All Forum Posts by: Hugh Smith

Ok, my partner and I have almost finished a large flip project south of richmond Va. We have a wyoming LLC that will file taxes as a C corp that controls a Virginia LLC that is an IRS disregarded entity. Only the wyoming LLC will file a tax return. The Wyoming LLC paid all expenses for the rehab. The wyoming LLC took over the property with a contract for a down payment with the final payment to be paid after 3 months ( in a few weeks). We bought very cheap but with major rehab expenses. Since real estate sales are slow due to high interest rates  we decided to keep the property as a rental. but we need to refinance it (75% of appraised value) to get our investment back out plus some profit. I am in the process of setting up another partnership LLC (non C corp tax filing) structure for rentals so my partner and I can share the depreciation deductions in a way to cover other personal income.                  (1) I got a recomemndation for a virginia banker for investment property - good guy , very enthusiastic etc. But he referred me to a mortgage company that says they can only refinance property in a personal name not property in the name of an LLC. it must be possible to finance property in an LLC because that is a common way to hold title to real estate. anyone else run into these kind of problems ? any problems with transfering property from personal to LLC or transferring between 2 LLCs.? (2) possible tax filing complications because the fix and flip LLC paid for the repair expenses but the rental LLC or partners personally will likely own the property when receiving the money for the bank finance. Not sure how to handle the property closing in a few weeks. Any suggestions ? Thanks.

OK< thanks 

i dont have a contract but there is a virginia attorney( Craig Buck)  that handles these kinds of transactions which he calls contract for deed.  Also he has written a book on real estate contracts .      http://www.assumeanyloan.com/2...

http://www.assumeanyloan.com/1...

You can get his RE contracts book on amazon.  https://www.amazon.com/Real-Es...

He does not call it subto - he calls it contracts for deed. https://virginiaclosings.com/o...

i dont have a contract but there is a virginia attorney( Craig Buck)  that handles these kinds of transactions which he calls contract for deed.  Also he has written a book on real estate contracts .      http://www.assumeanyloan.com/2...

http://www.assumeanyloan.com/1...

You can get his RE contracts book on amazon.  https://www.amazon.com/Real-Es...

He does not call it subto - he calls it contracts for deed. https://virginiaclosings.com/o...

It turned out that the estimate of the rehab expenses was pretty close.  maybe expenses are higher in other areas of the country. The estmate was 15,000.  the final total expenses were a little under 17.000.  The property owner was ok with that.    My partner added an additional bathroom- shower insert not tub.  But a fully framed in additional room.  refinshed all the hard wood floors ,  repainted all inside and deck out back.  

What was not predicted was the sudden downturn in the real estate market. The property owner never originally wanted to sell the property for the $225k as is value. He was dreaming that after the house was fixed up it would go into a bidding war like his neighbors house. Instead the fed has been raising interest rates. The house was originally listed for sale at $324,000. Its been reduced by $5,000 every couple weeks. Its not selling. The owner is reluctant to sell below $310,000. So now my investment is stuck there. The real estate downturn may get worse before it gets better. Someone suggested a LOC. YesI did apply for a 1st position HELOC. It took over 3 months. They went into every possible complications and questions about my other properties , sons student loan etc, etc. Have replaced my first mortgage but I still dont have checkbooks to access the additional line of credit yet.

So my first rehab project did not go well . My investment is locked up.  We are now working on the second project.  I bought a hoarder house that had caught on fire.   Fire damage and water damage in january. Outside also a disaster. Overgrown with weeds and bushes.  we paid someone to remove over 40,000 lbs of junk from inside the house.  My partner is a magician at doing the repairs cheap.  The house has a very large attic .  He plans to add an additional bedroom and bathroom upstairs with an additional staircase. I expect that it will be hard to sell any real estate in the next year.  I am hoping to refinance it to get money out and keep it as a rental.  Yes,  I bought it very cheap.

Thanks for your response . I was looking for help with the contract not help with the repair estimate or with estimnating the ARV. My partner has done a lot of work like this before. He is providing most of the labor and he has a very detailed estimate for the cost of materials.

Thanks for your response . I was looking for help with the contract not help with the repair estimate or with estimnating the ARV. My partner has done a lot of work like this before. He is providing most of the labor and he has a very detailed estimate for the cost of materials.

ok, i am starting up a partnership with a friend in virginia to fix and flip houses. 

My partner says we dont need to buy the first house.   He has negotiated an agreement with a friend like this:   

we agree with the owner that the "as is" value of the house is $225,000. my partner estimates that it might take $15,000 to fix up the house including  adding another bathroom.  

when the house is sold we subtract the as is price and the total repair expenses from the sales price.  And we split the profit 60% for us and 40% for the owner.  

But i have concerns about how to write a contract and enforce it.  The owner is  expecting a biddiing war and the sale price will go over $350,000.   But the comparables suggest $300,000 max.  what if the owner decides to hold out ( forever ) for a sales price over 350k.  

or what if the owner decides that we have not done that much work and he just sells the property on his own and gives us some small payment.  i know that contractors can put leins on property for specific amounts owed.   But we can not name a specific amount now because there are two unknown variables- the final repair total and the final sales price.   Can we just file the agreement on the property to cloud the title even if we dont know the final amount we will be owed ?

I have never seen any contract like this ?  

Thanks 

And property management for $100 per month ?  is that realistic?    and 100/mo for maintenance - even less so for an multifamily.  

I am currently in the process of selling a rental house in Virginia. I would also like to sell a condo in northern California that has appreciated a lot and is fully depreciated. I would like to reinvest but Northern California is too expensive . I'm looking at Nevada. I know that both Reno and Las Vegas have had a lot of appreciation also. Are there advantages of choosing Vegas  over Reno or vice versa?