All Forum Posts by: Patrick T.

Not to contradict anyone, but as a contractor I would be looking for the simplest way to do things within the bid I provided. So my first thought was that if the bathroom shower/tub needed tile replacement, the best thing to do is get the old material and drywall (you can't separate the tile from the drywall) out and install a clean surround. Anywhere there are tile issues it typically involves going to the studs. So I'll be interested to hear why he did that. And also what was actually agreed on, what was the scope of his bid?

Hey Flippers & Holders/Newbies & Vets,

What is the best legal entity for flipping and holding (for financial and tax considerations)? Is a different entity best for flipping vs holding. In the spirit of "just do it" how soon into your ventures in REI have you set them up? Has anyone found the need to change the entity? BTW my state has no income tax. I'm a sole proprietor.
Thanks for all of the great information!

That's a good one Brian! My @mention doesn't work, so I hope you get this.

I've been watching this thread and I see one really important gap: Supervision. It's your project Matt. You can't just turn key decisions and details over to someone with no skin in the game and no experience. Either jump in there and run the operation or pay someone who knows how to. But don't pay someone for an unknown result...that's ludicrous.

Tim: that's pretty creative.

Matt: There is an awful lot that goes into dealing with tenants. You know your handyman and his character, and how many tenants you have. But dealing with tenants, being responsible for the building and having a relatively free hand with your money can be a little more than a lot of people can handle. Especially if he has a full time job as handyman. It could get complicated. So I would be careful turning over too much responsiblity at once. Does your rental agent have anything to say.

6% sound significant. Without knowing how many tenants and the condition of the building, what an experienced manager would cost in that area, the caliber of tenants, it's hard to offer more advice.

Early,

You're in a big city. There are lots of resources for finding a good contractor. A lot of people tend to be DIY when it comes to contracting matters. But if you have no idea what you are doing on the contracting front, your best friend is a contractor who has experience on your type of project. There are literally hundreds of contractors in a large city who could help.

The problem tendency I see for new investors is that they see the various prefessions, be it contractor, realtor, or lender as adversaries. The fact is you can't stay healthy without a doctor unless you know as much as a doctor knows...and it costs a lot of money to know as much as a doctor knows. Start by building a team. Create relationships. To find a contractor, talk to realtors, lenders, insurance agents, suppliers...and just be honest and thorough about what your goals are and what you are looking for. The better you can paint the picture of what you are looking for, the more involved the person you are talking to will get. Talk to all kinds of people who play a role in what you want to do with direction and enthusiasm. People really like that...and they want to help.

So the contractor didn't work out. Go talk to the building department and get your options from the horses mouth (I'm sure they would like to know the details).

Then approach your investing future as a team builder. All of the government agencies and professions are "partners" to a long term professional.

Good Luck!

Hi all,

I'm a General Contractor, doing business as an LLC in Spokane, WA and I'm interested in knowing what legal entity works best for doing business in real estate - flipping houses. Especially in consideration of working with partners who contribute financing and/or with various types of lenders.

Great information here - Thanks!

That's a good question Marcin. Laws vary and anyone can sue anyone else, but the operating principle is that if you hire a licensed, bonded and insured contractor it is their responsibility to oversee safety. They are typically accountable to a state labor division on these matters. It is generally good to get a certificate of insurance, because that helps insure that the contractor is playing by the rules. You should contact your insurance company and ask them specifically what is required of you, since that's who you'll go to if you get sued. You should also ask what you should not do that could be construed as taking on responsibility. That's getting in pretty deep, but that's how attorneys find ways to include you.

If you hire un-licensed, un-insured people you take on all kinds of liabilities - this being just one.

Denice,

I noticed that you mentioned "oven" and then also "range". Ovens that have vents release heat and gases. As I mentioned they need to vent to the outside.

Range hoods collect grease and smoke from the cooking area. If one is recirculating it simply pumps everything back into the kitchen. If it is ventilating it absolutely needs to direct the grease and residue outside, and not into the attic.

Hi Denice,

Adam is right about the roof and the inspectors. Though there are some ovens that actually do require a vent (usually higher end like Thermador). And since they are uncommon, installations of these units often times are done incorrectly.

The fact is that if the oven requirees a vent, it is dangerous to ignore that. Get the installation instructions for that oven model and see if they call for a vent.

If you can't do that, start by asking the inspector why that particular oven requires venting when 95% of ovens don't. If he has a good answer then contact an appliance dealer who handles high end appliances. Do not call Home Depot, call an expensive appliance dealer. Try to bypass the sales people and get a mangager or owner. Give them the model # and see if specs call for venting. If so, ask for the name of a reliable installer who can take a look at it (even plumbers and HVAC guys may not be familiar with these ovens).

It sounds like a lot of work, but when it comes to heat generating appliance you should cover yourself.

Good Luck!