All Forum Posts by: Cyle Harris

I just finished my first fix and flip in June and did not have the best experience with my general contractor. After reviewing some of the mistakes I made, these are some of the main steps I will take moving forward and I'd recommend you consider them as well when deciding on a general contractor to work with: 

1. Receive references from someone you know
   1. If you can't find references, use home advisor (search for someone who has at least > 2 years of good review history)
2. Ask contractor for references and follow up on those references
3. Develop your own independent contractor's agreement (I would not recommend simply using one drawn up by your contractor)
4. Start the contractor off with a small job in the beginning to see how you work together and to understand their work ethic (you don't want to work with anyone you don't get along with. Trust me, this will save you a lot of headaches).
5. Don't be afraid to fire a bad contractor and hire a new one (this is where I made my biggest mistake. I didn't want to start over with someone new so I put up with wayyy too much. I would've been better off finding someone new to finish the job right)

If you haven't already, I would highly recommend reading some sort of book on this subject. I read J Scott's book "The Book on Flipping Houses" and it helped me a lot throughout my project. 

Thanks again @Mikael Winkler this helps a lot. 

Thanks for your insight @Stephanie P. I never thought of pursuing this sort of strategy. Your perspective makes since if the interest rate (and overall process) of securing a long term loan the conventional method is cheaper than if you use your LLC.

I'm assuming by conventional your referring to taking out the loan in your name as opposed to an LLC, correct?

Thanks for your input @Ben Stoodley. I did not know there was a preference to lend to LLCs as opposed to individuals in the hard money world. 

@Mikael Winkler That's good to hear that your hard money lender (and hopefully most are similar) makes the process of drawing money from your loan using your LLC so easy. Follow up question for you - how was the process different from applying for a personal loan in your case? Do they look at your business tax returns or anything unique that only applies to LLCs?

I financed my first fix and flip by taking out personal loans and using my own cash. Going forward, I'd like to begin using my LLC for financing deals (i.e. hard money loans, etc) to keep all of my personal and business expenses separate and to leverage some of the benefits of simply using an LLC.

Does anyone have any experience using their LLC to finance deals? If so, can you share details on how you got started and how you secured your first loan using your LLC?

@Jordan Deeney In my first fix and flip project I unfortunately had to pull all but one (plumbing) permits needed to receive my certificate of occupancy. Long story short, my GC assured me that no permits were needed for the work performed but sure enough after my final inspection, I was required to pull both building and plumbing permits (and of course I had to fire my GC before the final inspection because of other major issues so he wasn't around to pull them himself). 

I would not recommend this method and will use this as a learning lesson for me to ensure I understand which jobs require permits and that my GC agrees to pull them as their is inherited risk when you pull your own. 

Thanks for your insight @Drew Sygit. I've seen a few multi families appear hear and there in Auburn Hills/Rochester Hills (1-4 units) for sale but they are few and far between. 

@Montez B. I think if increased cash flow is what you're looking for as opposed to simply eliminating your rent you should go for the more aggressive house hacking strategies, i.e. buy a single family home and renting out bedrooms or a multifamily home with > 2 units.

If the quads in your area are located in questionable areas, I would consider the single family option (if you're comfortable with that) or combining strategies with buying a duplex and potentially renting out both the other unit and a bedroom within your own unit as well. It all depends on what your comfortable with and what you're financial goals are with house hacking. 

@Jeffrey Edwards mhmm I never connected those dots. Thanks for your insight, that actually makes a lot of sense. My dad worked in Auburn Hills in the early 90s and mentioned that it was basically all cornfields during that period. A lot of the development is relatively newer compared to cities like Detroit and Pontiac. 

I've been looking to purchase my first house hack multifamily unit property (MFU) in the Auburn Hills/Rochester Hills area and have been finding little to no such properties available. After daily searches, I find an abundance of MFUs in Pontiac and surrounding cities, but none in my target area. Does anyone know exactly why this is? 

I understand that a good deal on a MFU is typically hard to find and Auburn Hills/Rochester Hills are SUPER hot markets, but I'm wondering if anyone else has noticed the same thing and had any thoughts surrounding the matter. 

I'm thinking of purchasing my first house hack soon and believe this would be a great move for you. You have the opportunity to eliminate your housing costs while gaining landlord experience which is a great way to start investing. I would echo @Courtney Trahan's comments if you're able to keep your current home as a rental and purchase a multifamily property, this would increase your cash flow potential which is always great! If this option is taken, it's also important to keep in mind that this would require more work if you don't hire a property manager.