All Forum Posts by: Nghi Le

@Kelly B.

There were multiple reasons, many at play before we even started the campaign.  But we were all working full-time then, and we decided that rehabbing and doing the mailing (and responding to calls) just wasn't feasible.  We also had 0 responses out of 300 mailers  that week (and over the next 3 months we only had 1 call back), so we did a bit more research and saw how competitive the wholesaling landscape was in Seattle, and we just didn't have the time and energy to do trial-and-error to find the sweet spot.  Even now, in Seattle, it's easier to be a rehabber (and buy from wholesalers) than to be a wholesaler.

@Ben Biggs

We primarily buy our properties from wholesalers and MLS, so we don't typically deal with off-market sellers directly. The offer I mentioned earlier was to neighbor who had interest in the work that we did from one of our flips in the area. I ultimately didn't get the deal, as a couple of other investors had already reached out to the owner and offered higher than I did. The market is extremely competitive here in Seattle, and I tend to be more conservative than most of the flippers out there.

Due to the hot Seattle market, we don't really have an issue of houses not selling.  We typically buy in areas where the average DOM is less than a week.

I'm definitely not an expert on marketing and wholesaling (tried my hand at direct mail for a week and decided it wasn't right for me), but I'd reach out to the multitude of wholesalers on BP for some more advice :-)

My issue with all of this is that this is your first flip, right?  When you're starting out in real estate, I always recommend to keep it simple and focus on the income-producing activities first as opposed to spending money on creating complicated legal structures.  Doing a flip is hard enough, so there's no need to add more complexity to it.

I spent 6 months wasting money on setting up an LLC and asking attorneys and CPAs all sorts of questions. And then when I acquired my first property, to save myself a headache I just put it in my own name, even though I already had an LLC. Because it's not just about setting up the entity correctly, but you have to run it correctly as well.

Flipping isn't for everyone.  And until you do one and decide that you want to keep doing it, I don't recommend spending thousands of money for a legal structure that might possibly be used just once.  And if you do decide to go through with it with your money partners, and you lose money on the first deal, then you'll probably lose your money partners (and perhaps friendships) as well.  I personally wouldn't put my relationships at risk in a new venture.

In real estate, experience and results are what matters to people, especially lenders.  I would get that started before doing anything else.

@Carl Washington

You can do something like the following 3 options:

• All cash
• Lease-Option
• Owner Financing

Here's a sample offer I made 6 months ago on an off-market property:

Offer #1: All Cash

$120,000 Purchase Price

Offer #2: Owner Financing with Down Payment and Monthly Interest

$130,000 Purchase Price

Down payment of $10,000 now, and then $1,000 a month for up to 7 months, at which point you will be cashed out

Offer #3: Owner Financing with a Single Balloon Payment At End

$140,000 Purchase Price + seller closing costs (title/escrow/insurance fees and excise taxes)

We pay all of your closing costs (so you won't have to bring any money to the closing table), and then cash you out within 7 months at the highest purchase price

Hi @Reda Eldehiry, nice to see another Seattle software engineer on BiggerPockets!  I myself am a retired software engineer at the age of 27 thanks to real estate.  I can't imagine someone at Amazon being able to take on flipping alone though; it's definitely another full-time job, and at times even more taxing than a 60-hour workweek.  Kudos to you!

I'm not an attorney, but I can definitely refer you to the one I use in the Redmond/Kirkland area if you want to PM me.

Everyone is bringing in SEC/DFI, and I don't think it has to go there. Since you're a new flipper, I would just create an LLC for the first deal/property, and then see where it goes from there. That's the simplest and least riskiest way to get started.

You can lay out of the terms in the operating agreement (of the LLC you created) for that specific deal, and because everyone is considered a partner (and not a lender) and a PPM isn't involved, I don't believe the SEC needs to get involved. Of course, talk to an attorney to verify this.

The hard part is knowing how much each person needs to put in (because you don't know what property you're going to buy yet). You could potentially lock up a property in an uncreated LLC's name, then create it right after mutual acceptance, but that's a bit risky and requires a lot of up-front planning, so I don't recommend this route.

Another route you can simply do is have title in your name, and then have all of your investors in a fractionalized 1st position note (with deed of trust).  You can spell out all of the terms in the note itself, including profit share.  This allows you to really align things per deal with different investors and investment amounts.  If it's a 1st position lien and your investors are friends and family, I don't believe SEC/DFI needs to get involved either.  Again, something to talk to an attorney about.

However, if this is your first flip, all of this is honestly a huge, unnecessary headache.  Try to do your first flip with your own funds if you can (and use a hard money lender to leverage most of the project costs).  Your investors will probably want to see you have some experience anyway.

Please add me as well, Patrick :-)

Hope to see you at the next SnoCo meetup (won't be going to the one this month though).

@Robert Slatkin

The permitting part is the most painful part, sometimes it might even take longer than the rehab itself.  When we submitted permits, the intake date was 2 months out.  And then they took their sweet time reviewing it... and sometimes we have to go through multiple revisions.  In our latest permit submission, there was a power play between the designated reviewers.  The soil guy wanted us to modify some of our structural designs and then yelled at the structural guy for approving the structural portion of the permit, even though that was outside of his scope/jurisdiction.  But once we have permits in hand, the rehab takes 3-6 months, depending on how extensive it is.

We haven't explored buying lots and building on them yet, so I'm not able to give you an answer for that, unfortunately :-(

But once you're in town, we should have coffee.  I can also show you to some of the local meetups and I'm pretty sure you'll be able to find people there that can answer all of your questions.  There's a huge and vibrant real estate community here in Seattle :-)

Hi @Steven Britton,

As @Bryan R. mentioned, we're in a Tax Deed state.  I haven't heard of anyone doing tax deed investing successfully in this state (unless they invest in tax liens out of state).  Most of them get picked up before auction time and you're left with the bad ones.

Can I ask exactly what you're looking for in tax liens?  Is it mainly cash flow?  Is it the potential of owning a property at a very low cost?

If you're coming to the BP Meetup this Thursday, we can sit down and chat as well.

@Steven Rasovsky

Ahh, I see, you're looking at condos. I don't normally watch MLS listings that much. It sounds like you need a realtor who can set up an automated mail for you when new listings pop up. @Adrian Chu would be a good choice, especially since he's very well-versed with condos.

It looks like your 2nd comp is available?

Hi @Steven Rasovsky,

We do have a property in Capitol Hill / Madison Valley getting ready to be listed this upcoming Thursday, but it's much higher than the price range you're looking for.

I'm not sure you can find a house in this area for that price; I know a homeowner who just sold his 2 bedroom, 1 bathroom, 1,000 sqft house for $400,000. We were trying to buy it off-market for $350,000, but he found another off-market buyer (through FSBO listings) willing to pay higher for a house that needs to be remodeled...