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All Forum Posts by: Jonathan Ortiz

Jonathan Ortiz has started 2 posts and replied 25 times.

Post: LLC for each?

Jonathan OrtizPosted
  • Middleburg, FL
  • Posts 37
  • Votes 7
Yes that is true and can be done. I believe the terminology is called a "Series LLC"

Post: What would you do? Scenario, Financing

Jonathan OrtizPosted
  • Middleburg, FL
  • Posts 37
  • Votes 7

@Account Closed

Great post! Question: Do you know if you qualify for a FHA loan? IF you do qualify and you are looking to purchase a multifamily property, you can live in one of the units for at least a year (based on the FHA requirement but double check) while at the same time rent out the remaining units to acquire some cash flow. Of course you would need to perform your due diligence and ensure the numbers will work in your favor. And, your downpayment if using a FHA loan would be 3.5% - I believe the terminology used for this strategy that I've read on BP is called "House Hacking" - Try to search and read some articles on BP about House Hacking as that may be an option you can utilize in your market. Best of luck to you!

Post: How to get a good deal on the MLS in a hot market

Jonathan OrtizPosted
  • Middleburg, FL
  • Posts 37
  • Votes 7
Have you tried raising your EMD with your offer to be more competitive? In a hot market, perhaps offering $5,000 or $10,000 EMD may help. Best of luck!

Post: LLC as an S Corp

Jonathan OrtizPosted
  • Middleburg, FL
  • Posts 37
  • Votes 7
I had a domestic LLC incorporated in NJ over the summer and filed for s-election status for my flips. It's simple to do and if you go to the state website, they have step by step instructions on the steps you need to take. Let me know if you have any questions.

Post: Partnership with brother-in-law? How to do it?

Jonathan OrtizPosted
  • Middleburg, FL
  • Posts 37
  • Votes 7

@Stephanie Hardy

Great post Stephanie! I would definitely recommend purchasing any buy and holds under a Domestic LLC (with the LLC being the owner) even if there are multiple parties involved, especially since Nevada laws tend to be "investor friendly"when incorporating LLC's in Nevada. A LLC will act as an additional layer of protection for everyone, and you can still obtain financing with a LLC and you do not necessarily need to have "all cash" to purchase a property under the name of a LLC. By having the property under a personal name(s)..now you do not have Asset Protection, and you are leaving yourself open for anyone to "attempt" to sue you directly rather then first going through the LLC. HINT:  IF someone tries to sue your LLC - "that person" or "entity"can ONLY go after any assets owned by the LLC that is being sued. IF that situation ever came about - Talk to your attorney on next steps AND reach out on the BP forums for advice!! You can have a LLC with you, your husband, and husband's brother all act as "managers" of the LLC, and you can structure your LLC Operating Agreement (which your attorney can help) to outline all of the terms and conditions, and list each individuals "share of ownership" of the LLC. OR, you can purchase the property with 2 LLCs - You and your husband can purchase the property under your own LLC while adding your husband's brother's LLC as an additional buyer to the purchase agreement contract. Then, each of the LLC entities can each share 50% ownership of the property. 

In addition, there is one final matter on which I can assist you … it is in the preparation of your “corporate resolution” OR “resolution”….

NOTE: Some investors have a LLC for their buying-selling ("flipping") entity, others have a "s-corp".

Please be aware that you make an “s-corp” an “s-corp” by filing an “s election” for your corporation entity with the IRS.

Also please be aware that you can make an LLC an "s-LLC" by filing an "s election" for your LLC entity with the IRS.

The result is the same whether you start with a corporation or with an LLC. There can be benefits to either entity.

Also note that whether you have an LLC or a corporation or an "s-elected" LLC or an "s-corporation" … your company can be, in casual conversation, be referred to as a "company" or "corporation"…

So, you may hear someone ask you for a "corporate resolution" in conjunction with your LLC.

Also, a corporation or an LLC can have a "Resolution", whether it has an "s election" OR NOT!!!!

Your “Corporate Resolution”

From time to time, you may be asked by a bank or Seller or partner to provide them with “a copy of your Operating Agreement” for your company. 99% of the time, you really do not need to provide an actual Operating Agreement. In fact, your Operating Agreement should be confidential; so, it is probably best that no one should see it. Instead of giving out your Operating Agreement, IN THE VAST MAJORITY OF CASES, you can provide them with a “Corporate Resolution” or a “Resolution”. This Resolution will give them all they need.

NOTE: If you are in a situation where someone is demanding your Operating Agreement, please contact your attorney immediately! In such cases you should probably strip your Operating Agreement down to a minimum so you can send it without compromising your desired confidentiality and, then, create addenda and resolutions that are separate from your Operating Agreement, and which you can keep confidential. In this way, you can avoid giving out your confidential paperwork (except maybe by court order in extreme cases).

When you create a statement from your company that authorizes a member or owner or officer or designated other person to perform a duty(ies) or function(s) of your business, this statement usually needs to be signed by someone who is identified in your Articles of Organization (or Certificate of Organization – whatever it is called in the state of origin) as an authorized person. Any such statement can be referred to as a “resolution”.

NOTE that the document can be called a "resolution" or a "corporate resolution" because the word "corporation" or "corporate" is OFTEN used by accountants and attorneys to describe EITHER an actual corporation or an actual LLC. In its generic use, the term "corporation" or "corporate" can be used to describe any "company" or "business entity".

You may be required to have your resolution document notarized, so it's best to be prepared and get it notarized. Hope this helps! Best of luck to you!!

Post: Flip Funding up to 80% ARV and rates starting at 7%

Jonathan OrtizPosted
  • Middleburg, FL
  • Posts 37
  • Votes 7

@Sean Richway

Hi Sean - I am glad I found your post! I received a verbal acceptance this afternoon for a single family property for a fix and flip in New Jersey. I should be receiving official docs from the seller's agent by next Monday or Tuesday. In the meantime, my team and I will be prepping to do our due diligence on the property asap by having our contractors, home inspector and FHA appraiser to verify our rehab costs, and ARV during our inspection period. With that said, I will be looking for a HML to fund this potential deal should we go through with it. If possible, could you please email me additional information and what your loan terms would be? Some rough numbers to consider (pending ARV appraisal and contractor bids)..Purchase Price $265K, ARV $405K, Rehab Cost $50K - My email is: [email protected]

Thank you!

@Ana Marie B.

I agree with the above feedback from everyone. You can either wait it out or withdraw your offer (in writing via email or letter) and get your EMD refunded back to you.

Also, for the future, if you are going to ask for a "price reduction" due to "unforeseen repairs" - it is best to use other terminology other than a "price reduction" or "repair requests" as some sellers may tend to entertain other offers instead, or decline your offer all together. I like to use the terminology "Forensic Cost to Cure Disclosures Addendum and Exhibits" and list your "Cost to Cure" exhibits on a state official addendum form. 

Hopefully, you had a home inspection done by a certified home inspector, and you received a certified inspection report with color photos describing each defect. You can actually use the photos and copy some of the wording from the inspection report and use it on your "Forensic Cost to Cure Disclosures Addendum" which now becomes a "Fact of Record"

NOTE: Even though in most cases you will be making offers on “distressed” properties which are sold “As Is, Where Is, and With All Faults”, you will STILL have the right to an inspection of those properties to determine the exact condition of each property in its “As Is, Where Is, and With All Faults” situation. You should also have your agent email you to confirm your rights to have the inspections done and approve them – or get a refund of your deposit(s). 

When you are ready to create your exhibits - I would keep each exhibit short… combining items so that you have 1 exhibit for each of these if applicable:

Hazardous Conditions,

Code Violations,

Unpermitted Improvement

Out of Code Improvements

Structural Defects (perhaps to include foundations, rot, joists, bearing walls, grade and draining, etc.)

Material Defects (perhaps to include electrical defects, plumbing, septic defects, heating and cooling defects, etc – things that are maybe not so “structural”, however they make the property uninhabitable unless items are repaired)

So… you are not making each picture into an exhibit… make a separate exhibit for each one of these categories above and combine pictures and bids to total the cost to cure for each category.

It is best to create AND FOCUS your exhibits on “unseen” items… items discovered only because you actually completed “intrusive inspections” THEN, bring in the “seen” items to make the exhibit longer… if you have time…

If you don’t have any unseen items, then you have to work with the best repairs you can find…  

and also remember …

Your opening paragraph should go into an official state addendum form provided to you by your agent…

either you send an email to the agent to tell them the words … (best when the agent is working with you)

or you get the blank state addendum form, and put the words in (required when the agent is NOT working with you) ..

and your opening paragraph could be something like this:

"Due to hazardous Conditions, Code Violations, Unpermitted and Out of Code Improvement, and Structural Defects & Systemic Defects sited in the exhibits below with a total Cost to Cure of $32,700, the Purchase price of the property will be $38,000; the Cost to Cure is evidenced by “Exhibit #5 - Certified, Inspection #0826157538” and “Exhibit #6 - Contractor’ s bids, License #_____________”, and in the following exhibits [found in the attached file name {Forensic Cost to Cure Disclosures Addendum and Exhibits-7538SMarshfield}, attached hereto and an integral part thereof; namely:

Exhibit #1Code Violation / Hazardous condition - Main service line to Meter & Inferior electrical panel - Cost to Cure : $1,500

Exhibit #2 – Structural Defect – Rotting and Failing Fascia & Soffit around 90% of structure – Cost to Cure : $2,700

Exhibit #3 – Code Violation / Hazardous condition – Cost to Cure : $1,500

Exhibit #4 – Structural Defect – Cost to Cure : Unknown

Exhibit #5 - Certified, Inspection #0826157538 – 35 pages

Exhibit #6 - Contractor’ s bids, License #_____________” – 4 pages,

and again .. I would shorten the names of the exhibits so they fit on one line without leaving words out …

Also, please remember:

You want your 1st couple of exhibits to be your worst… so if they open the exhibit, they see that the title of the exhibit is not an exaggeration ….

Hopefully, they won’t open the rest of the exhibits… but if they do, you have focused on the worst pictures/defects first ….

Rename the inspection report to the exhibit name above, and attach it to the addendum.

Rename your contractor’s bid (If you have one) to the exhibit name above and attach it to the addendum.

How does all this sound? Look?

Hope this helps you and best of luck!!

Post: HML Math Question

Jonathan OrtizPosted
  • Middleburg, FL
  • Posts 37
  • Votes 7

@Susie C.

Great post and feedback from everyone! I recently uploaded a "Hard Money Lender Profile Sheet" today which you can use to assist in asking the right questions when "interviewing" a HML. The document can be found under "Tools" - "File Place" and a screenshot is below for ease of navigating to the proper document. Thanks and best of luck to you!

Post: lost my 1st deal

Jonathan OrtizPosted
  • Middleburg, FL
  • Posts 37
  • Votes 7

@Jeremery Jett

Great post! Most Hard Money Lenders (HMLs) typically lend a percentage of the ARV (most cases 65% of the ARV) or a percentage of the purchase price and rehab cost (Example - 80% of purchase price & 100% of rehab), whichever is less of the two as you mentioned above. In addition, HMLs will charge you interest per month (holding costs) ranging anywhere from 9% - 18% along with "points" (origination fee) - 1 point is equivalent to 1%.

With that said, nowadays, most HMLs require you to have some type of "skin in the game" or a downpayment on the loan so the HML doesn't have to take on all of the risk. The downpayment, we as investors, need to come up with is also known as Gap funds. If you do not have the required "Gap Funds" to satisfy the HMLs requirement - this is where you will need to "pitch" your property to other private lenders or "Gap Funders" on this site, or by networking with other investors outside of BiggerPockets.

I would suggest that you begin to build your list of "private lenders" or "Gap funders" if you do not have liquid funds available for either earnest money deposits, or the downpayment for the HML. Network, Network, Network!! Also, if you have good credit of a 700 or above - you may qualify for a business line of credit at 0% interest for 12-15 months which will help you get started in your business if you do not have liquid funds, or cannot get a list of "private lenders" together. For additional information on a business line of credit, you may click on the link from my signature below. Lastly, I uploaded what's called a "Hard Money Lender Profile Sheet" that you can reference when "interviewing" various HMLs that are out there under "Tools" - "File Place" (see screenshot below). And, you can go to: http://moolahlist.com and you can search for HMLs in your state. Best of luck to you!!

Post: Business Cards

Jonathan OrtizPosted
  • Middleburg, FL
  • Posts 37
  • Votes 7

Hi Keith:

You will need to navigate to "Tools" - "File Place" and search for my document. I should have mentioned in my previous post, sorry about that. My previous post was just a screenshot so you know what to look for. Also, I can email the template to you as well if you'd like. Thanks!