All Forum Posts by: Bob Woelfel

@Georgui Kasaev...I've only ever done buy and hold partnerships, but I would definitely set up a separate LLC bank account. You should not be mingling 3 different peoples personal funds in deals like this. Set up one account that way all 3 partners can see exactly where things are at and where money is going. I'm not sure it matters when or how much you decide to deposit, but you need to make sure that all 3 partners are depositing the same amount or are on the same page with how this is going to work.

Have you discussed a scenario if everyone is putting in 15k and one of the partners only has 10k? I'm sure you have but these things come up. I've also seen a number of flip partnerships go south when all the partners don't agree on the rehab budget, scope or change orders. I actually just heard a story today from an investor who partnered on a higher end flip in Kansas City. They thought they were going to make about 60-70k total and around 30-35k each. Well one of the investors thought that if they spent more on various items they could push the ARV a lot further. They went over budget by about 80k and ended up breaking even on the deal....all because they didn't agree on the rehab and one of the investors got greedy thinking if they did more they would make more. Three partners can be a lot of different opinions. I wish you the best.

@Alex Mercer...in theory yes this would work with a few caveats.  Lenders typically have seasoning requirements where you must own the home for a minimum amount of time before they will refinance.  Most lenders this is between 6 months to a year, but many commercial lenders don't have this.  

You may have somewhat of an issue finding a conventional lender to do such a small loan.

Lastly, this typically works best when you have a deal and have a significant amount of equity at purchase or through a rehab and force appreciation.  

@Kyle McCorkel...every market is different, but yes I'm starting to see this in our market as well.  It has a lot to do with the market and how competitive it has gotten.  The reality is if investors can sell for higher to an end buyer, even without doing anything then they are going to do that.  When the market wasn't as good investors would sell to other investors who flip.  The wholesaler would make some money and there would be enough left on the bone for the end investor as well.   This obviously still happens today.  I think today there are obviously a lot of buyers who aren't afraid of doing some work/rehab especially if it allows them to buy a house or move to an area they want to be in.  I don't know anything about your market, but if there is a market of buyers for this then I don't see any reason why you couldn't do the same thing.  As long as you close and actually buy the property, you can really do whatever you want with it.  

@Quaheri Redcross...on paper yes it would seem that this is a good deal.  You also have to factor in other costs such as agent commissions, buying and selling closing costs, cost of money, utilities, taxes, insurance, etc.  There are a lot of costs that most people don't factor when they are new.  With that said, if those are the actual numbers then you should do well.  Good luck.

@Robert Collins...it's not a bad deal, but it's not necessarily a great deal either.  Your insurance number seems a little low for a 150k property, but other than that the rest of the numbers seem fairly in line.  Any chance this is close to you and you can manage it yourself?  It would make the numbers look a lot better IMO.

@Amanda Hibbert...don't know what that program is.  

If you already have a loan in place that you don't want to HELOC or refinance then your main option is just saving the cash flow to pay for it yourself. Depending on what your numbers are you might be able to get this job done and then apply to refinance the property to get some of that back at a later date. Why do you need to do these things? Windows are typically a bad investment unless absolutely needed and a fence is typically more of a want than a need. Not saying you shouldn't do these things, but they don't seem like must haves. When the AC breaks in the middle of July you'll want that money for those types of things. Best of luck.

@Joshua McGowan...i was in your shoes about 5 years ago. I offered on a couple properties on the MLS and fortunately or unfortunately my offer was accepted on BOTH of them in the same week. So now I had two projects instead of one and a lot of money in play. The advantages I had that helped me where that I did a live in flip a few years prior so I did have some experience, but that was in a completely different city. I spent a TON of time at Home Depot and Lowe's getting very familiar with prices of materials. If you are nervous about rehab costs I highly recommend doing this. That way you can work backwards on everything. If you are wondering what it will cost to tile a floor just take the sq. ft. of the floor and figure out your material costs and then use a conservative number for your tile person for labor. You won't be super accurate, but with where you are in the process short of getting actual bids this is one of the best ways of getting estimates.

Depending on how you finance the purchase and repairs you will need to have some cash left over for overages, holding costs month to month, etc.  You don't want to get to month 3 and be out of money.  If you have this cushion then you should be able to withstand whatever happens and make it out on the other side with a renovated property and a new tenant.  Because you are new I would recommend budgeting at least 10% of misc overages because I'm 99% sure you will go over budget.  I would also recommend adding on a month or two to how long you think this is going to take.  It ALWAYS takes longer than you think.   The best way to build your team is to get recommendations from other investors.  Go to investing club meetings and talk to people about who they use.  It's a process man.  You won't have all the answers right away and you never will.  You just have to get close enough to the answer to know that you'll be able to figure it out as you go along.  Best of luck.

@Tamara Al Hashimi...the only numbers that look good on this property are the numbers if you sold. As a rental it's bad and taking out a HELOC will only make the numbers worse. You have two kids and make $45,000 a year, but if your numbers are right you stand to walk away with around 150k if you sold. I don't know if you should 1031 or just sell outright and pay the taxes, but you should have sold YESTERDAY! Best of luck.

@Nadia Doty...I do not know the specific situation because I didn't listen to the webinar, but each partnership arrangement is unique because each partner brings different skills, $, time and knowledge to the table.  If you don't have any experience or $ or time then expect to give up a lot more of the deal than someone who has all of those.  As long as both partners know the expectations and agree on the structure of the deal I can't tell you what's best for you and your situation.

The only partnership I've ever done has been 50/50 in money and we had the same relative experience.  What I can say for certain is that everything needs to be spelled out in your operating agreement.  Who is paying for what, who is responsible for what tasks and how you will both be compensated either monthly or when you sell are just a few small details with many more that should be discussed and put in the agreement.  Too many investors spend too little time on this.

@Account Closed said you shouldn't buy properties just to buy property.  Get back to work.  Things will happen for you.  Best of luck.