All Forum Posts by: Bryan Hartlen

@Catie Fihn, the wholesale value will be the price a flipper is willing to pay. You do your same analysis as you've been doing as a flipper: Price = ARV - Rehab - Holding - Profit). That's your price to flippers. You may need to adjust the price up or down depending on the profit targets your investors look for but your familiarity with doing flips should make this an easy exercise for you.

We are on a smaller scale (and without a designer on our team) so our solution is that we pick a target comp and use it as the fit and finish guide for our finishes.  

@Chris Seveney, @Patrick Roberts and @Denise Supplee thank you.

On top of the previous recommendations - as you don’t appear to have a property manager, I’d suggest you start documenting every issue and correspondence with the tenant.  Would also make sure that any warnings are put in writing even if you are following up on a verbal discussion. 

@Chris Seveney shouldn't your title company have found the recorded CFD? What raised the flag for you to dig deeper?

Do I have this correct?
- LLC bought the property using Lender with the title exception that you noted.
- Lender was selling the note, with the same exception, which raised a flag for you?

We’re selling a SF rental property and offering seller financing.  We’ve bought, sold and created a handful of notes but they’ve always been to individuals.  

Do you treat underwriting an LLC buyer differently than an individual? We've previously used Call the Underwriter to underwrite individuals, but my understanding is that compliance is less of a concern when selling to an LLC?

Are there any LLC-buyer specific potential pitfalls that we should be wary of?

We’ve had one group want to do the purchase within a trust; specifically put the property in the trust and then sell the trust.  Any concerns with doing this rather than a straightforward sale and having them handle trust steps after the sale and without our participation?

We don't plan to sell the note, BUT we want to keep that exit open should the need arise. Anything unique about re-selling a note held by an LLC that we should take into account? Are they more/less desirable than a typical owner-occupied note?

Any recommendations on attorneys that would have experience in this that could advise and handle the transaction (in Birmingham, AL)

Thank you in advance for sharing your experience and wisdom.

@Marc Zak look at the free calculator here on BP to see a pretty good model to analyze rental deals. It’ll give you an easy to read view of how many of the points raised by Dan H and Chris S play out in a deal. 

@Will F. some of this will depend on what you have to lose if you were sued. An LLC when properly formed and administered provides separation and protection of assets that are outside of the LLC from the actions of the LLC. If you don't have, or aren't worried about protecting, other assets then having an LLC is of less value.

@Jamie Parker are you having trouble getting properties under contract OR assigning the contracts to flippers?  

We don't use the 70% rule for anything except to decide if we're going to look at the deal… and even then we just want to see if it's close before we spend time running numbers. Our analysis is ARV - Rehab estimate - Finance Costs - Holding Costs = Profit. That Profit number needs to be above our minimum threshold (which is large enough to handle any rehab oh $hits).

I live in Phoenix but invest out of state. We haven’t bought a property from a flipper here for years. The margins are too tight and most deals are being offered at 80 - 85% of ARV. That said, I’m assuming that someone must be buying these wholesale properties.  The Nashville market may be similar.  You may need to offer more to sellers and sell to a smaller group of investors (who may buy with cash and/or are willing to work on tighter margins).

To help understand your market better, put your name on your competitor wholesalers’ lists and see what they are “offering” and compare those to what you would expect using your current model.

Call the PM (I don’t think HABD will provide information on a property you don’t own - even if you can get them to answer the phone). Ask when they last requested a rent increase, what the request was and whether or not it was accepted.

Note that you’re dealing with a true bureaucracy.  There are specific rules on when rent increases can be submitted for review, but there are no guarantees when they will respond. We’ve had increases submitted in Sep that weren’t approved (retroactively) until June the following year. We’ve also had increases submitted in Sep 2023 that still haven’t been processed.