All Forum Posts by: Lisa Johnson

Hi everyone,

I am meeting with my investor tomorrow and we are going to discuss setting up an LLC for our flipping business. With that said, since we will be paying cash for the houses and repairs, should we buy them under our LLC or in our names and then transfer to the LLC?

Please note that once we rehab the property and sell it, at the end of the year our LLC will issue a 1099 for each of us.

@Dayn Beals, @Account Closed, Thank you all for taking the time to advise me on contractors.  I really felt that the second contractor was very professional as well.  I have known him through networking and he seems to have a good reputation.  The first contractor was referred to me and various people told me that he does good work.  My issue with him was he didn't really seem to want to do the job.  Also, him showing up an hour late to meet me and my investor was very embarrassing for me. Okay, so I gather from your advice that I should not tell them about each other when getting bids and I should give them a budget for the SOW before so they can see if they can work within it.  Am I understanding your posts correctly?  I really appreciate all of you taking the time to help me understand this process and I would like to invite all of you to be my colleagues.      

@Tim Steele, thank you for your advice.  

When I locate another house I will contact at least 4 contractors and let them know that this job is up for grabs if the price is right.  They will all know that they have competition.  Have a great day.

Thank you @Ben Wendt.  The purchase price is $234K and it's in a nice established neighborhood.  It has water views and is across from houses on the water that sell anywhere from $652-800K.  There have only been two houses in the neighborhood over the last 6-8 months that have sold. One for $197K and the other $234K.  Both of those were estate sales and interior lots, neither had water views.  In talking with my Realtor she contacted to other agent and found out the lady that owns the house bought it in 2011 for $301K.  So, as you can see, the seller is already taking a big loss.  

In processing this deal in my head, there are some sticking points about the construction of the house that would make it less attractive to buyers.  One being, the front entrance is very dark and narrow and sits to the side of the house.  Two, the master bedroom sits right off the entry.  The front door opens, take two steps and you are at the entrance.  Master's located on the front of the house is a detriment.  Most buyers want their masters located towards the back of the house or split from the other bedrooms.  I think with just the layout alone, it's an uphill climb no matter how good the finishes on the rehab.  Thanks for your advice, have a great day.   

You might want to check on Craig's List.  Select your town or one close to your and look under Materials. There some really good deals on there.  Good Luck!  

Hi everyone, 

I was hoping that by this time I would be telling you about the start of my first flip but...

Over the last two weeks I sourced a house in a really nice neighborhood, did the initial walk through with my Realtor and my investor. I typed up a scope of work to be done on the property and gave it to  the contractor who met me the next day at the property.  He showed up almost an hour late, did a very basic walk through not checking electrical, plumbing or really anything else. About 2 day after that he gave me a verbal bid. ($54K -not sure for what exactly) He then said and I quote," I don't want to get my electrician or plumber involved unless I know we got the job".   Needless to say, I was not happy.  I then called another contractor (not telling him my quote) and he met me same day at the property.  He walked through and discovered a lot of issues.  Several leaks, polybutylene, mold, issues with the roof, shorts in smoke detectors and the hot water heater not meeting code.  He then asked if his subs could meet me there the next day.  When I got to the property, He was there along with his floor guy, plumber, electrician, and the painter/sheet rock.  I was shocked and happy given the most recent experience with the other contractor.  We all walked through, each one writing things down in order to provide a bid for their service.  Several days later, I contacted the contractor and was presented with a bid for $77K.  Needless to say, I began to negotiate with him and was able to lower the price by $6500.  Even with all of that, the numbers didn't work so I had to scrap this flip.  Please note that all of this contractor's subs owned their own businesses in their respective fields.   

Okay, so I want to know how you more experienced flippers handle these two issues.

Should the contractor give me his price and take care of paying for his own subs out of that or is this common place for all the subs to provide individual bids? 

And,

I have read dozens of post on BP by people who purchase the houses first and then meets with the contractors after the close for bids.  

Which is the right way:  Walk the contractor through before the purchase and get bids or wait until after the house is purchased?

Thank you @Rob Witt and @Steve Vaughan for your help.  I really appreciate you taking the time to help me with this.  Have a great day!

@Matthew Kreitzer, Thank you so much for your advice!  Have a wonderful day.

Thank you @Matthew Kreitzer.  Should I consult with a Real Estate Attorney or General Practice?  

Hi everyone,

I am starting my new career in flipping houses. I have my investor in place who will be purchasing the houses and covering the cost of the rehabs. We will then split the profits 50/50. Currently, I am a CEO of my own company that has an LLC. My company has to do with careers/consulting and not real estate. Is it possible to use my existing LLC to cover our purchases / flips? I can set it up to send out a 1099 at year end for both he and I. Do you have to change your LLC to add a DBA if the initial LLC is for a Career focused company? Will I need to add my investor as an officer in my company? Any advice would be very helpful. Thank you.