All Forum Posts by: Mike G.

Agree with Stan, it's a holding cost.  As long as you hold the property, you must keep paying insurance.

Unless the house is already sold to someone, this sounds like a bad idea.  What happens when somebody chooses all their custom colors, appliances, fixtures, etc, and then they can't get a loan or decide not to buy the house?  Then you have a house custom to one person's specific tastes that you are trying to sell to someone else.

Also, not having a finished house during showings is a mistake.  We once showed a house without appliances, but we had photos of the appliances that would be installed for people to see.  Many people saw the house but we received no offers.  The next week we installed appliances, and that weekend we had 6 people see the house and 5 of them made offers.

You should really look at the remodeled comps for your house.  I would think that laminate floors will not be good there, especially if you want a quick flip.  Same with ceramic tile.

@Deborah Hill , it will be extremely difficult to wholesale an REO in the LA area right now. Most banks explicitly prohibit assigning the contract, and even reselling the property within a certain time period (usually 30, 60, or 90 days). But if you want to try this route, you need to show proof of funds, have a high EM deposit ($1000 is not going to cut it), a short close time (like two weeks), and no contingencies (other than maybe inspection, but many investors will make offers without contingencies).

It seems like a lot of banks are pricing properties really high right now, so don't jump on something just because it is an REO. You usually have to find a significant fixer; otherwise the bank will just wait until a homeowner wants to buy it. But, there are always those that somehow slip through the cracks.

Sorry I wasn't able to make it.  Hopefully next time!

Hi, @Will F. 

Marketing costs, education, and other non-property-specific expenses are deducted as business expenses.  They are not assigned as costs for the rehab.  If they are legitimate business expenses, you can still deduct them, they just don't get associated with a property.  Your account will know how to deal with that stuff.  I recommend getting set up with something like QuickBooks and working with your accountant to define a chart of accounts that makes sense for your flipping business.

Taxation isn't high for flipping.  You are just taxed on your income like everybody else.  As your income increases, your tax rate goes up.  Also, you will have to pay self employment taxes, so that makes it more painful, but that's the same for any business you own.  Again, speak to your accountant.

You should absolutely have a separate bank account (and credit card if you can) for your business.  Your accountant should also be advising you on this.

It sounds like you haven't spoken to an accountant about any of this stuff.  Do so.

Hi, Brandon.  No, I didn't get around to checking out Salesforce.  After I put in the time on Podio and decided it worked for my needs (and was free), I just stopped there.  I have bumped up Salesforce on my list to check out in the future, though.  Thanks for the suggestion!

In addition to posting this question here, you should also contact all rehabbers you know in your area to see if they have recommendations.  Especially contact any who run investment clubs.  Also do a search online for hard money lenders in your location and give them a call.  And you need to have all of your financial information in order, such as last two years' tax returns (for owners and the company), three months of bank statements (owners and the company), company YTD finances, company formation documentation, etc.

Oh, and thank you @Recia Davis for pointing me toward Podio!

A couple of people have asked me about where I am with this, so I'll post an update.

I decided to go with Podio.

Here are some of the positives and negatives that I have seen with it.

Positives:

• I am able to import a list from Excel and specify the mapping of columns to fields that I've set up in Podio.
• I am able to specify fields on import that are "key" fields, so that duplicates will not be imported.
• I can re-export a sub-selection of my Podio database to Excel, which I can then submit to a mailing service.
• Podio automatically logs a history of every change that is made, along with who made the change and a time/date stamp.  I can see exactly what was changed for each edit and revert the change if I want.
• When I search for an entry, it shows me results as I type (kind of - it's a web interface, so there is a delay, but it's fine)
• I can attach files to entries in Podio, such as pictures of the property, contractor bids, rehab analysis, or whatever.
• The Podio database is in the cloud, so both my partner and I can access it from any web browser and also from a mobile phone App.
• There is some task creation functionality, which looks like it might be cool (similar to ZoHo), but I haven't used it yet.
• Their forums have a lot of information.
• It's free if you only have a few users (I think 5 or less)

Negatives:

• It's a little tough to figure out what's going on initially.  The developers chose not to use standard database nomenclature, so there is an extra unnecessary barrier to entry.  Also, their introduction tutorial isn't very useful, and the interface is often unintuitive.
• I can't save a default mapping of Excel columns to Podio fields for importing.
• When duplicates are detected on import, the original entry is updated with "new" info from the duplicate and there isn't an option to have it just ignore the duplicate.
• I can't choose which fields to export to Excel, so I have to remove columns after export.
• The Podio database is in the cloud, so if the Internet is down or slow, accessing it can be frustrating.
• There is no built-in functionality to back up the Podio database, either automatically or manually.
• It would be nice to be able to specify one or more fields and have Podio search for duplicates using those fields.
• On import, if Podio sees what it thinks is a date, it converts it to its internal date format, which is annoying because it also adds a time to that field, like this:  2014-05-29 00:00:00.
• It strips out comma separators from numbers when importing from Excel.
• A number of little annoying/frustrating interface issues.

Overall, Podio working okay for us so far, but some things have me concerned.  A built-in backup system seems like a crucial bit of functionality, especially for a database in the cloud.  I can manually export each table to an Excel file, which is fine for me because I only have one table so far, but this doesn't seem like a good solution.  Another global issue is that the developers seem to ignore requests for some really basic functionality (especially interface functionality) that ought to be very easy to implement.  They are probably focusing on larger systems, but I have seen simple requests from people made a few years ago that still haven't been implemented.

Anyway, that's where I'm at.  As a free system (for now), I can only grumble about Podio's rough edges.  But now that I have it set up, it seems to be working okay and does what I need.  And my partner and I both have easy access to one central database.