All Forum Posts by: Tony G

Bienes, my partner (who has done 6 flips already) and I (with no experience) consistently look at properties that our agent gives us on a weekly basis. we both have full time jobs and that's why we had to hire an agent with a solid team to go through and filter properties for us. If you are saying it's not abnormal to find a deal in six weeks, then it makes me think i'm right in sticking to my game plan and waiting is the name of the game right now. my partner and I communicate well and thought we needed to strategize differently due to market conditions.

Thanks for the input Ryan, I appreciate you taking time to educate me. As far as profit goes, yes, 15k would be our net profit after all costs and acquisition. I am being realistic with my numbers and i'm trying to not get burned at the same time, but it's tough to find properties right now with low inventory and lots of investors. I guess I will just have to wait patiently. Thanks again Ryan :)

my partner and i have been talking to a cpa and he told us to start up an s-corp to avoid self employment tax which is at about 15% in minnesota. according to him we would 1) incorporate our business 2) file with secretary of state 3) get fed and state id #s 4) file sub s status 5) open bank account 6) buy quickbooks.

is this what we should be doing instead of having an llc with my partner? how much is it usually for an s-corp startup? i know an llc here cost about $170.00 and i can do that myself but the s-corp will be done with a lawyer as well as our lawyer drawing up a contract between my partner and I to protect ourselves. is an s-corp the right way to go?

newbie here so please be patient with me :) my business partner and i have been working with a real estate agent who's cdpe cetified and have found some good properties for us. we have been looking for about a month and a half and haven't gotten a property to work on. we have found some potentials and have put in a couple offers at asking price. with those offers, we have gotten beaten out due to owner occupants or other investors who bid a lot higher than asking price. we are looking to make about 15k-20k per property and sticking to that because anything under 15k isn't worth it to us, we would rather wait for a better potential which is possible in my market since we put in 2 offers that would have made at least 15k. we like to have guidelines for purchasing our properties and stick to a game plan.

with that being said, do we need to adjust or re-strategize our game plan with this dry/competitive market right now? are there other avenues besides a real estate agent where we can find properties?

Joshua

Thank You for your input. What would the net profit be if you were to have a 70% ltv on a 130k appraisal (purchase 60k, rehab 30k)? about 40K? If that is correct, and you sell at 85-90% you are making about 20k for 85% (110,500-90k) and 27K on 90% (117k-90k). This is all gravy math, but this isn't including purchase closing costs, loan fees, and interest fees each month you keep it. If you factor those in, say you hold the property for 6 months at 10% = 4800, 2k for points, 6k for closing, and you are going to sell in the 85-90% you are making about 3k and 9k. I think this would be a moving price not a selling price right? Am I understanding what you are telling me correctly Josh or no? I apologize if i'm misunderstanding but I would love to understand how to make 15k from a 70% ltv.

As far as 13% back to investors, for them to purchase the property for me and I pay for rehab costs, is that from the net profit? so if i'm looking to make 15k on a project, i'd give him 1950 for risking 60k? I have no idea what is fair and I would love to get your opinion so I can at least be prepared to negotiate with any potential investors.

Thanks Josh

Tyson

Thanks a lot for the info. It seems like I'm going to have to go to the smaller local banks, but with my good credit and income I think they will be able to give me a loan for higher than 60K. The max i'm looking for is 80k anyways just so i have a wider range for properties.

What were the loan points, interest, and terms of these 2 loans if you don't mind me asking? Also, if we end up using conventional loans is there a recapture period if we sell before 6 months. Is there going to be repercussion if we sell before 6 months? Or is this why the banks charge you the upfront loan points to ensure that they are at least making money on the loan already so they don't care when you sell? If we do sell the property are we going to be subject to a recapture tax?

I wish 80K could just magically appear somehow :) but its fun to figure out all aspects of this business so i be better prepared for later down the road.

This is my situation:

1)I don't have a deal or purchase agreement. In the process of looking for a deal to fix/flip.
2)I have 30K to spend on rehab and down payment, but might need more for rehab/materials. I do have a credit line for 10k at HD as well. My income and credit are above average so not too worried there.
3)I need to borrow 80K for acquisition (that's the max i can buy at because if i have to buy/hold, since it might sit on the market for too long, i can afford to hold the property even without a renter. In the mean time i would still get a renter in there obviously and get some cash flow going. I would then wait until spring time to put it up on the market.

These are my questions for that situation.

1.Since i don't have a deal or purchase agreement, am i just wasting time going to different banks and lenders? I would like to know beforehand who will be lending to me, as well as knowing fees,points,etc., if I do find a deal. I don't want to end up scrambling to find a loan/lender to approve me and end up losing the property to someone else who has that lined up already.
2. Since i am assuming i will be putting 20% down on 80k which will be 16K, i will have 14K left plus 10K in HD credit line. I am going to be more comfortable having another 10K aside just in case for rehab surprises and materials. What's the best way to keep most of my money for rehab and get a 100% loan on the acquisition? Is a conventional loan the best loan for me? If i do a conventional loan on the 1st house can i keep on doing conventional thereafter on all my properties?
3. If i can find an investor that will fund me 80K, what would be a fair percentage to give to him if i'm going to make 15K on the project? It's an acquaintance where i told him what i was doing, and he said he might fund me but don't depend on it. His thoughts there is he doesn't like the whole fix/flip strategy right now since he invests in the 300K+ SFR, buy/hold, hopes to bank when it appreciates strategy.

If my post is redundant I apologize in advance, but there is a lot of information to take in on your 1st flip, as many of you well know :) I would love to get some advice from everyone, so please let me know your thoughts.

Thank You in advance,

Tony