All Forum Posts by: Will Barnard

Michelle,

The answers above are all good and correct, so I won't regurgitate them. As for referral's, you can check out preferred lenders here on Biggerpockets or do a google search for them, there are tons in So Cal. Check out The Norris Group, they are very reputable and have been in business for many many years. 

Also, many people often interchange the terms hard money with private money. Make no mistake, there are differences. Hard money lenders are licensed in the state or states they lend in, they often lend other people's money and they often have stricter loan docs, terms and costs. Private money are individuals (who could also hold a license in some cases) who are often friends, family, business associates, doctors, etc who are looking for investment options outside of stocks/bonds/mutual funds/CD's/Etc.

Your current equity position is not enough to qualify for a HELOC so that option is out. YOu could take a personal loan, use credit cards or sell other assets to raise the capital.

As for the repair itself, you state cast iron which is for the sewer line. Plumbing re-pipes for interior are for supply lines. So which is it? Sewer or supply lines need upgrade? If it is sewer, you have several options. There is the excavate and replace method, there is trenchless system option, and their is a relining  option. I suggest you get 2-4 bids for each option from licensed plumbers to see what is best. The lowest price is not always the best option.

If you have a property under contract, nobody can circumvent you or steal your deal, the only way that could happen is if your contract expires in which case, you no longer have any control over the deal. If it is actually a deal, then you should have no problem selling it to any number of your vetted all cash buyers (you need to have buyers in place first before you go locking deals). Others will argue against that advice claiming once you find a good deal, buyers are easy to get, however, there is down side doing it that way and no legit downside doing it with buyers in advance. With having vetted buyers, you should know their criteria and as such, search for properties that meet those criteria, that places you in a much stronger negotiating position with potential sellers when you know you have a buyer or multiple buyers that will fit in this box. Additionally, and probably most importantly, if you don't have vetted buyers in advance and you market the property on FB or other online or direct sources, you are marketing a property without a license which is against the law in just about every state if not all by now. You must have a real estate license to publicly market a property you do not own title to. Also don't listen to those who will tell you that you are marketing a contract and not a property either, that is simply not true and in a court of law, good luck arguing that.

To properly and legally wholesale, you need to know your market, build a qualified and vetted all cash buyers list, build a marketing plan to attract and receive qualified seller leads, and know how to negotiate and properly contract the deal. Without a license, you are not permitted to publically market the property so you either need to get a license, close on the deal with cash or borrowed funds and resale right after (double close), or properly set it up with a set buyer in place. The last of these options has several options. If you are searching for one or two specific buyers, you can prearrange to make offers in a new entity or trust and name the buyer as a member/owner of the entity (or trustee or beneficiary of a trust). Then at closing and in escrow, you simply have that buyer pay you your fee in escrow for the rights to buy you out of the entity or trust. No public marketing to violate the laws, no worry about locating the buyer before your contract expires, etc.

I have posted many times on BP how to properly structure wholesale deals, try and search to find them or search through my specific posts (although they are over 15k).

As others stated, hollow core will suffice unless your flip is high end. Pay more attention to the door hardware, that is what is seen and touched more by buyers.

In your scenario, I would structure that as debt and not a partnership. If you intend to pay 10% of money the contractor invests in your project, then simply do a 2nd trust deed (behind the purchase loan) at 10% for the term you both agree to with a balloon payment rider (this is for no payments during loan but one lump sum balloon payment at sale or end of term, whichever comes first). You should also consult your CPA/Tax advisor to ensure that your flip is best suited in an LLC or another entity. Generally speaking, flips work best using an S-corp for a number of reasons. This is not legal or tax advice, just general experience/knowledge. Consult your CPA.

You will not be able to build a quality ADU for less than $300k at 1200sf. Also, you will not be able to build a 1200SF ADU with the primary house at 1100sf.

All the other negatives are valid regarding the ADU although I would argue that the value after building possibly being underwater is irrelevant so long as your timeline to exit is 7 years plus. Also, appraisals will get better and more inline once there are years of comps for them which should improve over time.

That said, buying a multi could be a better fit if you buy right. Money is made at purchase in multi and then adding value adds to that money/profits.

Construction can certainly be frustrating and time consuming not to mention expensive but in So Cal, it can also be very rewarding too. You have the devils advocate above but having a good contractor & designer can make all the difference. After doing this for over 15 years, I have had my ups and downs and one thing I can say for sure, if you can hold for 10 years plus in so Cal and add value (like construction), you will make out well in the end.

Great, send me message with info for upcoming Jan 12th meeting.

 Thanks for invite Stacey but I did not see this until after the meeting. Please let me know in more advance of your next meetup. TY.

Will Barnard

Welcome to BP Nation, one important thing to keep in mind, the rich act in spite of fear while others allow fear to stop them.

Network, educate yourself, learn your target market conditions inside and out, including past 12, 24, and 36 months to give you an idea of what the market did over an extended period of time which helps you better project future quarters.