All Forum Posts by: J Scott

I'll generally just have the utilities turned on in my name for the inspections, and then turned back off after the inspection (unless I'm going to close quickly, in which case I'll just leave them on). While doing this may piss off some listing agents/banks (sometimes they'll charge ridiculous fees to do it for you), I've yet to have a serious issue doing this.

Keep in mind that if you live in a cold climate, you might not want to turn on the water in the winter. Dewinterizing the house can cause problems -- especially if you don't go through with the purchase.

But, with electricity and gas, just turn them on in your name, and be prepared to apologize if the bank/agent makes an issue of it.

I have my full business plan on my blog if you're interested in seeing it and getting some ideas...in general, here are the things that you'll want to ensure that you include in your business plan:

- Overview of your business. Where will you operate, who will you be working with, will it be part-time or full-time, etc.
- Your business/investment strategy (will you focus on flipping, renting, wholesaling, bird-dogging, etc). Go into as much detail as possible.
- Property Criteria. How will you know if a property is one that you would/should buy? What are your criteria? This should include location, type, financial returns, etc.
- Financing. Where will you get money? Do your cash flow projections work the way they should? Will your plan work given your cash flow projections?
- Your team. Who will you surround yourself with to be successful? Do you have a lawyer, CPA, agent, lender, etc?

Depending on what you plan to do with your BP, you should focus on certain aspects more than others.

For example, if you'll use it to try to get money, focus on the business strategy and financing/cash-flow sections.

If it's your personal plan, focus on your property criteria (so that when you start looking, you have a very good blueprint for what to buy and what not to buy).

When I first started rehabbing and didn't have any idea what things would cost, I found two reputable GCs (based on recommendations by other investors) and paid them (about $50 each, to cover time and gas) to come to a couple properties and give me estimates.

They knew that I didn't have the properties under contract, and that I was just trying to get an understanding of what things cost if I were to undertake the project. The small amount of money I gave them made it worth their time to help me out, and they also had the opportunity to be on my short list of contractors I knew when I finally bought that first one.

Ultimately, one of those contractors ended up being my main GC, and has helped me on many projects since. His willingness to drive an hour and spend a couple hours giving me estimates has translated into tens of thousands of dollars for him.

Win/win all around...

Just because the bank asked for "best and final" offers from you and the other investor, that doesn't mean that your original offers were comparable. You may have asked $11K and he may have asked $17K...the best still might come back and request each of your highest offers in the hopes that one (or both) of you will go higher than the highest original asking.

I put all my flips into an LLC for this reason...

Focus on rebuilding your credit and work hard to get in a better cash situation before investing...

There are certainly ways of investing without cash, but if you have HORRIBLE credit, that's generally a result of not knowing how to handle money, and therefore you'd likely get yourself into more trouble trying to invest without cash.

Generally, it will take two full years of established credit before your company will be able to obtain non-guaranteed loans. Get the DUNS number now...it's free so it can't hurt, regardless of what others' recommend.

Here's the best resource for Business Credit issues that I've found:

http://www.creditboards.com/

As Jon says, if you have a seller's disclosure statement claiming the roof was new, you *MIGHT* have some recourse. But, even in this case, probably not worth the cost/effort involved.

Consider this a good lesson about getting inspections and contractor bids (in writing) before closing.

I can't speak for HUD, but for REOs, there's a lot of leverage that can be had with an all-cash offer. As you mention, it's always cash to the seller when you're sitting at the closing table, but that's not why cash is so important.

Banks (REO asset managers) like to see all-cash offers because it means one less issue that could possibly derail the deal between contract and closing. If you're going to be financing, you'll likely have a financing contingency in your contract, and that means if your financing falls through, you can back out without any risk. The REO asset manager would much rather you offer cash, so you don't have that opportunity to back out.

In fact, the best way to gain leverage on an offer is to remove as many contingencies as you can. I've had offers I've made where I came in $10K less than the highest bidder, but because I have no financing contingency, no due diligence contingency, and a large earnest money deposit, my offer was accepted.

And don't think that all REOs are selling for near full-price these days. While every area is different, I'm making (and getting) properties for up to 30% off asking in some cases.

You don't need a D&B number, but if you want to build business credit, it's highly recommended. Many potential credit sources (stores, banks, commercial lenders, etc) will use your D&B score to determine whether and to what extent to lend to you. If you don't have any D&B credit built, you may still get credit, but it's a lot easier if you've been building D&B credit for a couple years.