When do we talk with all the suits?

[Jason Pelch]

Here is a bit of background: A friend of mine and I have teamed up and are diving into real estate. Neither of us have any substantial cash on hand but we both have good jobs and good credit. We’ve teamed up because our skill sets match up and neither of us have an abundance of free time; one of the wonders of having small children. I’m the numbers guy and he’s the construction guy. Our plan is to buy distressed properties, rehab them and either put tenants in them or flip the property to a retail buyer, depending on our primary exit strategy for each property. At this point, we haven’t bought any properties. We’re under our minimum education threshold, but we are doing our best to support @Joshua Dorkin & @Brandon Turner by reading The Book(s) on Rental Properties, Managing Rental Properties, Flipping Houses, & Estimating Rehab Costs. We've joined a REIA, gone to a couple of their seminars and to one of their monthly meetings so far. That bit of background seems big enough…

So, once we’ve gained a bit of confidence and run out of excuses, we’re probably going to have to buy something. My question is, at what point do we need to talk to all the professionals (the lawyers, the CPAs and the ilk.) Is this done before we seriously start looking for properties? Do we need a legal entity first, since we aren’t going it alone? No one is going to get much if we’re sued. Here, let me help:

Steps to success:

1. Read Rich Dad, Poor Dad, realize you’ve been doing it all wrong, shake fist in air.

2. Educate yourself on real estate

3.

4. (I need some help in this area)

..

X. Buy Piece of real estate

..

..

Z. Drink on Beach.

[Nick Alvarez]

I would hammer out more details/plans with your partner. 

What area do you want to invest in first? How do you want to go about purchasing projects? (traditional, auctions, private transactions etc.) Get a general indiction on the amount of distressed properties within your target area, start driving around neighborhoods for an idea of whats available, network with those in your REIA group. Once you have a specific goal/area/price range in mind, build some models with your partner's expertise on repair costs, ARV, financing assumptions, etc. Once you two feel confident in your model & validate with some comps- start discussing how financing will work- then you could maybe start invoking the help of some "suits" regarding private money or conventional financing, speak with a trustworthy accountant/CPA/Lawyer for advice on your tax plan/implications & exit strategy. I think the most important step prior to engaging various 3rd parties is to make sure you and your partner are both aligned in your goals & expectations- then you can have a clearer picture of what you want when you go speaking to all the other various suits.