Advice on First Ever Fix and Flip

[Account Closed]

Hey you guys, my name is Benjamin. I'm 21 Years old, I'll be graduating from college in 3 weeks, and I'm looking to start a career in real estate investing. I currently have about 20k that I've saved up, and I'll be starting a sales job in SF soon that pays about 70k a year, and living at home w my parents, which means I could probably save a good amount of money. My best friend Kyle has no money but he's worked in landscaping and carpentry for the past 4 years and can build/fix anything. We're thinking about starting a fixing/flipping business in Northern California. How would you guys recommend we get started? What would you do, if you were in my position? Where would you look for good fixer/flippers? What books would you read? Who would you talk to?

The other option that appeals to me is saving up until I've got about 120k and looking for a small multifamily buy-and-hold. I've heard those can make absolutely killer investments. 

Any advice would be greatly appreciated. 

Thanks a lot, Benjamin. 

[Brian Schmelzlen]

Hi Ben,

Congratulations on graduating college with savings, and having a nice paying job lined up.

If you are serious about starting a fix and flip business with your friend, I would seriously consider talking to both a CPA and an attorney.  My general advice for fix and flips is to set up your business as an S-corporation.  You will want to talk to a CPA though about what exactly that would mean for you, and how to structure everything (capital contributions, loans, etc.) to achieve the results you are looking for.

The attorney is probably even more important to talk to in this situation.  You are talking about going into business with your best friend, so hopefully you would both work well together but you need to do proper planning to make sure it does.  A point of frustration between the two of your (eventually, not right away) could be how to split income and responsibilities given that it sounds like you would put in 100% of the money and your friend would be putting in sweat equity.  You need to talk out everything in advance, and have it written into an agreement.

While you are still figuring out if you want to pursue this, I would start attending local REIA meetings and talking to everyone there.