All Forum Posts by: Josh H.

... But am trying to make sure that will still be a viable option in the coming months 

 Hi David,

I don't need the day job to qualify for loans since they are hard money loans. And we found medical insurance through our broker that insured all of our flips. 

We have 1-2 years of money for runway. But I don't want to blow that then have to go back to work. 

I think we can continue to flip

 I appreciate that line of thought, but we've made $500k flipping this year vs 150k at the day job. I feel like the day job is limiting my income but at the same time, the market is shifting, which is why I'm not sure what to do. I'm not sure flipping will be sustainable in a cooling market with higher rates. Ugh. 

Hi Kevin,

Like Ryan, I am a flipper as well. We have very done well over the last couple of years and have 11 flips currently in process or reno - and want to start BRRRR'ing for that exact reason - to build long term wealth. The problem is when flipping is your income source, how can we justify making $200/month, when flipping offers a 250x return on capital over the short term? $50,000/$200/month = 250 months to gain that income, just over 10 YEARS, vs immediate. I know the taxes are higher - but when your income is from flipping, deferring the income for the next 10 years is hard to justify.

I feel like I am missing something, please let me know if I am - as I want to build long term wealth.

Thanks,

Josh

I am REALLY confused about what to do. My wife and I have grown our flipping business over the past couple of years to doing 10 flips currently.

I was just getting ready to quit my job that pays $150,000/year to focus on real estate full time, but the rising interest rates has me very concerned, with no end in sight. We just had a .75% rate rise yesterday and will likely see another one by the end of the year (maybe two?). We have enough money to last at least a year. The hope was to quit my job and focus on finishing our 10 flips because it has become too much for my wife to handle. We are in the Northern Virginia and Maryland markets in case that is helpful

I am concerned that if we see a big dip in prices, I will regret it because the 10% profit we typically get ($50K on a $500K flip) will basically mean we are doing flips for free.

I would love for some very seasoned investors to give their opinion on whether I should stay in my job, or focus on our flipping business that is doing well

Thanks,

Josh

 Thank you! DM'ing you now. 

Hello,

Does anyone have a general document that you can share that you have your contractors sign before starting work, that protects (idemnifies) you from damages they cause to your property or neighbors' property, and has other terms that protect you, such as saying change orders must be in writing, and other things that are beneficial?

We have a few flips going on now and want to make sure to cover our bases. A real estate attorney that I spoke with today wants 3K-5K to create a document like this, so I am seeing if there is a free document that we can get since we are still a growing company. Any document that would protect us would be very helpful.

Thanks,

Josh

I just want to say thank you to everyone that replied. We decided to set up our LLC ourselves, instead of paying a company thousands of dollars to do it. The lady that we spoke to seemed like a scammer and it would be a colossal waste of money to use them. Thanks again for the advice.

@Bill B.

Thank you for your response (as well as everyone else that responded). Your advice really resonates with me because we actually have a call scheduled soon with a person that works for a law firm that sets up LLC's and corporations. From preliminary talks, it seems like she just wants to set up a couple of LLC's or corporations for us to overcomplicate things and charge us $8,000!

Would your advice also hold true for a partnership, between two business partners that are not married? 

We are trying to figure out how to make it so that both he and I minimize taxes as much as possible and take advantage of tax writeoffs. Although he will not be materially participating in the management of the STR, since he is the financial backer for a large part of it (he provided the $200K downpayment, my wife and I are carrying the 700K DSCR loan) we still need to make it so that he gets tax writeoffs. From what I understand, a partnership would not work as a disregarded entity.

Thanks,
Josh

Hello,

I have heard of leasing your short term rental to another LLC that you own in order to minimize tax liability from a video that I watched, but there was no information given on why this is advantageous or the mechanics of it. Can someone please let me know a simple explanation of this and how it helps lower tax liability?