All Forum Posts by: Colin Fleming

Can you send me financial statements on these?

For Freddie and Fannie property has to be owned personally. To clarify, my suggestion was to own these personally with joint ownership (not under LLC).

Transferring ownership to LLC later is a common strategy, but double-check with your lender to make sure it won't technically break any agreements in your note and mortgage.

I am making the assumption these are single-family properties in areas you want to be in. Unless there is something with your situation where you cannot get credit, I would talk to a few local community banks (business banking department) about funding options. A term loan with an initial interest-only period, a revolving line, etc. Then you can start at the 1st "R" in BRRRR. There are many more layers to this situation if it is your first project, so make sure you do a lot of learning before diving in. Good luck!

Hi Jimmy, I have been a commercial lender for the past 26 years and the LLC structure is the most common I have seen with real estate investors. You definitely want a competent real estate attorney to draft your Operating Agreement. I have seen many partnerships end poorly because they did not plan for all partner exits. All income and expenses are run through your LLC and any excess cash can be distributed to the members or reinvested etc. Your Operating Agreement should cover this too.

If you want fixed-rate financing you could take ownership of each property jointly as individuals. Check with your attorney to see if the operation of these properties could be somehow be included under your LLC.

Good luck to you!

Hi Shawn,  Thanks for serving our country!  I would analyze the property assuming it is an investment property so you make sure it cash flows when you eventually move out.  You can back into a maximum purchase price from there.  Also, use current rents, not market rents (if rented below market currently) and actual expenses from the seller's financial statement/tax return.  This usually works to your advantage when negotiating price.

If you want more details about ratios, cash margins etc. PM me and I can give you a deeper analysis method.

Hi Joshua, I am in La Crosse and use the driving for dollars strategy as well.  Can you walk me thru how you do it?  What services does Propstream have?

Jamie has a good point about making an offer based on what you determine is your max price.  Many sellers say their asking price is firm, however if you respectfully walk through what improvements are needed and a realistic value, they often will flex.

Hi Andy, there is a general formula flippers use to make an initial determination if a property may work as a flip:

ARV x 70% minus rehab costs = max amount you can pay for the property. If it meets this initial test, I would tag this one for further due diligence where you really fine-tune your ARV and rehab costs.

Based on the information you gave above, your deal looks like this:

460,000 x 70% = 322,000, minus rehab/holding costs of 134,000 = max purchase price of 188,000. You are 87,000 off the seller's asking price of 275,000 which you said is firm, so you should move on to your next lead. Even at the high end of your ARV range you are still 66,000 short.

This method will help you spend less time on deals that ultimately do not work.  Good luck and keep after it, you will find one that works!

Great!  Good luck in your search.  I also suggest trying a few strategies to find off market deals.  Let me know how it goes!

Hi Misti, I would analyze this as a straight rental to make sure it cash flows when you eventually move out.  The information needed to start calculating numbers are the purchase price, cost of rehab and market rents after renovation.  Can you get those and I will help you with a simple way to do an initial pre-screen of any project?

Also, what are the terms of the seller financing?  Down payment, interest rate, term/amortization etc.