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All Forum Posts by: Account Closed

Account Closed has started 4 posts and replied 10 times.

Post: Assuming a note on seller financed deal

Account ClosedPosted
  • Investor
  • Tyler, TX
  • Posts 10
  • Votes 8

I'm looking at a deal with 13 total single family rentals. The note is being carried by the previous seller and payments being made by current seller. The properties cash flow about 40k a year. We would be assuming the payments with little out of pocket. My question is while the return would be good with us paying little out of pocket, if the loan balance is greater than the value of the properties which I suspect it is, (we are soon to find out loan info) is it still worth doing the deal because the seller wants to get out from under deal and we would get favorable terms even though we would technically be underwater?

Post: First Flip. How important is a general contractor?

Account ClosedPosted
  • Investor
  • Tyler, TX
  • Posts 10
  • Votes 8
Quote from @James Hamling:

@Account Closed I have not seen anyone mention the most important item here, that your doing your math backwards, and process. 

You should be asking yourself, how much will it cost you to NOT have a GC? Just any GC. Then, how much will any GC cost you vs a good one?     I am dead serious, because the answer to this will determine your budget, in $ and time, for looking for a GC, or a good one. I heard nothing about any set budget for this. 

And I need to touch on a VERY important item that in house-flipping, budgets are NOT just$, there is a time budget and a $ budget. ALWAYS! 

To preface, once upon a time I was coined the king-of-flips, because that's all I did, and I did it on massive scale before stepping away from that. So I speak from 1st hand personal experience. Now I had a massive advantage, I was a GC, and had spent near 20yrs in the trades before I started flipping as an investor, so I had things down to a science already. I can tell you, 90% of the profit I generated was directly a result from my renovation activities. If i went just 90 days over timeline, that could have been most of my net, gone, cost of $ burnt up. Or market shift. 

Look, a good GC does a hell of a lot more then just manage crews, that about 5% of being a good GC. No joke. 

First major item, I have vendor accounts and manufacturer direct accounts which gives me pricing and time of delivery that nobody in general public will ever get, period. Pricing alone, most of my prices were volume based, so I can make 20K more on a flip just because of how I buy things. Delivery time, that's a huge one, as a GC (ok, just assume GC = GOOD GC) I get expedited service over many others and in flipping time = money. 

Then there is dealing with inspectors and local government. Often I walked in to get a permit approved, I know everyone in that office by first name, we have seen each other a hundred times before. I know what quarks they have, what aspects they press on, and they know me, my work, and i get an easier time because they have that assurance, not to mention getting any kind of variance passed. I also know from the get-go what will need to be done and how it will need to be done, I know if the electrical inspector in that area is all about his GFCI's, or if the HVAC inspector get's all giggly when he sees tapped seams on trunk lines and then just automatically passes and walks out. Heck, one time sitting waiting for the framing inspector, who was famously known as the toughest inspector, in the toughest jurisdiction, she pulls up, walks 10' from her car when looks up at me waiting at front door and says "Oh hell, this is one of your places James, why didn't you tell me, I'd have saved the trip" and signed off on the inspection before she even got onto the yard. That's a result of having done dozens upon dozens of passing inspections without a single item missed, reputation built, only a GC can bring that. 

So yeah, not having a GC, seems insane, like a perfect receipt to answer how can someone flip in the longest time for the most expensive way with the most headaches possible. 

We havn't even gotten into the fact of sub-relations and having loyal subs with secured pricing, the ability to run a gantt schedule, or adjust one, to get maximum efficiency and minimal time of reno, knowing what's the most current hottest trend buyers are looking for (yeah, a GC knows because a GC is who all the people are having do and design it). 

A GC is ROI, every time. If you want to be an investor, BE AN INVESTOR. Does WB go out and bottle coca-cola at the plant? Do you see Elon fueling up rockets? No, of course not, because there too busy being the investor and empowering the functionaries to do there functions.

This response is why BiggerPockets is the best. I can't thank you enough, you just saved me time, money and headaches. Makes total sense, I'm an investor not a contractor or realtor, experts are experts for a reason. Do amateur work expect amateur returns. Thank you for the response and your time!  

Post: First Flip. How important is a general contractor?

Account ClosedPosted
  • Investor
  • Tyler, TX
  • Posts 10
  • Votes 8
Thats kind of where my head is at, I have no experience flipping I figure I’d leave it to an expert. Much like I’d rather trust a trained pilot than myself to get me to where I’m going. Thank you for your reply!

Quote from @David Avery:

A general contractor loves to over see the job. He loves to do most of the work.  He loves to schedule the plumber, electrician , etc.  

GC will keep an eye on everyone and everything.  He can give you a bid for the job that he is doing, and manage the other subs as part of his bid or scope of work.

I would never mange anything that I am not a professional in.

It is a nightmare and you will lose sleep over it.  

Post: First Flip. How important is a general contractor?

Account ClosedPosted
  • Investor
  • Tyler, TX
  • Posts 10
  • Votes 8
That is extremely helpful. To give a background we got quotes on the big ticket items talking with subs directly and we’ve got a ballpark of about 120k-140k in rehab with a pp of 45k, Arv- 260k-275k. Thank you for the advice meeting with a GC and getting design estimates will be something we do farther ahead of time next time.

Quote from @Andy Sabisch:
Quote from @Account Closed:

Also a follow up question. When getting together a plan to flip the house, things like floor plan, layout, cabinets, paint colors, design plans etc. Who would I use for that? Would that be the contractor or a mix of people? I want to make sure have a clear plan for the house before I begin work.


And to answer the second question, that also should have been part of your estimate to support an offer price.  Once you have done a few you can do that yourself but use resources such as Home Depot or Lowe's or some other store that provides free design assistance.  You can always shop for better prices but you will have a design and a cost to factor into your offer.  

Stick with the formula of PP + Repairs should be no more than 70% of ARV.  The BP calculators will help you get in the ballpark.

Post: First Flip. How important is a general contractor?

Account ClosedPosted
  • Investor
  • Tyler, TX
  • Posts 10
  • Votes 8

Also a follow up question. When getting together a plan to flip the house, things like floor plan, layout, cabinets, paint colors, design plans etc. Who would I use for that? Would that be the contractor or a mix of people? I want to make sure have a clear plan for the house before I begin work.

Post: First Flip. How important is a general contractor?

Account ClosedPosted
  • Investor
  • Tyler, TX
  • Posts 10
  • Votes 8

About close on my first house, was a hoarder house and going to need a lot of work. I want to hire a general contractor, I feel a good GC would help speed up the flip which would limit holding cost and help get a good estimate. My partner would like to self manage the flip and work directly with subcontractors thinking the GC takes too much money off the top. Is it worth it to save the headaches? Does anyone have experience in self managing a flip? Would love to hear your perspective.

Post: Getting a loan with no credit history?

Account ClosedPosted
  • Investor
  • Tyler, TX
  • Posts 10
  • Votes 8

I'm 20 years old and playing a sport in college, I currently do not have any credit history. Would I be able to get a hard money loan if I used a guarantor with a high credit score? Of course my deal would have to be solid. I know different lenders have different requirements. 

Post: How To Keep Getting Loans

Account ClosedPosted
  • Investor
  • Tyler, TX
  • Posts 10
  • Votes 8
Originally posted by @Aaron Kaminer:

I am just starting out. I have been researching for about a year now and my strategy (at a very high level) is to BRRR my way to financial freedom. I am not excluding other strategies but I intend to focus most of my time and energy on BRRRs. That said, I am concerned I will not be able to carry enough loans to acquire enough doors. E.g Let's say I aim to acquire 10 SFH per year, my first 2 years. I.e, 20 loans in total. Is that even possible? If so, what type of lender am I looking for?

My understanding is that a common bank will struggle to meet these needs. Rather, a portfolio lender might be a better option. However, I have heard that portfolio lenders can make it difficult to sell the property, should you decide to do so. Then there is private lending.. 

My question is this: In light of this high level strategy and the need for many many loans, what is the typical (if there is such a thing) route for lending?


I do understand that acquiring MFHs would alleviate this issue to a degree, however, I am asking in principle. How would this be achieved?

I am in a very similar situation, I've been aggressively studying for the past couple years and now it's time to get real experience. I plan on doing the same thing with using BRRRR to maximize the purchasing power of what money I do have. My question to you is how do you plan on getting your first loan? I have looked at several hard money lenders and most would like to see 1 deal done for a short term fix and flip loan. It seems that the hardest part in starting out is getting the loans necessary.

Post: First Post! Creating an LLC with brother?

Account ClosedPosted
  • Investor
  • Tyler, TX
  • Posts 10
  • Votes 8

Thank you both for your insights, if it's like anything else I'm sure there are pros and cons to both options. It probably would make more sense cost wise in these early stages to open a joint LLC and crossing the solo deal bridge when we come to it.

Post: First Post! Creating an LLC with brother?

Account ClosedPosted
  • Investor
  • Tyler, TX
  • Posts 10
  • Votes 8

My brother and I are looking to buy our first deal. We want to partner on this first one and on some but not all future deals. To give a background he is 22 and about to be earning stable income in the Navy by the end of this year and I am 20 years old playing baseball in college not currently earning income. We want to invest in some deals together and share in equity and profits on those but also have the ability to do deals without one another and not intermingle those future individual investments. Would it be better to create separate entities and partner on specific properties or create one multimember LLC? Is there something specific in an operating agreement that would take