All Forum Posts by: Francisco Solano

Hello BP! 

Looking to see if anyone has a basic template of an operating agreement for a business partnership of two parties involved in the fix and flipping business? We want to detail the responsibilities, capital contributions, profit and lost sharing percentages, decision-making process, have dispute resolution methods, and exist strategies. We are splitting up capital contributions at 50%, but see having different involvements in the repair process. We are contractors with different expertise and want to figure out a way that is fair both to get compensated. Would the person who takes on more labor to repair the property have greater preferred equity or is this usually treated differently?

Below is something we have in the works:

-Looking at a property that is 3beds 1 bath

-ARV once complete is at 250K

-Repair costs = $40K

-Working on acquiring it for $125K max

Thanks for the input!

Hi!

I am getting ready to execute on a direct mail marketing campaign for off market properties to zip codes in the greater Milwaukee, WI market after reading, listening, and watching Jerry Norton, Pace Morby, and many other local investors. It's gotten to the time to get **** done! These are areas I know like the back of my hand! I am working with pre-foreclosure and tax delinquency leads I obtained using Propwire. I have the contracts ready, cash buyers waiting, and company set up to lock up deals.  

I am also a licensed realtor, have worked a loan originator for hard money lender, have light general contracting experience. I understand how to get to an ARV, account for repair costs, the hard/soft cost of financing, and so on.

What advise would someone give in locking up deals?

What legal parameters would you be cautious of? Are there certain things you can or cannot say on an appointment or on paper?

Thanks!

Hi BP Community!

I have found a reliable person who I will be working with in securing distressed real estate. He will be providing the capital to cover the closing costs and part of the rehab. He will also physically work on the properties at this point. Our current focus is working on 1-4 unit fix and flips, but eventually work towards being able to refinance properties and keep and cash flow them.

My question is  tailored on the the way I should structure our relationship for the legal and tax base purposes.

Should I secure the deals under my business and pay my partner out of my business operating account?

Would it be wise to set up a new business with he and I as registered agents and lock up deals under this entity?

What type of entity would be best to pay less taxes? Would setting up an S-Corp be the best option?

Thank you so much for the input!

-Frankie

Hi BP Community! 

I am actively working on sourcing and locking up fix and flip deals. These deals would have adequate equity in them. I am looking at 1-4 unit properties. The properties would be in a distressed state and I would lock them up at a minimum of 65% of ARV. In this effort I have sources that can provide private capital. My question then is, what would be a fair ROI on the private capital? I know this depends on the deal itself, but are there any general guides as to how to pay the investor(s) via points or equity? I'll articulate a deal for better specifics.

So let's say I have the following deal:

SFH - 4 Beds 2 Baths - Purchase Price: 170K - ARV: 350K - Repair Cost: 55K

So I source private capital. I obtain 80K in liquid cash. This is to cover the repair cost and part of the purchase. I would obtain a hard money loan for the rest of the cost.

In this scenario what would be best way to leverage the deal? How many points or how much equity in the deal would you give to pay the investor?

Thanks!  

Hello - Are there CPA's anyone can recommend in the area that has experience with real estate dealings?

Thank you for the contact Rebecca! 

Hi Jeremy - It would be greatly appreciated if you could share the attorney's contact.

Greatly appreciated!

-FS

Hi BP community - I am looking into getting involved into non-conventional financing options in the real estate realm. I have found tons of forms in regards to subject to, land contracts, and lease options to name a few, but would like to connect with an experienced attorney to ensure I have the adequate legal fabric. Hence, would anyone recommend an attorney that would be able to further advise on these matters? Greatly appreciated! -FS