Starting Out Help & Guidance

[Michael Forrest]

Hey BP!

I'm new to investing and am looking for a little bit of guidance to get my feet moving. I know I want to flip properties at this point. I also know I should start an LLC for liability & tax purposes. Does anyone have any recommendations? I live in Delaware but will be looking for properties in both Delaware and in Chester County, Delaware County, Montgomery County. Any good real estate lawyers or CPA's that understand the real estate investing side? Also, any recommendations on finding end users? The goal would be to turn the property around in 90-120 days. Any help is appreciated! Thanks!

[Rich O'Neill]

Hi Michael, welcome!

A few comments: not being a CPA or lawyer, some of the advice I have gotten is that an LLC does not really have any tax implications. Apparently you can take the same write offs personally as you can in an LLC, just keep track of expenses diligently and be ready to defend them in an audit, which you should do for an LLC anyway. If you do not have substantial personal assets(which you may), I have also heard that an LLC may not be that helpful from a liability standpoint. You can still be personally sued and lose in a lot of cases regardless of having an LLC if your books aren't rock solid. A good landlord insurance policy should help here.

Again, not a CPA or attorney, but it is definitely worth sitting with maybe a tax attorney who is familiar with liability who can advise a little better. The point is that an LLC is not a given or always necessary and may just slow you down in getting started as another excuse to why you didn't get started.

I have not used them, but one law firm that I know works like that is Clarion Law in West Chester. Jimmy is a friend of mine. I have never used them as a customer but they own some investments of their own and they have backgrounds in tax law. I am actually getting ready to sit with Jimmy for a little while to help set up a partnership in the next few weeks. Will let you know how that goes.

I would also suggest to you that North DE, Chester county, Delco, and Montco covers a very large area with very different markets within each. I would hone in on what type of flips you would like to do and pick a region based on that. If I were you, I would eliminate Montco from the beginning since it is so far away from you. There are plenty of deals to be had much closer to you. Just my opinion.

Chester county will most likely be higher end flips with much more capital involved but higher profits available (not necessarily higher percentage profit though). My guess would be that north DE is similar, but I am not as familiar with that market other than driving through it often.

Delaware county will most likely be lower cost of entry, lower rehab costs, and lower profits (again not necessarily lower percentage profit). Delco can be trickier though since there are areas closer to the city that are not very good flip areas in my opinion. In my eyes your best bet is to stick to Garnet Valley and Media areas in Delco.

I hope this was helpful! Keep in mind these comments are based on my opinion and what I have seen. Your experience my be different. Let me know if I can be if any help!