All Forum Posts by: Dennis Soto

Hey @Lashonda Spell, were you able to get a response to this question? I am curious to know other people's approach as well.

@Steve Vaughan thanks for your feedback. My thought was to add him as a member of my LLC which would be used for the purchase and resale of the house. He would get paid for his work through the HML funding the rehab just like any other job. Upon completion and sale of the house, all debts are settled, a percentage stay in a business account for the next flip/ business expenses and the profits are divided in half.

Still sound messy?

Hey @Matthew Paul

Thank you for your response. I figured as such in regards to the contractor charging the same as he would any other job. I just wanted to get some feedback from others to make sure I wasn’t making a mistake as this is my first rodeo. 

As far as my commission is concerned, I actually did consider waiving my commission to increase the profit margins for both sides, which is why I posed the question about the contractor’s profits. 

Hi all,

I am a New Jersey realtor and recently approached a contractor I know personally to see if they had an interest in partnering for some house flips. I have an LLC I would like to utilize for the purchase of the properties and he has an LLC for his construction business. The plan as discussed is we would use HML to fund the project. We will be splitting the cost 50/50 and splitting the profits 50/50 as well.

My question is: how to best manage the construction portion of the cost? Should the contractor make a profit off the construction as if it was any other job, or should he just bill labor/materials since the cost will affect the overall profit?

In addition, should I as the realtor waive my commission as that will also affect the overall profits?

Thanks in advance for any guidance.

Hi all,

I am a New Jersey realtor and recently approached a contractor I know personally to see if they had an interest in partnering for some house flips. I have an LLC I would like to utilize for the purchase of the properties and he has an LLC for his construction business. The plan as discussed is we would use HML to fund the project. We will be splitting the cost 50/50 and splitting the profits 50/50 as well.

My question is: how to best manage the construction portion of the cost? Should the contractor make a profit off the construction as if it was any other job, or should he just bill labor/materials since the cost will affect the overall profit?

In addition, should I as the realtor waive my commission as that will also affect the overall profits?

Thanks in advance for any guidance.

Hello all,

I recently lost my day-job due to COVID-19, and I'm considering going full-time investor in. My strategy is to start a house-flipping business in New Jersey to gain capital and once the house market settles (or I build enough capital) buy-and-flip hold properties that will cashflow substantially. I know that for buy-and-hold properties, the best entity to protect your assets is an LLC. However, I've heard that for short-term RE (such as flips) its best to have an S-Corp entity (for tax purposes).

Is this true? 

Can you please explain why or why not?

Thanks for the info @David M.. So if and when I decided to become a realtor, how do you recommend I go about finding/recognizing a good broker? Not so much a profitable one; although profits are important one that would provide training and mentorship could be more valuable in the long-term. 

That is so very true @Garry Hoffmann. Even if I don't actually get the license, it would give me a better understanding of what realtors do. Having the knowledge could assist me in recognizing a good realtor when I meet one as well as solidify a good working relationship.

@Tara S. did you quit your day job cause you enjoyed being a realtor more than whatever you did prior or because of the benefits it brought to your investing? Would you say being a realtor opened doors and opportunities that would've been more difficult to obtain without the license, or do you feel you could have accomplished the same with a good realtor on your team? I recently lost my job due to COVID and was considering going realtor/investor fulltime that's why I ask. 

@Justin Robert that's exactly my theory. The access to the MLS and the money I would save on commissions seem to outweigh the cost of maintaining the license. As you said, if I can do it in a part-time capacity and sell to family and friends as well as my own deals, the benefits would outweigh the cost as long as the broker is willing to keep me on.

@Jacob Lapp the way you described your scenario is exactly how I hope it would go for me. I'm sure there are differences between your situation in PA vs. New Jersey cost, regulations/guidelines though; or am I just over analyzing it?

@Frank Godfrey I have not considered the liabilities that come with being the realtor as I am not aware of what they consist of. However, I do appreciate the picture you've painted of the other ways I could benefit from utilizing the realtor's experience and time vs. trying to do it all myself.