All Forum Posts by: Aaron Dennis

Hey BP community!

I've been a part time RE investor for about 10 years. Little background on me to help paint the picture for my business concept. I'm a licensed builder and have been actively building and renovating homes as my primary occupation while dabbling in the RE space buying properties, fixing them up and flipping/holding. Finding deals has always been my biggest challenge and I've leveraged wholesalers, RE agents and my own marketing to find properties, but still not the greatest amount of deal flow. About 5 years ago, I decided to get my RE license as I kinda predicted legislation being put in place against wholesalers (which slowly seems to be happening) and my thought was if I was licensed, I would be able to continue marketing to home owners (not to assign, but only to purchase for my own flips/rentals) 

So, I'm seeking guidance on a business concept that encompasses my knowledge, experience and licenses. I'd like to position myself as a one stop shop for home owners with distressed properties where I'd: 
1) Provide a cash offer on there home - (with all the close fast, no hassle things)
2) Help them list it or refer them to an agent in their area (keeping in mind that I would likely get a referral fee)
3) Renovate their house for them then help them sell - I've got the team and know what renovations move the needle

I'm beginning a period of what I hope to be substantial growth and I'd like to increase my flips/rentals at the same time so I'm wanting to ramp up my marketing. Not disregarding wholesalers at all (I truly appreciate them and think they have a place in the market) but I feel yucky simply saying sell me your house for penny's on the dollar which is the primary reason for including the other options listed above. So my thought is to provide a summary to sellers of the 3 options on the front end which explain the pros/cons with each and ultimately provide them with an estimate of their proceeds based on the option they select. 

Couple questions I've been wrestling with:

1) Am I trying to do too much? Is my services to complex to have an effective marketing message?

2) Legal - I know licensed agents have a fiduciary responsibility (which is why I want to be transparent with the options and provide accurate numbers) but I want to make sure I don't expose myself to any legal issues down the road. I also know plenty of RE agents who continue to buy off market properties at a bargain and they have not experienced any legal issues. 

3) Business structure - keep under my building LLC (taxed as S-corp) or start new, then transfer properties that I keep to my holdings company.

4) Overall concept feedback? Again, to me it seems there are only 2 options that are put in front of owners (buy for cash, sell on MLS) and that is from two different professionals (investors, agents) but I feel like there's value in being able to provide any solution for this type homeowner. But then again, I may be too close to it.

Any an all feedback would be much appreciated. 

Thanks,
Aaron

Hey BP community,

Well, my wife and I jumped right in to real estate investing mid 2021 and I'm happy to report that we now have 2 long term rental properties with great numbers! So, with a slight taste of success in our mouths, we've just decided to pursue a much bigger deal - a big foreclosure with a purchase price of 800k with value ranging from 1.1M -1.3M (depending on the amount of rehabs done - which it doesnt need much).  We are considering 1) selling our primary residence and moving in to this foreclosure OR 2) performing a light rehab and selling it. We're all over the place in terms of our hopes for financing so wanted to see if anyone has some experience they could share. 

Option 1 (preferred option): Move in to the foreclosure and sell our current home. Our current primary home has about 300k in equity and we have some reserves (approx 150k) but not nearly enough to cover the entire 800k. What are possible financing options here? Tried conventional financing with a local bank but turned down due to slightly high DTI (they applied my primary mortgage, new primary mortgage, and one of my rentals - but did not include my rent as income since its been less than a year). Also spoke with a couple hard money lenders but they would only do it if I purchased through my business with the intent to sell or rent it out. We're also considering selling our house quickly (which solves the DTI issue) and trying conventional again. Timing here seems tight and the stars would have to align. I've heard closing a foreclosure normally takes 3-6 weeks after you've won the bid - any insight into closing times would be helpful as that alone may eliminate this option

Option 2: Perform a light rehab and flip the house. In this scenario, I probably wouldn't want to tap into my funds/equity as much so I'd be looking to fund 600-700k with intent to turn sell within 3 months. Financing options here? 

BTW - I'm in NC and we currently have the highest bid (yes, I know its not wise to make a bid without financing established). When your backs against the wall, there's only one way to go.

Thanks a ton!

Aaron