All Forum Posts by: Tom Spaeth

An insane asylum should work rather well for that.  

Just kiddin couldn’t resist

An llc with a very good operating agreement   Think of everything that could go wrong. And put a solution in the agreement. Easier now than later when money is involved. 

Item 1: I have done that for years. There is a lot of hype about how great LLC's are to put your property in. In truth - Maybe - maybe not. It is very smart to have an LLC agreement to dictate on how the two of you agree to run your rental. If you have a nice big mortgage on your house and a real good umbrella - Let them sue you. What are they going to get. They get to talk to your insurance paid lawyer in the hope of some small payout.

1A - everything reports to a K1 partnership return. A good CPA question.

2: Good question for your insurance agent if you trust them.

3: Keep all this in your llc agreement. You will have a hard time ever being really even on equity in houses. Just assume you each have x% equity as agreed

My 2 cents - worth every penny.

First you need to be paid as a property manger separate from any other part of the transaction. 10-12% would be reasonable. That is what any other property manager would earn doing that job. If they are coming up with 20% only they are not coming in real strong. This is because you will be using your credit and technically you are bringing 80% of the funds, though of course their 20% is critical. I would take no less than 50/50 for this particular deal.

Never QuickBooks online - It sucks. I use QuickBooks, spreadsheets for tracking, and buildium.

@Robin Boyer - Download the property flip costs. You will get an idea of what kind of money went into this project.

@Eddie Egelston - As so the paint. You can see some issues in the picture with tuck-pointing that had been previously done. It was far worse in other areas. It was cheaper to paint the brink than to try to repair all the bad tuck-pointing.

@ - First you have to figure out the amount of work you are willing to undertake. Are you comfortable with mold, asbestos, structural, moving walls or do you need to start with simple carpet and paint. That will lead you in the right direction. I did this project and received a check at closing. So it did not require any out of pocket money. If you have a real W2 job and good credit your $100,000 will get you an additional $325,000 or more from local bank. Plus there are private lenders and hard money lenders. Always keep a little money in reserve.

Your home town has houses in a great starter range. Not sure how hot your market is. You can hit the MLS, find some good motivated agents (most aren't), door knock, and let everyone know what you are looking for. Also Check with Wholesellers.

Land is a whole different animal. Not the best place to start.

Just wanted to share this fix and flip we completed.

I bought this house in very bad condition, from an estate, for $30,000. The house had mold, no insulation, and was in generally bad condition. I bought the property as-is and had a hard money lender that agreed to let me get $10,000 up front by wholesaling the property to myself. So I paid absolutely no money down and no money out of pocket from start to finish. Over the course of 99 days we remodeled the house from top to bottom; added an egress window and finished two bathrooms to take it from a 2 bed/1 bath (plus something that may have been a bath at one point) to a 3 bed/2 bathroom home, as well as adding a garage, the egress window, framed out and added insulation, added new electric and plumbing. Lucky for us, the roof and sewer was in good condition and didn’t need any work. We invested a total of $118,653 into this project and profited $38,045 in 139 days purchase to sale.

Thanks!

I require payments made by the 25th. That way they typically clear prior to the 1st.

Has anyone use an someone to help pick out material and colors for their flip projects. I have used someone in the past for this and it worked out great. Unfortunately they decided to take some time off so I am seeing if anyone has a resource for this. 

Each have their advantages. Flips tend to go faster which is great. New builds take out all the unknowns. I used to work on houses that were over 100 years old. The only known was that when you finished demo you would have more work than you thought when you started. It depends on your local market. If you can get flips cheap enough and can flip for less that what it costs to build new then that is what you should be doing. In the upper end of the market it starts to get profitable for a new build.

Tyson Hosey