All Forum Posts by: Jamie Parker

Thanks 

This past weekend I was driving with my mom and daughter looking at properties in the Memphis Area. Cutting to the meat of the situation, I came across a property that looked like a fixer upper, typical investment grade property. Could use some work, good bones. Fast forward, I called the agent this morning. I informed the agent that I was a wholesaler. I was informed that the property is held in a conservatorship. While the Agent mention that the seller would prefer no assignment, to which I acknowledged. 

If the seller accepts the offer, (contingent on appraisal[as per court approval requirement]), How should i proceed in the situation. Can I just birddog the situation, step out the way, bring the buy and asking for a referral? or partner with a buyer for a flip? 

Just curious has anyone been a situation like this before. 

Quote from @Derek Bell:

I am used to posting under “commercial real estate”. I usually only do commercial/industrial developments. But I have an opportunity that I need some input. A seller and I are going to be under contract soon for a 13 acre parcel in middle TN. Very up and coming city located about 30 miles south of Nashville. Property is located at a wonderful highly traffic location. 18k cars a day and will only be increasing. 5 of the 13 acres is zoned commercial, the back 8 acres is zoned large lot residential. I want to keep the commercial zoning up front and parcel those off. The back 8 acres I want to rezone to a small lot townhome use. Just initial talks w my civil, I think we can get 40 pads or so. So, how much do residential developers pay for 40 or so townhome pads?

I am not going to do any improvements to the land, just improvements on paper etc. The topo is good. Not great, but good. All utilities are at the street. 

I would be curious to try a different approach work it backwards:

Example

1,000,000 Land Cost

x2 = 2,000,000. Soft cost, carry cost, offsite and fees

/.2 = 10,000,000 Total Build Cost 

40 pads= 250k per pad Cost [250k/$150 per square ft = 1666 sqft per unit] 

250k per pad x 20% = 50k for land ready to build. 

Check the comps for sale prices by square foot. 1666 sqft sales for 419k for example  Residential build cost and commercial build cost are different. The difference in build cost could add or subtract sqft but more of a quick estimate 

Quote from @Jamie Hora:

The question you pose in the title, "Is a rezone required if availability study can support more density".  Technically speaking, to develop with a higher density, then its an obvious yes that rezoning will be required.  

But I think you may be asking, should you do the rezoning, or leave it to the ultimate developer.  I would consider the jurisdiction you are in and the nearby existing development to gauge how this process may be.  Increasing density can often get strong reactions from residents if they disagree with it. 

Is the surrounding areas trending also with increased density? Does the City have Future Land Use Maps showing a higher density? If these are a Yes, then you'll have the support and backing of the City staff in your rezoning case.  In that scenario you could do the rezoning. (That's also assuming the higher density is what a developer is looking for in this area).

Thank you for pointing that out. Asking the right questions is vital to getting the right answer. In cold calling, have narrowed my focus since posing this question. "should a rezone be pursued" is exactly the thing that I ran into. Cold calling sometimes Topo maps and street view dont tell the whole story. I was able to drive the property a couple of days later, and I realized no i should not chase a rezone, and actually property similar to this will be removed from my list. 

About the availability study thing. That was my first time hearing that as a thing, never knew about it. Know I do. Thank you posting. 

Quote from @Tanarat Bunchom:

Hello Jamie! You’re on the right track—setting up separate LLCs for wholesaling and building can simplify things and offer liability protection, plus putting properties in their own LLCs keeps assets safer as you grow. Aiming for each part of the business to eventually fund itself is a solid plan, and a real estate CPA or attorney could help fine-tune everything for taxes and structure. Congrats on all the progress!

 Thanks you for the contribution to the discussion. While I am focusing on deals remaining consolidated to 1 llc makes sense. However, once i hit my goal and preparing to break ground on new construction, having a plan seems to help me better than shooting from the hip. I did that once and it didnt work out to well. Thank you again. 

Quote from @Sean O'Keefe:

Quote from @Jamie Parker:

Quote from @Tim Delaney:

Quote from @Jamie Parker:

In my first stint in real estate, I thought reinvesting in the business was keeping the marketing engine running. At the time I was running on direct mail. I thought reinvesting in the business was partially investing in education. I justified going to the 10X Growth Con in 2017 and a couple local investor seminars. Only thing I got out of those events were I didn't understand how to get to the next level (no fault of the events, I take responsibility of my on inability to make the connections in the content).  Taking notes and asking questions only got me deeper in the weeds as if I was asking the wrong question. 

After purchasing my first property last year, I have resumed cold calling after purchasing a second property this year. Closed my first wholesale deal in 5 years. But now, I am more concerned with entity structure. I wholesale in LLC #1, and the 2 properties i purchased is in my name currently.

The big question for me: When I start to build, should the properties be held in an entity? I will need to partner with a builder to get financing. Secondly, should Building LLC be separate from Wholesaling LLC(currently being used for wholesaling). Who should I or do i talk to about getting things more compartmentalized. I recently ordered a survey on the two lots I own, and realized that I may be approaching this the wrong way.

For clarity, as i understand the concept of reinvesting in the business, each "Bucket" should eventually fund itself without the need for cash injections or contributions. Where or when is the point should I consider this or can just start out at any point? 

Any thoughts? 

 Thanks for your reply, but also my apologies for the lack of clarity. In my first stent in real estate, I would make a withdrawal from my account, or spend out of it. Not going over a predetermined amount. However, I want to do things different. I think the technical term is distribution. 

Do I write the LLC a W-9 and write a check from the LLC into a personal account for tracking purposes? The rule I plan to enact is paying myself 10% of the revenue generated from wholesaling quarterly. Since starting up, I am personally funding the marketing and lists. At this point I have not done anything yet in terms of distributions. This year, Unless I hit my goal i do not plan on taking distributions, this will be how next will start for simplicity.

My ideal is to have a system or a standard in place to maintain discipline about procedures. That way I am rewarded but not using the business account as a piggy bank. 

Generally, Distributions are paid from profits that have already been taxed at the personal-level since IRS Schedule K-1 flows through to personal return. As a result, you don't need a W-9 for yourself, you're a Partner, and you don't need to issue a 1099. Distribution for Partners are track on the IRS Schedule K-1 in the Partner’s Capital Account Analysis section. You can wire the distribution, pay it by check, etc. The method of payment doesn't really matter - what's important is that it is tracked in Schedule K-1 and reported to IRS. 
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*This post does not create a CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.

 Ill take that I am thinking too deep about this. To all the comments thanks for letting me know, "stick to getting deals done". Ill just do that and stop trying to do what the guys on LinkedIn are doing. Thanks to all. 

Quote from @Tim Delaney:

Quote from @Jamie Parker:

In my first stint in real estate, I thought reinvesting in the business was keeping the marketing engine running. At the time I was running on direct mail. I thought reinvesting in the business was partially investing in education. I justified going to the 10X Growth Con in 2017 and a couple local investor seminars. Only thing I got out of those events were I didn't understand how to get to the next level (no fault of the events, I take responsibility of my on inability to make the connections in the content).  Taking notes and asking questions only got me deeper in the weeds as if I was asking the wrong question. 

After purchasing my first property last year, I have resumed cold calling after purchasing a second property this year. Closed my first wholesale deal in 5 years. But now, I am more concerned with entity structure. I wholesale in LLC #1, and the 2 properties i purchased is in my name currently.

The big question for me: When I start to build, should the properties be held in an entity? I will need to partner with a builder to get financing. Secondly, should Building LLC be separate from Wholesaling LLC(currently being used for wholesaling). Who should I or do i talk to about getting things more compartmentalized. I recently ordered a survey on the two lots I own, and realized that I may be approaching this the wrong way.

For clarity, as i understand the concept of reinvesting in the business, each "Bucket" should eventually fund itself without the need for cash injections or contributions. Where or when is the point should I consider this or can just start out at any point? 

Any thoughts? 

 Thanks for your reply, but also my apologies for the lack of clarity. In my first stent in real estate, I would make a withdrawal from my account, or spend out of it. Not going over a predetermined amount. However, I want to do things different. I think the technical term is distribution. 

Do I write the LLC a W-9 and write a check from the LLC into a personal account for tracking purposes? The rule I plan to enact is paying myself 10% of the revenue generated from wholesaling quarterly. Since starting up, I am personally funding the marketing and lists. At this point I have not done anything yet in terms of distributions. This year, Unless I hit my goal i do not plan on taking distributions, this will be how next will start for simplicity.

My ideal is to have a system or a standard in place to maintain discipline about procedures. That way I am rewarded but not using the business account as a piggy bank. 

Quote from @Chris Latham:

Hi Jamie,

I admire your diligence and attention to detail.  

 Thank you Chris, I decided to chronicle the project on BiggerPockets to remember every step of the way. This being my first run at it, I knew there would be something to talk about, lol. Thank you again for noticing. 

Just went under contract for a property. Seller is selling a portion of a 20 acre lot that has not been parceled yet. Under the current zoning (parcel viewer) the lot is zoned for 1 single family ever 40,000 square feet. I requested the water and sewer maps from metro, but this time it was different than usual. Maps redirected me to availability for a study to see if the current infrastructure can support further development. So obviously i will have to wait till Monday or Tuesday to hear back. I guess my question is, what happens if infrastructure availability is favorable? Level it as is or just wholesale it to a developer for them to work out all that? My goal is to provide as much value to the developer as possible by doing as much research as I can. 

Any thoughts. 

After some major considering;

If I can keep the Total Build Cost under 250K, Not including Cost+ or Builder Fee, these two projects will be an amazing for the area. Sending the surveys over to my architect was a really good feeling. Scraping the previous conceptual, my architect has been extremely helpful. I would like to build a craftsman or bungalow style, Recorded in the Domesday Book of 1086 as Latune, Latham became synonymous with rural land awash with barns and farmland. I am considering Farmhouse builds but may just get these two done and change at that point. Aim for a footprint between greater than 1500 but less than 1700 square feet.