All Forum Posts by: Joe Onorato

Hi all!

I'm bringing a partner in on a deal for the first time. We have been flipping for the past 18 months now in South Jersey, and have 3 deals going right now with all of our money tied up (we do every deal in cash to avoid bringing in a lender, etc). 

We just put a deal under contract yesterday and a partner would like to get involved. He has a greed to finance the full project (115 purchase, 35k rehab). He has been given our portfolio of past deals and feels comfortable with us. He is an experienced builder so he's letting me run the show to earn my keep, but asked me how I would like to structure the investment.

Does anyone have any advice or past experience with the best/fairest/easiest way to structure this? The two options I was going to throw out were:

He take out a mortgage/promissory note on the transaction with us and becomes 1st lien position

I wholesale the deal to his LLC to purchase and draft up an agreement to split the profits 50/50. Obviously more sound than this but that would be the general idea.

Thanks in advance!

Joe

Question for BP Land. We've got our first few projects going with a new GC who came highly recommended. He's been incredible thus far. The only thing difficult for me, is that he prices out labor in a bulk fee. Scope of work is included but I don't know pricing broken out like my typical GC does in line item form. Makes it difficult to fill out my sheet.

Does anyone use a GC who does this type of labor billing? How do you break it out for your spreadsheet/calculations? Also, who has a great spreadsheet for managing just the rehab portion (billing, materials cost etc). I've used Quickbooks in the past but wasn't a huge fan FWIW. Just looking to see if someone has a better spreadsheet. Thanks in advance!

Thanks Steve! And thanks for your insight. Will definitely be noted in the future for upcoming deals, it's saved in my notes.

Good afternoon all, sorry for disappearing for a few days. Just wanted to fill everyone in on the process as all of you have been very helpful. We go to settlement tomorrow and I'm pleased to announce that after much fight we've purchased the unit outright from the solar company. It took me bringing in a roofing expert to document how the roof should be repaired, telling the solar company there's no way they feel like coming out to remove this system and repair to livable standards etc. We purchased the system at a substantial discount and also got the transferrable warranty. 

The only unfortunate situation is that the SRECS do not transfer over. Definitely a nice learning experience for future transactions. Thanks again for everyone's help! I'm happy to answer any questions on how we went through the process and negotiation. 

Y'all have been awesomely helpful. Quick update with where we are at. This was a purchase agreement we found out finally. Vivint has been incredibly discrete and secretive with giving us any information, and literally will not transfer me from the one person we have been dealing with. Extremely frustrating. 

We have received the amount of payoff for the system and are now aggressively negotiating with the bank on who will be paying this amount. Nothing in our contract says anything about us being responsible for the panels IF THERE WAS A BALANCE. So we are aggressively negotiating here. I have also made it known to Vivint the amount of unnecessary work, stress, time and effort they would need to go through if they needed to remove the system and repair the roof. I am doing all I can to get that $15,763 number down, and seeing what, if anything, the bank would be willing to contribute to get this off everyone's books and get to closing.

If for whatever reason we cannot find a reasonable number, we'll be having Vivint remove the system and repair the roof and siding where the system is. I will keep everyone updated. If anyone has any other advice, greatly appreciated.

Appreciate everyone's input here. Glad to be a trailblazer and hopefully help others after this situation!

I guess my biggest confusion is why is the foreclosing bank (Deutsche Bank in this case) not responsible for satisfying this buyout number Vivint gave me to purchase the system outright ($15,763)? I understand it's not a lien, but the system was in the previous owner's name and I guess logic would tell me the bank is responsible for paying this off, just like the $26,000 Federal Tax lien that was cleared off title.

For future educational purposes to everyone, Vivint gave me THREE options:

(1) Buyout the system for the above $15,763. I will be negotiating HARD on this number and this is my most preferred scenario.

(2) Assume the roughly $150/month agreement which I would then have to pass on to the end buyer when I rehab and flip the home. IF THE BUYER DOES NOT WANT SOLAR, I WOULD BE REQUIRED TO REMOVE THE SYSTEM AND REPAIR THE DAMAGES OUT OF MY POCKET. I have no desire to go this route.

(3) Since this is a bank owned property, Vivint will remove this system and repair everything free of charge. I will go this route if I'm forced to, but the selling point to the end buyer of having no electric bill and roughly $2,000-$3,000/year in SREC is appealing obviously to the listing.

 Thank you very much Steve, and you're right. All of the clients and investor friends I have are learning through my experience right now. We foresee the next 3-5 years a lot of properties we buy having solar panels in our area. So, I guess it's a good thing we are going through this now. Your analysis is pretty much in line with my partner and I's right now. Which is to negotiate the price of the whole system down with Vivint. I guess where my biggest confusion is: the liens on title are paid off by the seller, the bank in this case, but I've been told conflicting info from everyone I've discussed solar with. Some say it is a lien to be paid by the bank, and others say it's a gray area and they can fight back and say no you bought the property as is. 

Any experience here?

So a quick update, after climbing up the flagpole at Vivint yesterday I finally got an answer to my situation. The previous owners seemed to have a Power Purchase Agreement before foreclosure. There are two options per the representative:

1- early payoff of the panels - a total of roughly $15,700 that they will be able to negotiate down for a discounted price. I would own the panels free and clear and be able to transfer to the end buyer after my rehab.

2- Vivint will come out and remove the panels, make sure the roof is watertight etc and the system would be taken down.

My question now is, we went under contract through Auction.com on a pretty standard agreement of sale. There is nothing in there that says I am responsible for the solar panels. This is my first transaction dealing with solar so I'm wondering if anyone has any insight as to my next steps. I am obviously desiring to keep the solar system as this would be a huge perk to the end buyer when I list the property - hugely discounted energy for a system they haven't had to pay for.

I can't get any UCC paperwork without signing transfer documents, and I'm not transferring any systems into my name until I know exactly what is going on with these panels. Sorry for talking in circles, I just figured with logic that the bank would be handling this lien. Thanks in advance!

Thank you Wayne. My title company is on it. We have been awaiting the transfer docs and UCC from Vivint for over a week. Once we receive those I'm sure that will lend the info we need. 

Question for everyone in the forums. What is your experience with solar panels and how the bank handles them? I'm assuming these would be a lien on a property like any other lien? The only reason I ask, is they don't seem to be being handled that way, but it could just be the rep I'm dealing with at the solar company.

Currently under contract on a property from Auction.com and there are solar panels. The company is Vivint. I was wondering your experiences if any when dealing with solar. We are at the finish line and obtaining the UCC release, and I'm not sure if the rep for Vivint is just not used to investors or what, but he's making it seem like we are assuming responsibility for the payments of the solar? He mentioned purchasing the panels or prepayment of the power.

If you need more information I'm happy to share but just curious as I'm expecting a ton of foreclosures over the next 3-5 years having solar, so this is my first experience with these. Thanks all in advance!