All Forum Posts by: Carleton T.

Thank you Shawn for your reply.  Sorry it took me so long to reply.  That is a good idea to set up a Trust.  Also, I will start attending the Orlando CFRI meetings.  I assume when I attend I will be able to learn more about how to become a business member. 

And Kevin, I was thinking more of SFR but only because they seem like the type of property where we could flip it faster than a Multi family. But as long as there is a win/win for everyone in the deal I really don't mind what kind of property it is. My contractors license allows me to do rehab and new construction of both residential and commercial, so I am interested in all of the options. As for source of leads I don't have one. I would lean on my partner/s for those.

Thank you. 

I am a licensed contractor in Orlando, FL.  I am looking for an investor who would be willing to partner with me to flip properties in my area where I get paid in 2 ways: to do the remodel, but charge less than my normal rate, ie. doing it at cost, in order to ALSO earn sweat equity in the property.  First, what would you recommend for how to structure the amount of equity I would earn and is there a rule of thumb for this kind of thing?  For instance, should I base it on a dollar amount per hour I work on the project, either as a PM or as a guy who actually puts on the tool belt?  OR should I base it on a percentage of equity earned that is predetermined before we close on the property?  Or is there other options I have not thought of?  I want to be fair but also recover all my costs and make a profit that both I and the lender take advantage of.  And second, I am thinking of creating a contract that lays out the details of the amount of equity I earn on the property before we close on the property but is there also a way of putting my name on the deed at closing that would act like a second guarantee that I earn partial ownership of the property via sweat equity?  Or is that pie in the sky thinking?  Surely a contract is enough. Ideally.  Finally, is there an investor here that would like to talk about that kind of partnership?  I feel I would really benefit the kind of investor who wants to flip a property but doesn’t want to deal with project management or teach themselves about construction to make sure all the work is being done correctly.   In other words, I think a partnership where I bring the remodeling know how and sweat, (I have 26 years of experience and I have already created good relationships with subs I trust) and where the investor brings the money to pay for the property and rehab, could be a great fit for the kind of investor who wants to flip properties, but doesn’t want the hassle and stress of the rehab construction.  Granted, the investor would be making less profit, but the profit they do make would be more passive because I would take care of the stress of the rehab.  Does this sound like something lots of investors are looking for?  I am also licensed to do commercial rehabs so please let me know if that is something you would like to discuss.  

Thank you.

I am needing this encouragement too. I have a similar problem but from a different angle. I feel confident in my ability to estimate renovation costs and even doing the renovations myself, I have been remodeling for 25 years. My issue is I don't have any money to lose. I am going to be starting my BRRRR investing around May of 2022. That is when I will have been self employed for 2 years so I will be able to get a HELOC or cash out refinance on our primary residence, I am still doing research on both options, but once I get my first property I really need it to go smoothly because I don't have any savings to fall back on. My wife makes an OK income but still not enough for us to live on it exclusively. So between now and May I will be learning all I can about the parts of this venture I am less familiar with, choosing properties to analyze and buy, figuring out financing, insurance, taxes, and learning anything else I don't know that I don't know. But because it is new to me it is scary.

Thanks for the encouragement.  Ty

Paul, 

I have been meaning to get back on the forum and thank you for your response. I have just so busy at work. This information is soo helpful. Thank you. I am going to do exactly what you said. And thanks for all the good starter questions. The task of shopping around for a good HELOC lender doesn't feel so daunting now.

I know this might sound dumb to most of you, but it is not obvious to me and I don't know who else to ask.  I am at the point where I am ready to start trying to figure out my options for how to use my Heloc, but I don't know who to ask.  In one book I read I should "shop around" for the best deal and for a bank that has experience doing rental investing with a Heloc.  But what does that mean exactly?  Who would I even ask for when calling up a bank or credit union?  I know some of you are probably thinking, "well who did you talk to when you bought your primary residence?"  Fair question, but I got the name and number of that loan officer from a friend and that person doesn't live in my state anymore and I was hoping to actually be able to sit down with someone.  Do loan officers sit down with potential clients?  I ask because mine never did.  We spoke on the phone a couple times and the rest of the time I just communicated via email.  Besides, just talking to one person is not what it means to shop around.  How do you guys do it?  Do you just start calling up banks and asking to speak to a loan officer?   Thanks for any help you can give.  

Wow, I just got on this forum about 10 minutes ago in order to ask about this very topic.  I needed this so much.  Thanks for the help.  FYI, you talked me out of taking on a partner, but it is for the best.  

From the pics you sent it looks like the foundation is settling or has settled at one point in the past.  Could mean the water coming off the roof when it rains is making the ground soft under the footers.  But if the crack is very old then likely it is not an issue anymore.  It is common for a house to be built and in some places the ground under the footers was not properly compacted before they pour the concrete.  But later in the life of the house it settles and typically once it has settled it won't continue to happen after that.  Unless of course, like I mentioned, water from rain is making the ground soft right next to the house.  So, Just make sure your gutters are installed properly, that the grade of the ground makes water run away from the house and not towards it, make sure there is no standing water after a rain especially near the house.  Make repairs as needed to those things.  And if you really wanted to make sure nothing is getting worse, measure the cracks, inside and out, and once a year measure them again to see if it is getting bigger.   

Hope this helps. 

Jody,

I really appreciate what you said about limiting beliefs.  You are right, I am totally doing that.  I am 44 years old and I only started to learn about how to achieve financial independence earlier this year, and I am stuck in my old ways.  It doesn't help too that I was taught in my church how money is the root of all evil and it is harder to be rich than it is to get a camel through the eye of a needle.  But what my church or anyone didn't tell me was I might have to do some things I don't necessarily enjoy in order to achieve my goals.  By enjoy I just mean, if I had it my way, I would be able to achieve financial freedom by building furniture in my garage, or making mugs on a pottery wheel, but that is not the reality I find myself in.  

Also, I did like you said and looked up WiseGuysInTies. He is a big guy. And helpful. But I had some questions for you too. I liked what you said about asking everyone in my contacts for a loan. And actually I have a couple folks in my life who have already said if the numbers worked they would be interested. But how did you go about structuring it? How do I make it worth it to my friend, but also put the house in my name? Or would I form a LLC with my friend where the LLC would own the house? And do I just offer to pay my friend back by giving my friend all of the positive cash flow each month until their portion is paid back plus an agreed upon interest amount? Or is there an even better way to do this I am not seeing? I often read in my research to partner with someone, but it is not clear to me how to go about it.

Thanks so much for your encouragement, Ty

I am not sure where to start.  I am ready to be out of the Rat Race.  I grew up with a mom who was a teacher and my dad was a mechanic.  They didn't teach me about money.  I was just told, by them, and by my education, that if I want to be successful I should work hard and be a good employee, and then everything will work out.  But that is not what has happened.  I have spent my life trading my time for my money.  I have worked as a residential remodeler for 25 years, ever since college.  One positive thing is my knowledge and experience I have in construction will help me rehab properties to turn them into high quality rentals.  And I will be good at managing my properties, at least until I get too many to handle on my own.  

But I need help figuring out how to go about starting.  I have been reading a ton, but I am having trouble applying what I am learning to my situation.  So here is where I am at and then any help you all could give me would be greatly appreciated by me, and my daughters.  I have one daughter who is a senior in high school and I want to be able to help her go to college. ( Despite my increasing lack of confidence that a college education is what would be best for her future.) 

My family and I have a mortgage on a house in Orlando, FL. I was considering doing a HELOC on my house to start buying rentals using the BRRRR method. Although, I have read a bunch of posts on here that it might be best to do a cash out refinance. I could get more of my equity, if I understand correctly, 100% instead of 75%, but the interest starts immediately, on all 100% instead of just the amount I take out. On the other hand, banks could call the loan anytime they feel like it if I get a HELOC. But how likely is that? And is it true that interest rates are much better with cash out refinance? The research I have done didn't mention them having different interest rates.

Actually, the main issue I am facing is I am self-employed.  I will be self-employed for 2 years in May of 2022.  So I have at least two strikes against me from a lenders perspective.  Not only do I have steady, but fluctuating income, lenders only care about what I make after I deduct all my expenses.  I get it. My income is all up to me.  I have to work hard everyday, not only to produce high quality work with my hands and my tools, I have to always be thinking about how to fill up my schedule, because if I don't work, I don't get paid.  But I feel like I live in a catch-22.  I want to get a refinance loan of some sort to help me buy rental properties to get out of the rat race, but lenders would rather see me get further into the rat race by taking a W-2 position at a construction company, but I would get paid much less than what I make as an owner of my own business.  

The other issue I think about a ton is what should the first thing I do with the equity I get access to. My wife has one idea and I have another. She wants us to build a detached apartment in our backyard and rent it out as an Airbnb. It would do well too because we live in a desirable area of Orlando. But I would rather, at least for the first thing we do, buy a rental house has my first house using the BRRRR method. I am worried that if I use the money for improving my own property then I won't have any equity left to start buying properties with the BRRRR method. At least not for another few years, after our homes equity has improved again. But I really don't want to have to wait years before I start really getting into investing. I feel hungry right now. I would love to get like at least 2 properties per year for the next 4 or 5 years and then get into multifamily buildings with 10 to 15 units. And I think I am going to go crazy if I have to wait years to start. I already have to wait till May of 2022 before lenders will consider helping me with my refinance.

Any thoughts you all have I am very thankful for.