All Forum Posts by: Steven Tankersley

 Since you've asked...

Were on week 9, and interior and exterior paint will be complete. Cabinets are on site and are being installed Thursday. We ended up removing all the attic insulation and duct work and replacing due to rodent damage. We also had some significant roof repairs, as well as new gutters, all new siding, and new windows. We've moved to the exterior and are repairing irrigation, getting ready for concrete. Once the cabinets are set, it will be floors, baseboards, counters, plumbing and electrical fixtures. Were targeting 3 more weeks of construction. We're pretty much right on budget, with $100,000 spent to date and about $20,000 remaining.

Start of week two:

Dryrot repairs, interior framing, electrical, plumbing and inspections. Stay tuned. 

Week 1:

We had a massive crew (15) cleaning the property and demo'ing. All debris was offhauled, and we removed damaged, drywall, siding, and interior walls/cabinetry. 

Hi all,

I've bean a long time lurker, and finally had the right opportunity to jump on our first flip. Background - I own a residential construction company, and I am also a licensed Realtor. This project came to me from another agent who contacted me regarding a renovation estimate. While I was not interested in the renovation work due to the condition of the home, I did make an offer which was accepted. This is a 2,200 sq ft single story ranch home, 3 acres, built in 1987 with a barn and shop. 

Purchase price: $410,000

Renovation estimate: $95,000

HM & closing costs: $44,000

ARV: $649,000

Net projected profit: $100,000

The deal is structured with a 50% partner. He is also a Realtor, and he put up the capital for the downpayment (13%), points (3), closing costs, monthly payment, utlities, taxes. My contribution is the construction, which we bill weekly for costs incurred (time and materials). Our hard money loan includes a $95,000 holdback for construction costs. 

This property was BAD! It was a true hoarder property, garbage to your knees. The smell is undescribable - a mixture of feces, urine, dead rats. Our first order of business was to clear the property out, remove all interior items, windows, and most of the drywall and siding to let the property air out. We have significant dryrot, and are re-siding the house. We will have new ducting, new attic insulation, new siding, windows, all doors, all cabinets, drywall, paint, flooring of course. It will be a beautiful home with no corners cut. Total project schedule - 8 weeks. 

Background:

I own a construction company here in California, and hold my RE license. I have been looking for the right opportunity to come along, and a deal landed in my lap when another Realtor called me to provide a renovation estimate for a property which had essentially been a hoarder house. I asked if the seller would consider a cash offer, as-is, and she said yes. I have an acquaintance who is also a RE agent who has done a flip or two himself, and had some cash to park. I contacted him, and laid the offer out, and he was on board. 

Purchase price: $425,000

Repair estimate: $100,000

ARV: $650,000

Our offer was accepted, and we are in escrow today (21 day escrow, with 15 day inspection period). We wrote the offer the name "LLC or assignee" to leave the option to form our LLC. Our financial arrangement is my partner will put the 10% down for the HM lender, and pay closing and holding costs ($65k anticipated) My construction company will be doing the renovation, and I intend my company to bill our partnership for costs incurred (direct cost, no markup obviously). Profits to be split 50/50.

My questions are:

1) What is the best corporate structure for our partnership based on the info provided? Should we setup an LLC specific to the property (123 ABC St, LLC for example) and dissolve at completion? Should we setup an S corp? How have others gone about this with a partner, and how do we get our profits out if we set up the LLC? We have to get this nailed down by the close of escrow obviously.

2) Our HM lender terms are: $375k initial loan + $100k construction holdback = $475k Total Loan, 10%, 2.5 Pts, 6 mth. Any thoughts/input appreciated. 

3) Any input or advice on our deal and how to keep risk minimized, and everyone happy would be appreciated. 

Thanks!

Hi all,

I am a realtor and licensed contractor, and I need some advice moving forward on a flip in California. 

Background:

I found the property and contacted the owner. I reviewed the property developed a renovation estimate, ran the comps, and wrote the offer to the owner. The property is in partial probate (two owners, one is in probate), but the attorney has authority to sell (no court approval needed). ARV = $600,000 renovations =$78,000 purchase price =$350,000. With all costs considered, I estimate $130,000 profit.

 I wrote the offer with the buyer listed as my name "or assigned". I brought another realtor in on the deal who has $100,000 to invest of his own, and who was able to line up a private money investor who provided bank statements for proof of funds for the offer. I have approximately $20,000 of my own cash to invest on this deal, so obviously my partner has a larger stake in this financially. The original plan was to have myself complete the renovations, however it would require me to quit my full time job which I don't want to do at this time.

My questions are:

1) Should we set up an LLC for this flip?

2) Do you set up a separate LLC for each flip?

3) What is an equitable profit split on this deal? I found the deal and negotiated it, but my partner is putting more cash up. Thoughts? Is 50/50 fair to both or should he get a larger return if he is putting more cash up? We have not had this discussion yet.

4) If we set up an LLC, do we open a separate bank account? How are our personal funds comingled?

5) How do taxes and payments to each partner of the LLC work? Is the profit from the flip paid out to each partner then taxed as income by the partner? Seems like we would be taxed double that way - the LLC would be taxed on the profit, then the individual partner would be taxed on income.

Also, I put 0 EMD down. They did not ask for one, so unless asked I don't plan on offering it.

Thanks! I sent the offer 2 days ago, using our CAR forms. Funds were listed as "financed" with the "other" box checked - private investor. I have a bank statement from a friend of a friend showing 1.7mil available. I wrote the purchase agreement in my name with "or assigned" after, in case I opt to wholesale. I explained it was because we form a LLC for each flip (which is the truth). Fingers crossed.

I am submitting a written offer on a property here in California, which I have not determined yet if I will wholesale or flip. I am a licensed and active Realtor in California, and can use a CAR purchase agreement. Should I use a CAR purchase agreement or use something else? I am concerned about  being able to assign the contract if I decide to wholesale. I realize there is an assignment of agreement addendum which I can use, but is this the best path?

A couple other questions:

1) If I am using private money, do I still check the "all cash" offer box?

2) Do you guys put down an EMD? If so, how do I recoup that in case I cant fund/wholesale within the time frame?

3) The seller has requested proof of funds. I am using a hard money lender, who provided me a "notice of intent to lend", essentially a pre qualification. Is this typical/sufficient? 

My partner and I are going to look at a flip opportunity tomorrow. The house is in a trust, and the family wants to sell (currently off market). The attorney indicated there are foundation issues which are preventing them from listing it yet.

Background - I am a general contractor and realtor. My partner is also a realtor. Between us we have 120k cash we are willing to invest. 

The ARV of the house is 590,000. Assuming 50k in repairs, I am inclined to offer 385-400k. Now, I need to figure out my financing options. Most private lenders I know are hesitant to lend >300k. The house is paid for, what do you guys think about approaching the owner to carry the note while we complete the construction? If this is a good option, what is the incentive for them? How is the best way to approach this?