV requirements just to name some off the top of my head. I think most wholesalers just blanket their whole list with every deal they come across.

If I could find a wholesaler like this, I would buy a property every month from them. Unfortunately, I cannot find one in my area....