All Forum Posts by: Katherine Robbins

@AngieBriggs I live in Salem and I'm seeing a lot of renovations happening and prices steadily increasing. I think if you wait until the Spring to sell, you'll see you'll be able to get even more for it. It's really become a hot spot for young people and developers are seeing it. There are a ton of renovations/condo conversions happening on Federal St as well as The Point neighborhood. 

You might even want to consider splitting them into condos and selling each one off. Depending on the size of each unit and where you are in town, you might be able to squeeze more money out of it that way. Or, just sell 2 units off, keep one as cash flow and still get that money to invest somewhere else. 

Thanks Jake Hottenrott! That's super helpful. Appreciate it :) 

Hi everyone, I own a development company that primarily flips houses in MA amongst various other GC and design work. When we started a year ago and a half ago, we were told to structure our business as an LLC and elect to have it taxed as an S-Corp. There are 2 of us with interest in the company (40% and 60% share split). My question is, does anyone else have a similar business structure and if so, do you take your profits from your flips as a distribution or as wages in the form of paychecks? We want to be able to pay ourselves in bi-weekly paychecks but do we split off the Medicaid/SS taxes in doing so or do we not and consider the paychecks as part of our distribution and avoid that tax all together? We plan on considering the side work (GC and design stuff) to be taxable wage income but that is minimal compared to the profit we receive from flipping. We do about 2 flips a year as we're just starting out but once we grow, if we take distributions, then that will be a significant amount of profit/cash that will be avoiding the FICA taxes. In our mind, we setup the company this way to do just that, avoid being double taxed by Business Income and FICA but our accountant is concerned with taking paychecks and not paying the Medicaid/SS out of it and then having to keep track of what side work is considered wages and what's not. Any advice will be helpful!

Hi everyone, I own a development company that primarily flips houses in MA amongst various other GC and design work. When we started a year ago and a half ago, we were told to structure our business as an LLC and elect to have it taxed as an S-Corp. There are 2 of us with interest in the company (40% and 60% share split). My question is, does anyone else have a similar business structure and if so, do you take your profits from your flips as a distribution or as wages in the form of paychecks? We want to be able to pay ourselves in bi-weekly paychecks but do we split off the Medicaid/SS taxes in doing so or do we not and consider the paychecks as part of our distribution and avoid that tax all together? We plan on considering the side work (GC and design stuff) to be taxable wage income but that is minimal compared to the profit we receive from flipping. We do about 2 flips a year as we're just starting out but once we grow, if we take distributions, then that will be a significant amount of profit/cash that will be avoiding the FICA taxes. In our mind, we setup the company this way to do just that, avoid being double taxed by Business Income and FICA but our accountant is concerned with taking paychecks and not paying the Medicaid/SS out of it and then having to keep track of what side work is considered wages and what's not. Any advice will be helpful!

Hi everyone, I own a development company that primarily flips houses in MA amongst various other GC and design work. When we started a year ago and a half ago, we were told to structure our business as an LLC and elect to have it taxed as an S-Corp. There are 2 of us with interest in the company (40% and 60% share split). My question is, does anyone else have a similar business structure and if so, do you take your profits from your flips as a distribution or as wages in the form of paychecks? We want to be able to pay ourselves in bi-weekly paychecks but do we split off the Medicaid/SS taxes in doing so or do we not and consider the paychecks as part of our distribution and avoid that tax all together? We plan on considering the side work (GC and design stuff) to be taxable wage income but that is minimal compared to the profit we receive from flipping. We do about 2 flips a year as we're just starting out but once we grow, if we take distributions, then that will be a significant amount of profit/cash that will be avoiding the FICA taxes. In our mind, we setup the company this way to do just that, avoid being double taxed by Business Income and FICA but our accountant is concerned with taking paychecks and not paying the Medicaid/SS out of it and then having to keep track of what side work is considered wages and what's not. Any advice will be helpful!

Hi Adam, 

What type of wholesaling are you trying to do? You have a few contradicting questions. Are you looking to close on a property where you are the buyer then you turn around and sell it to someone else after you buy it? Therefore doing a double close type of transaction. Or are you looking to just assign the contract that you get to another investor? IF that is the case, you are not involved in the P&S or the closing. You are merely the person getting the seller to agree to sell the house for a certain price. MA is a 2 step process state - there is an offer contract and a purchase and sale contract. You can just assign the offer contract over to someone else and relinquish your responsibilities. This is just one way of doing it. Other states you'll need to do the P&S assignment.

Example - you find a home and contact the owner and tell them you're interested in buying their house. You think their house is worth $115,000 and you offer them $100,000 to purchase it. You write up an offer saying you will buy the house for $100,000 in 30 days, all cash and no contingencies but you have the option to assign the contract to someone else if you can't close on the property. You find an investor who is interested in the property and you assign the contract over to them to purchase the property for $115,000. The new buyer then takes over your offer to purchase and signs the purchase  and sale agreement with the seller. You will collect the $15,000 difference at the closing via the closing attorney or title company. You're selling the offer contract for a price, just the piece of paper, nothing else. You'll need to find an attorney or make sure the investor who takes over has an attorney who is familiar with wholesaling to make sure you get the assignment fee at the closing. You don't need to be at closing, just make sure you are giving your information to the closing attorney. Closing can be done in person or through attorneys. Depends on what the seller wants to do. 

You'll have to tell the seller this is happening though and they typically don't like the idea of you getting a cut of their sale. You can do a double close where you actually buy the property and immediately sell it to the investor for the increased price, that way the seller has no idea but you'll need an attorney who is familiar with doing this. You pay some fees when you do it that way but you also don't piss anyone off. 

Hope that helps!

How major are you talking? Are you rebuilding anything structural? 

HI @Lonnie Hammond - no luck on getting the contract from the guy I mentioned. Contractors aren't usually the most reliable when it comes to paperwork. It is quite simple for an attorney to draft up the language you want in any contract though. You have to be the one to set the terms of the contract anyway because it's most likely going to be specific to your deal. 

It is definitely a sellers market and is over saturated with investors, flippers and out of country buyers. People have the money in MA to overpay and no one even bats an eye anymore when someone offers all cash, no contingencies. I think your best bet is to look at the market trends for the lower end neighborhoods and see which is trending upwards. As an investor, flipper and Realtor - I would suggest Chelsea, Lynn, Revere, Everett and go north from there. Try to get a 203k loan and find a fixer upper. You'll have a contractor set the budget and you'll be following the direction of the bank so it's relatively easy to do and you'll be able to design it the way you want. Plus you'll buy something under market value and have instant equity. It's definitely hard to find properties but look outside the box and try to find something off market - send out letters and contact homeowners who live out of state. And always use a Realtor as a buyer! You don't pay any fees or commissions to them on the buy side, the seller pays it all. Just find one who is investor friendly. 

Hi @Naoise M.

I got my license for the same purpose, to have the transactions stay all "in-house" if you will and not hire everything out. I find that it's more complicated when you are the seller representing yourself rather than the buyer. The buyside is pretty straight forward and to be honest, the sellers agent is the one facilitating the deal so all you have to do as the buyers agent is to just stay on top of your dates/deadlines and make you have the appropriate contracts in place. Make sure you're open and honest with the sellers agent and let them know you're licensed and will be representing yourself. As long as you are using an attorney that also understands your situation, you should be fine. 

Like @Nick Foundas said, you'll need to hold your license with a brokerage in order to be considered the buyers agent for the transaction. You can't get paid the buyers commission if you don't have an affiliation with a company. I hold my license with Century 21 Commonwealth out of Newton and there are a ton of investor agents that work in the office. We are associated with one of the biggest developers in the area as well as the manager of the office being an investor herself. It's a great environment and everyone there is interesting in flipping and helping each other out. I love it. 

Feel free to shoot me an email if you have any specific questions! I'm happy to help :)