All Forum Posts by: Tim Silvers

Igor

Is your 10-15% based on all cash rehabs or are you leveraging with hard money?

I get more than 6% sometimes on my deals.

The brokers/agents going out of business has been touted for decades and it still hasn't happened.

On flips when the market was hot any idiot could buy a property and make a ton of mistakes.With everything rising they could still most of the time eek out a profit.If they really knew what they were doing they could hit a grand slam.

Today you have to do everything perfectly to preserve your margins.You have to go after properties that regular home buyers can't get financing on or are too ugly for them to want.

Investors looking to buy paint and carpet only jobs to flip are looking for a needle in a haystack.

I don't deal with wholesalers much when I list an REO or a commercial short sale.All they want to do is collect a fee.When I list it the bank and or the seller in pre-foreclosure knows I can easily find them an actual buyer who wants to own the property for awhile and does not need a wholesale price.

The bank doesn't care about the wholesaler trying to be a middle man.The bank wants the highest net and so does the seller in pre-foreclosure usually to reduce their 1099-C phantom tax potential.

My friends that flipped during the hot times form years ago are now doing development projects redoing downtown warehouse spaces for conversions using government grants etc. to offset costs.They aren't really playing in the residential flip market anymore because of higher risk now and lower profit margins.

Are condos still going cheaply in Vegas?

I don't believe there are REO flips in this market in Las Vegas. We do occasionally see that REO properties close at suspiciously low prices (like the ones we get at Trustee sale) but it's typically because they go back to the REO agent. This seems to be illegal, so sooner or later they will get caught.
There probably are some completely trashed REO properties that one can get only for cash since no bank will finance them, but by the time you fix them I'm not sure there will be any margin left for the profit. In addition with REO there are extra expenses such as closing costs which further eats up the profit.
I'm not saying it's not possible to make a flip based on REO, but why would one go there when there is Trustee sales. BTW, if you need help in buying at trustee auction in Vegas, I can help.

In regards to the topic title ('Flippers Priced Out of Market Now?'), not at all. In Las Vegas the only way to flip the house is to buy it at the Trustee sale. Well, it the only way if you want to build a repetitive stable business. While in 2009 we regularly saw the return of 40% on a single property bought at the Trustee auction, it's not the case any more in 2011. However you can still average a 10-15% return on a single flip right now (2011) here in Las Vegas.

...learning how to list REOs and short sales, working with asset managers and recreating our business models.

Yes, the bank may pay any draft presented, but;

What I was saying is to also address the dual control requirement in the Operating Agreement.

If one partner signs any draft and pays any item or presents it for payment without the other signature that partner has then operated outside the Operating Agreement and is liable personally to the partner.

Your Operating Agreements should also include actions performed outside the partnership being persoanlly liable to the company. On top of that, there will be a hold hamless and indemnification agreement. This can stipulate that such amounts must be paid upon demand and if not paid, the defendantis to pay costs of collection, court costs and reasonable attorney fees.

If you have a partner that writes a draft under these conditions, they may also be subject to criminal charges, embezzelment and fraud. Such charges may well dependon the amount of the check IAW state laws.

You could also have the partners bonded for theft, fraud, or embezzelment. Other types of coverage such as errors and ommissions are also available. Costs would have to be considered, especially for a new company or business partner.

You might find a third party to sign checks for you, like an accountant, some provide such services, but frankly the liability is high for them and that toocould be expensive, but might check on it.

So, just because a bank will honor a check without the proper signatory doesn't mean who ever signs it is off and away with the money.

As mentioned above, protecting yourself is one thing. If you are paranoid about dealing with someone, you just don't trust them, don't get in bed with them in the first place! Move on.

Good luck.

I would never partner with someone if I didn't trust them not to steal from our business...

What you're looking for is called "dual control". When you set up any depository account you can have dual signatures required for any transfer, withdrawl or draft. That will require at least 2 people to sign. One can deposit,

Be sure to include that in your Operating Agreement as to the adminstration for depository accounts. Good luck..