All Forum Posts by: Richard Heine

Without hijacking I would like to follow up on a few finer points from the great post by 

@Jeremy Rotert  

Get an LLC

Have the LLC loan the money. But who is the buyer then. I want the LLC to by the buyer and have issued the loan. But that seems reciprocal.

My LLC is buying a multi for cash. I want to do a cash out refi soon. How do I structure the loan? Another one of my LLCs loans to my buying LLC?

R

On the Capital Expenditures budget I think you can be less aggressive since the big three, HVAC, roof, and water heaters are new.

That's a good story. Several times if the house was less than 'broom clean'  and my cleaners can't fit me in I gave new renters 2 weeks free rent to clean and paint. They love that. It's like a discount coupon.  My cleanest 'Good Housekeeping Award tenant left the house in terrible condition...in a hurry.

I will only answer a small part of this because this might be a good opportunity and I have been through one of these with a seller 2 years ago. You really need to think outside the deal. Does he have kids (heirs), is this guy of sound mind and is there equity in the home.  If the deal is ridiculous good someone might come sniffing around when you are the owner.

I think your dealing with a common form of grief and depression.

This is a rescue deal in disguise. The people I dealt with were not in for a chalkboard pitch, you are right. I had them tell me what was going on and what they wanted to do with their life and the house they were already way behind because of medical stuff.  I told them I would come up with a plan and drop by in a day or two.  When I returned I made a short pitch starting with "What if you could,..."  I got a killer price, help them get rid of the car and they ended up with enough equity to move on. But not much. I was there fifteen minutes.

This is beyond sales 101. Good luck. There are some awesome deal makers on BP so I am sure you will get creative suggestions.

For current tenants you will want Estoppel Certificates to know the rents, deposits,  and who owns appliances, etc.  Sounds great with all that new hardware. Lower your cap ex estimate.

Get your LLC in NC today, Look here, $30.  Takes about 15 minutes online. The paperwork is very generic. You can find it anywhere online.  Take the fancy State document and go to the bank and open a checking account. They will only offer you a business account. Now, when you make an offer on a property, the purchase offer will say buyer is XXX, LLC and you will sign your name.

When you shop that around for money a bank will be happy to loan but you will be asked to sign a personal guarantee. There is really not that much more to it. You only have to deed it once from seller to your new LLC.

Say you want the spouse or kids to be part owners. Boom, add them to the LLC.

My real job is using QB Enterprise with payroll, 12 years now, but for my real estate I have been a quicken user. Basic but Intuit products work. Thank you Dave Toelkes I am jumping over to QBPM cause I am spinning a lot more plates now.  I found that several of my accountant friends are well suited to decipher a QB products to process tax returns. No more shoe boxes.

These are all good suggestions. I am guilty of shooting from the hip but I have done so many home repairs over the years that I can rough estimate pretty quickly. Of course, that is if nothing unexpected is discovered.  I recently started making a list during a slow and careful walk through like others have suggested and then did some online shopping for prices.  This helps construct a working budget. Don't be tempted by budget creep.  Draw the line early on  about the quality and types of enhancements.  Kitchens and bathrooms need to be nice but also you need to have 'curb'. Not just the view from the curb but when someone opens the front door.  That is where the hook is set. After that other imperfections will be excused. 

Get the GC you trust on the walk through. Also. Like  Alex Johnson said, know the cost of all the big items by ticket price or Sq ft.  BTW, it's always more than your first estimate so don't be conservative. 

If you don't have any networking or eyes on the inside ( local bankers and brokers ) you need to find that killer short term owner finance.  Save your cash for some down money and the rehab. I have been in your shoes before and they are out there.  Have you thought about a FB post or CL ad. Maybe some mailers and a little driving for dollars.  You want the hoarder house, the one grandma has to move from. Those are my favorite. You have to play harder than anyone else to find that first deal. 

Another tip. Don't do the inspection alone. I never hire an inspector but I have construction friends, small time builders.  Together we uncover most of the surprises. In a few hours you should have some rough estimates of supplies needed.  The biggest cost is usually labor so the more you do the more you save. I like to hire out the ugly part, that's where you fill the dumpster when starting.  Please keep us posted.  

Title company - general warranty deed.  Done it twice.