All Forum Posts by: Elizabeth Seiferth

Hi All!

We have an LLC for flipping and are in discussions with a friend whom is a GC on partnering on flips. We have not ironed out any details yet but we will put together a joint venture agreement ahead of moving forward with any deals. Right now, we've been discussing one party putting up the down payment, and the other party putting up the construction costs and splitting profits 50/50. I'm curious if anyone has any examples of a joint venture agreement that they might be able to share?

Thank you!

liz

Quote from @Chris Shon:

@Elizabeth Seiferth Thanks for sharing! Definitely sounds like you were in a similar situation. May I ask which Rookie Reply podcast you are referring to? 

As an update, we fired our contractor and found a new one who should be finishing in the next 1-2 weeks. We ended up adding a bath and closet to the large bonus space instead of an addition. 

The markets still not looking great in ATL so I'm hoping that we are able to sell at a decent price and consider it a miracle if we broke even. Some money will most likely be lost. My goal is to just minimize it for now and stop the bleeding. 

Worst case we will have to extend the HML or try a DSCR loan, but managing rentals from across the country doesn't sound very appealing especially with more upfront costs to furnish and add amenities.

Hi @Chris Shon -

Sounds like things are progressing in the right direction! Hoping you get this project wrapped up quickly and sold. Regardless, you guys will be so relieved once you’ve offloaded the property, and many lessons learned I’m sure. That was our situation as well 😅…and we’re still gonna do it again!

I believe it was this episode in which they talked about your post, but not positive:

https://podcasts.apple.com/us/podcast/real-estate-rookie/id1...

 I suppose they don’t give you a heads up when they talk about it on the show! 

Hi @Chris Shon !

I just heard your situation on the Rookie Reply podcast. First, I'm so sorry this has been your experience so far. We just went through something very similar with our first flip which was in Riverside, CA (we live in the San Diego area). So at least in our situation, it was easy to get to site.

That said, we had a terrible contractor that clearly was mismanaging funds and when we would show up on the weekends, nothing had been done the week prior. He was always full of excuses and we eventually discovered he was a compulsive liar but that took quite awhile to figure out. We had considered firing him and kept delaying it because he would basically make false promises and we felt we were going to leave $$ on the table if we did so. In the end, we fired him at the tail end and we wished we had fired him much earlier. The net loss was probably the same either way. Given your scenario and the slow progress, I'd fire your contractor and find someone who can finish the job quickly to get you out of the HML and the headache / stress of the property.

As for listing, we listed on the low side compared to the rest of the market and ended up closing about $30K above our listing price with 5 offers in the first few days. Unfortunately, due to the bad contractor, extended holding times, and some theft we ended up breaking even and having a lot of lessons learned!

I realize that I'm responding a few months after your original posting so hoping things are going smoother now or you're in a more steady spot. 

Hi All,

I've been trying to find a qualified CPA for California that is an expert in RE. It seems whenever I have an initial scoping call with one company that call goes well and then I find a series of reviews that are alarming and negative and keep me from moving forward. Obviously, reviews live on the internet for a long time and may no longer be relevant. Does anyone have any solid recommendations for CPA's in California that are experts in REI?

Thanks,

liz

Quote from @Evan Polaski:

@Elizabeth Seiferth, this is a cruddy situation.

I personally have not found penalties is either easy to enforce or effective.  Even if you have penalties available in the contract, given your "small payment" left, you may basically be telling the contractor to work for free from here on out (they won't).  And they very well could argue that your change orders due to inspections are what slowed it down so penalties are not applicable, anyways.

I have offered INCENTIVES to finish when I have been in situations closer to yours.  "I will give you $2,000 MORE than I owe you if you finish in the next two weeks, with full C of O". Yes, it costs you more, but at this point, firing them and getting a new person in will very likely cost you more than you owe the current guy, and anyone that is available at the drop of a hat is not likely to be someone you want working on your property, anyways. 

For future reference, I have basically started working with contractors that a VAST majority of bill is due upon completion.  These contractors often cost a bit more, but they tend to be more professional across the board because they a) have a bigger carrot at end and b) have better financial management skills.

That is a good advice, thank you! Definitely something we could implement now even though I don't want to pay them a dollar more. But the 2K would be worth the peace of mind to get this over the finish line. 

I appreciate it!

Hi all- I would love some advice. We are in the end stages of our first flip. Our contractor has been insanely slow with minimal progress from week to week and already 2 weeks behind their timeline. We should be listed at this point and we have at least another 2 weeks left to get there (no point in fully pulling the cord on this GC at this point). We are about an hour and a half away from the property (it was a cheaper market) so I don’t have the ability to be up there every single day micromanaging the contractor. We have a small payment left on the contract which I am withholding until completion.

We did have to get permits and the city inspector has added work at every inspection so that has caused distractions (necessary ones) along the way.

Our visit to site today was more of the same, I immediately reached out to the GC with photos of every space - interior and exterior - asking how they can claim we will be done in a week when we are clearly not that close. He will be going out to site tomorrow to give me an update on their plan.

Has anyone ever dealt with this type of scenario? Any recommendations to light a fire under their asses and get a bigger crew on site to finish the job?
 

Quote from @Julie Bourdon:

Hey everyone! 
I've had my eye on real estate investing for about a year now, particularly interested in starting with house hacking. However, after recently relocating to California for personal reasons, I've come to realize that the market here is quite challenging for beginners like myself.

I'm contemplating shifting my strategy to out-of-state investing. I've managed to save up a decent amount for a downpayment, but I'm feeling lost about where to even begin. Learning about various investment approaches has been overwhelming and taking that initial step toward building passive income streams seems daunting. Ive read books and listened to podcast but cant seem to find the strength to take that first step.

If anyone has been in a similar situation, I'd appreciate hearing about your experiences and how you overcame the fear and uncertainty to take that first leap into real estate. What motivated you and what were your first steps to dive in and not let fear or lack of knowledge stop you from making progress. 

Thanks in advance for any advice or insights you can offer!H

 Hi Julie! I’m also in California and have debated about every strategy out there 😅. But landed on flipping (with the intent of buying and holding eventually) given that I have always wanted to do it! My big concern, like you, was the cost of property in California but there are some cheaper markets in state as well that have a lower barrier to entry than the coastal markets. I am sure you can find success in whatever you do. And let me know if you’d like to connect, I am in North county san diego and in OC often. 

Quote from @Connor Kline:

I am looking to purchase my first flip. I am currently negotiating with the sellers. I have been in contact with a few lenders, and hard money lenders. I am curious to know if anybody has a good lender they would recommend for a first time investor? The deal I am currently looking at is purchase price between 50k-60k. Rehab between 75k-90k. ARV 205k. The goal is to flip it, but alternative exit strategy would be to refi into long term hold.

Ideally the lender I am looking for needs to work with first time investor, and also okay with the amount of rehab needed. (a couple lenders have told me it is to big of a rehab for a first time investor).

I have 25k in reserves, and need a lender that is okay with that. 

Any advice would also be appreciated!

Hi Connor - congrats on finding a flip! You’ve received a lot of good advice above. We (my boyfriend and I) are under contract for our first flip in California and while I’m excited my veins are also fueled with fear, but I just need to keep reminding myself of the numbers. 😅

From my experience so far in contacting HML’s, many won’t lend beyond 85% LTC and below a 75k PP. However, I am sure there are loan products out there that may work. A few suggestions:
1) Could you raise private money instead? Family, friends, networking contacts instead of using a HML? Full disclosure - I have not done that but could be a work around for the red tape with a HML. I imagine a similar level of due diligence may be required. 
2) perhaps a construction loan product might be a better route? Again, I’m not familiar with them by any means but there are definitely lenders out there that do construction loans. 
3) do you have a primary property that you could take out a HELOC? We have a HELOC on our property that we are using for the down payment + reserves. 

Good luck!! 
liz

Quote from @William Klawitter:

Hi all. I have a wholesale deal under contract, but I'm seeing that title incorrectly shows 2 beds when there are really 3.  Seller claims all 3 beds are original & from my inspection, they appear to be original as well.  My buyers will still need some documentation though. So the question is- if title's wrong, where can I go next to get the docs that prove the 3 beds are original?  I'd guess that I could go to the county- but isn't that where title gets their info from anyway?  Seller has their purchase docs but they don't say anything about the number of rooms. Thanks in advance.

Hi @William Klawitter I’m resurrecting this post from 9 years ago 😅. I’m under contract for a property that is showing 2 bed /1  bath with the county but there is a 3rd bedroom and it appears to be original to the house. I’m curious if you remember how this situation resolved? We will be doing a fix and flip and 3/1 or 3/2 (if we add a 2nd bathroom) would be a big difference for selling purposes. Thanks :) 

Quote from @Mark Ainley:

@Elizabeth Seiferth if you DM me suburb and scope size I will connect you with one or two people we have worked with.  

 Thank you @Mark Ainley! If it does by some small chance pan out then I'll send you a DM! Appreciate the offer.