All Forum Posts by: Bernard Pearson

@Ben Feder I've learned a lot over the course of the last few months about setting up LLCs for holds/flips/etc. it's important you to consult a tax pro to make sure you can KEEP most of your profits and not have to pay them all off in taxes. Example: your LLC should be in the state of the properties you are holding to avoid paying cross state taxes. If your setting up your LLC for true protection you may want to consider a Wyoming LLC as your holding company as Wyoming is one of the only state that doesn't require a name of the owner be publicly visible. When you setup your specific LLCs you would list the Wyoming Holding company as the owner... look I'm no pro at the structure (yet) but definitely looking to learn more and get it right... I've been speaking with corporate direct and Anderson business advisors to find the best approach. I haven't settled in on either one of them yet, but will definitely pay the fees to use their services to make sure I get it right up front... the LLC structure is like the foundation of the house my man... it has to be solid...

@Ben Feder hello Ben it depends on your ultimate strategy. If you plan to hold them I would recommend separate LLCs, if these are flips it may not be required and more work/cost than its worth...

Hello BP. I took the the plunge again... I just acquired 5 properties in Baltimore and want to talk strategy on how the BP community would approach this project. 

NOTE: Catch/Caveat I need to get $55K of my cash back in less than 40 Day to avoid some penalties

Option 1. Take'em all on at once with Hard Money Loan?

Option 2. Take on 2 or 3 properties with Hard Money for construction loan, Refinance into conventional, pull cash out and use the money to complete the other 2

Option 3. Sell them all as an Investor Package for $250K

Option 4. Your Thoughts 

Looking for interested serious investors also.

Here are the details.....

**********************************************
4 of the 5 properties are owned outright the 5th property is under seller financing

We have four of the 5 appraisals completed. The properties are in the John Hopkins area and there is a lot of reno going on in the area with John Hopkins and Habitat For Humanity.

Package Purchase Price: $120K
Combined Construction: $385 (estimating high)
Combined Estimated ARV: $850K - $1.1M

1. Property 1 : Seller Financing (Converting to 2 -Family as a hold for $2300)

Appraisal Results Pending
As-IS $35-45K (TBD)
Construction $125-$150K
Estimating ARV $225-$250K

Some Encouraging Comps on Property 1 

($247K Multi-Family)

https://www.realtor.com/realestateandhomes-detail/1532-N-Caroline-St_Baltimore_MD_21213_M50251-76862
https://www.realtor.com/realestateandhomes-detail/1534-N-Caroline-St_Baltimore_MD_21213_M50254-00458
There's also an older/less modern 3 Family unit directly across the street at 1841 N Caroline St.

$249K (869 W Lombard St.)

https://www.realtor.com/realestateandhomes-detail/869-W-Lombard-St_Baltimore_MD_21201_M51998-28733?view=qv

$449K (2209 E Lombard St)

https://www.realtor.com/realestateandhomes-detail/2209-E-Lombard-St_Baltimore_MD_21231_M55848-85425?ex=MD2692696249&view=qv

$280K (259 S Ann St)

https://www.realtor.com/realestateandhomes-detail/259-S-Ann-St_Baltimore_MD_21231_M55836-56569?view=qv

2. Property 2. (Selling)
Actual Appraisal Conducted
As-IS $30K
Construction $80K
ARV $215K

Encouraging comps in the area that recently sold for property 2
https://www.realtor.com/realestateandhomes-detail/743-N-Patterson-Park-Ave_Baltimore_MD_21205_M62094-62622
https://www.realtor.com/realestateandhomes-detail/2200-E-Madison-St_Baltimore_MD_21205_M93876-20243( $334K This was converted to a multi-family but 6 min walk from our property)
https://www.realtor.com/realestateandhomes-detail/909-N-Bradford-St_Baltimore_MD_21205_M69525-51509($238K)



3. Property 3 (Hold and Rent for approx. $900 - $1000 Mo.)
Actual appraisal conducted
Sales Price: $15K
AS-IS: $12K
Construction $25K
ARV $174K

4. Property 4 (Selling)
Actual appraisal conducted
As-Is $5
Construction $75K
ARV $177K

5. Property 5  (Selling)

Actual Appraisal Completed 

As-IS $12K
Construction $65K
ARV $200K

Encouraging comps in the area for proerty 5 that recently sold
https://www.realtor.com/realestateandhomes-detail/2504-E-Eager-St_Baltimore_MD_21205_M61748-05296($247K)

Thanks for your thoughts lets talk strategy.... 

@Kyle Nelson although a genuinely great thought/approach BUT This “trainer”

Is obviously running a business and if he’s a good business man there’s no way he’s give you his product on consignment... that would be like going to an enrollment officer at a college and saying “yeah let me try the four years out and if I graduate and make a lot of money after I will pay you for the knowledge I gained, but if I only get a mediocre job, you get nothing ” business is business the “trainer”

Is providing a service, either you take it or leave it, the ability to choose is a beautiful thing.

@Katrina Nicole-Ivy I’m currently under contact for five properties in Baltimore City. What zip code did you purchase in and would you mind sharing the addresses? I may have someone who is interested in assisting if you are interested in a partnership?

@Jason Mercheyu thanks for the connection. I appreciate it

@John Semanchuk thanks John appreciate the feedback. It’s s sad state of affairs when you are unable to find good contractors... what do you know about the area there in Summerville/Charleston?. hows the market out there...! hot, Luke warm, or cold ? Are you a flipper?

Hello. I am looking for a contractor (or 3) I can speak with to discuss a property flip in the Charleston area. I’m in the process of going under contract and looking for a contractor/business partner who is dedicated, Does nice work and is detailed oriented. Any help you can provide is greatly appreciated

@Justin Reyes many have said it already man but I know it’s important to hear it multiple times sometimes...

I say YES leverage your 401K to get rolling. I did...

A few options:

1. Take a loan from the general pool of the 401k

1a then take a loan from the other side of the 401k

(Most 401ks have a personal loan and a general purpose loan) (most 401ks let you pull up to $10,000 for first time home buyers with no tax penalty

1b. Take those funds and go house hack a fixer upper take a hard money loan to fix the property up to drive equity into the house

1c. refi, pull your cash out, sell home or rent (if cash flow if there) pay your loans back (if you choose) and keep rolling.

2. Roll your 401k into a Self Directed IRA

Some Self directed IRAs allow you to purchase reveal estate within them as a means for long term investment.

2a you can pull money from your Self Directed IRA and if you can get that money back in less than 60 days there's no penalty

2a1. You can find a sweet deal pull your money out, by the property with cash (makes your offer much sexier to seller) then do a refi (specifically "Delayed Financing" loan) to pull tour money back out and out your money back into your IRA. You will need to Keep some money in the home (most lenders will lend 75-80% of the appraised value on a delayed financing loan)

Speak with a tax pro/cpa before you make a move so you know what your loopholes and pitfalls may be but I leveraged all options above to get into the Real Estate game. Good luck, get going, fail forward...

The steps/process you've outlined will help keep you focused on your overall goal... great luck. Keep us posted.