All Forum Posts by: Howard Johnston

Good Morning fellow BP'ers!

We are Howard and Heather Johnston and are new to the REI world. We discovered BP about 6 months ago and have listened to every podcast, many twice, watched webinars, followed threads, bought some great books and are also PRO members.

We are moving to Jacksonville, FL and our goal is to purchase our first fix and flip within a year. We are waiting for our house to sell and when that does we will have about $100k to begin investing. In that time we will be networking like crazy, building our team and getting to know our areas to farm. So far, we are thinking of concentrating on Mandarin, Julington Creek, Beauclerc and San Marco areas. Would love to eventually flip near and in the beaches area as well.

The advice and knowledge that is shared on the forums are something we really appreciate and hope we will be able to contribute to ourselves as we gain knowledge and experience on this amazing journey. One thing we learned early on from BP and from our own experience as that success isn't only achieved through hard work and determination but also through giving.

Currently, we run a family owned remodeling company, concentrating on anything cosmetic and custom. The range of our work goes from flooring installation, cabinet installation, custom woodwork, trim, painting and more. Until we start flipping houses, we will need to continue this and hope we can even work with fellow investors in Jacksonville that are having troubles with contractors. Also, we know what it is like to get in a jam, so if you are an investor in JAX then please contact me and we will do what we can to help.

Please feel free to learn more about us at our website which there should be a link to below.

Thank you for your time and we look forward to getting to know the BP community and hopefully many BP'ers personally in JAX!

Best regards,

Howard

Thanks Larry,

What are your thoughts on obtaining the HELOC and then transferring everything into the business name? Is this even possible? Would HELOC have to originate with the business?

Thank you much for your time!

Hello Bigger Pockets folks,

Thoughts from anyone on if we should transfer the deed (ownership) of our home from our personal names into the name of our company? We are about to apply for a HELOC loan, we own the home free and clear, are turning it into a vacation rental. Using our HELOC to fund at least in part our first deals.... so would all of this be easier or is there any benefit to just putting it all into our business? We have an S corp.

Any pointers or thoughts would be fantastic.

Cheers,

H&H

Hello everyone,

I know this is a question for an accountant, we are looking for real estate savvy one.  Not sure if this is legal or even possible, so I guess we get creative thinking brownie points. 

We already have a corporation set up, can we take a HELOC out on our current home funnel it through our corporation and have our corporation act as our HML. Then when we sell the house pay back the corporation and the 11% we would have paid an outside HML, we then take that 11% and reinvest it elsewhere. Any other money we would have made on the flip or sale we could do what we are suppose to with it.... another flip, put it through our payroll to pay ourselves, pay our due taxes etc.

Is our thinking correct in this?  Anything wrong or illegal about that? Is it even possible?  

How would we "funnel" money into our corporation from our HELOC? Possible? Illegal? Not even possible?

Thank you in advance! BP community is fantastic!

Hey folks,

We currently live in NH, own our home out right. Bought it for cash and we have it for sale now for 290,000. We are adding another bathroom to the house and making it a 4 bed/3 bath and making it a vacation rental (taking it off the market). Moving to FL and wanting to get into the REI market down there. Thinking an HELOC would be a great way to fund our adventure. We want to start some relationship with banks in the Jacksonville area (where we are moving to) would it be wise to try to get our HELOC loan from a bank down there or work with someone locally here? Is it even possible to work with someone in FL for a home up here? If so can anyone recommend some lenders in FL that we can start talking to?

Thanks Shawn! Appreciate the feedback.... I think we are! 

Hi Kurt,

Thanks for your questions, it allows us to explore our own thinking.  

Our other homes were not "flipped" intentionally they were homes we lived in for years. We never thought of them as "flips" until now.  However, we did buy them for much less or distressed and worked on them. We didn't just ride the appreciation rate up on them.  Home we are in now was bought with cash out of forclosure for 68,000.  Home before that was a 57 acre farm in KY, we brought the farm and home back (very distressed) and then worked the farm for 5 years, we bought that with 50% down (cash) financed the rest through a small bank in town. 

Our credit score reflects years of no debt.  We were completely debt free for close to 10 years (Dave Ramsey).  We liked the freedom of no debt but it isn't good for a credit score. So for the past year we have been building credit again. Takes time... no credit seems to be a more difficult hurdle than bad credit.  We still don't have a lot of debt, we keep it low as we still like our freedom. 

All that being said, we are sitting on money in this house which could be working for us now. We could wait and save, but we aren't afraid of the "risk" we are more about the opportunity. With our skill sets our time and money would be better used in an area with a much better economy (not here in the very north country). We have planned for a 50% vacancy in our vacation rental here, which seems to be very conservative, as we live within 30 mins of major ski areas and in the summer these mountains are filled with vacationers from NY, MA, CT and RI. Lots of rivers and lakes up here, great place to vacation. Even with a 50% vacancy rate this home will support itself and put money in our pockets (4 bed, 3 bath completely renovated antique cape sitting at the end of a dead end road surrounded by pastures). Our daughter will be the property manager as she only lives 20 mins away. We could take the vacation rental money and just use it to pay back any equity we have pulled out. As long as we are as successful in FL with our homes, we should not need any income from this home. The worst case scenario is we move back here and keep doing what we are doing. We could pay the mortgage on this home without a problem. Or we simply do in FL what we are doing here, as we get our REI off the ground.

Personal note- We drive upwards of 4-6 hours a day to do what we do here, because we work renovating and construction for others.  Our area does not have a booming economy it is very seasonal and mostly vacation area. All the money in this state is in the southern portion of the state and those are the folks calling us to do their work.  Our time is being wasted in drive time and it means really long days with no time with the family.  We could be working for ourselves, and doing much better (we aren't doing badly our company made 250,000 last year) but we have to spend twice as much time making that money as we would in a better area.  Tired of long winters that make our job and work harder.  And tired of working for others when we could be doing better working for ourselves.  So that is the personal side of our thought process.  

We aren't afraid of the risk, we don't want to be foolish however, so we very much welcome anyone that would like to analyze our thought process and give us feedback.  

Oh, side note...  We also already have a Corporation set up as we have been contracting for many years already and running crews.  

Anyone have any advice on Corporation versus LLC. How do most REI folks work?

Hey thanks so much guys! We knew we would get great advice from the Bigger Pockets community. We hadn't even thought about a HELOC, we will look into that immediately.

Thank you for the early welcome! We can't wait to be there! 

We are open to just about any flip, most probably distressed. We have all the experience needed to do just about any scope of work. Sister in law is a designer and she lives in Jacksonville. My son and his wife are coming with us and as they have worked with me for years, and I have trained them so we come with a crew as well. We have experience in everything from framing, trim, paint and even have done a good amount of custom cabinetry work, can't think of anything we haven't done. Although we do plan on hiring out work as well keeping things moving along quickly. Looking forward to networking and building a team down there. 

We would be interested any property if it were in the right neighborhood, with the right comps and of course the right price. We would be interested in flipping it in less than 2 months, so the scope of work would need to fit within that time frame (mostly because we would like to be doing at least 8-10 flips per year). Would probably like to keep the first home in or under the 200,000 range, maybe less and don't want the rehab cost to go over 50,000-60,000, but could as long as the ARV and comps justified it. We would certainly be open to paying 80,000 with only 30,000 in rehab costs. As long as the ARV is good we would look at anything.

 Getting my GC license and RE license before we arrive, so I really know the business and have the licensing behind everything we do (working on that now) and would like to get into some buy and hold properties as well, after our first few flips. 

Thanks so much for all the feedback.  Having this community as a sounding board is worth a million bucks! We were nervous about pulling the equity out of our home (old school in our thinking) now we can't wait to get started. 

Hey folks. My wife and I are REI newbies and are looking to flip houses. Although new to real estate on the investing side we have flipped two homes that we've lived in with great returns. We are self-employed (contractor over 10 years), credit score is 680, very little debt and we own our home. Currently, we are in the White Mountains of New Hampshire and will be moving to Jacksonville, FL (where we'll be flipping full time), in the coming months.

Our plan is to use our current home as a vacation rental giving us rental income, (our area gets about $1500 to $1700 per week). The question is, we own our home outright and it is worth about $300k, so do we use the equity in our home to fund our first deal either in part or completely rather than going with an HML or portfolio lender? Or pull some equity and combine with other financing?

What would you do? Any feedback would be greatly appreciated!

Thanks,

Howard and Heather Johnston