All Forum Posts by: Justin Sullivan

Hi,

So a partner and myself are entering into a partnership of flips. We have plans to create the LLC for the future projects but this first one we are just running through on of his businesses. We have an idea of how to structure it for tax purposes for payments and expense my only question is for cash payments.

Where I am from we can find some day laborers who are paid cash. For these payments, Probably $2,000 for entire project, how should we calculate these for tax purposes? Can we say they are cash payments to different day laborers less than 600? If one of us has to take the expense how could we calculate the tax on this? Like if we have to pay the taxes? 

Our main thing is we want to taxes liability for cash payments to go against the deal and not come out of either of our profits. I have a construction company which we may run the renovation through and then the cash payments would run through that. Then I would want the extra tax expense to cover that so once again the money comes our pre-profit and not out of our profit.

Anyone who has experience with this feel free to chime in.

hey Andy!

My wife and I invest in NJ and a year ago moved to Arizona. Now we are investing in both markets. We are south jersey right outside of Philadelphia. It looks like you up north.

Anyway what type of investing do you do or are you interested in doing?

@Chris Seveney

That's a great point about the self-directed IRA. Where would I find information on these events? Google? I hire people for my construction company and it is a detailed process. I would love to hire someone and might look into it. Right now its on a one to one basis looking to deal a deal a month at least hopefully more.

@Karen Margrave

Karen I have listend to your responses about General contracting in the past. I am in construction myself so I liked to hear your point of view. I am going to do that. I have known about doing that for a while just kept putting it off putting it off. Thought that working was more important, LOL! Thanks for that advice. By marketplace you mean Facebook marketplace or does BP have a market place?

@Brock Mogensen

Yeah I need to get back to networking groups. I moved to Arizona and renovated my new home to move my family in so I spent day and night doing it and decided to stop doing everything for two months to get that done but after I finished I never went back to my normal routine. I will definitely let people know where I am headed and see if I can link up with someone.

Thanks all for the great advice here. I definitely have experience and proof of concept just need to get out a little more!

Hi all. I have been investing for about 4 years now and I am looking to expand and grow. I am in the phoenix area and looking for persons interested in partnering on deals with me. I will find them run them and sell them we just need funding partners. For anyone who reached out to others how did you find funding partners early on? We have proof of concept we are in a new area where the market is great and really looking to scale and grow this thing!

Any advice or interested parties in greatly appreciated!

Congrats on the huge month!! I am new to the phoenix area just relocated here about a year ago from New Jersey. If you want to connect and let me know where and when the meet ups are I would love to chat. Ill send you a message so we can talk further.

Did you try to get him to come out and do the work? I know you've been requesting your money after he didn't show two times but did you try to figure out why he didn't show? This happens all to often but in some situations he may just be in a bad place. Maybe he's tight on money and spent your deposit, maybe he can't find guys or maybe he wanted to take advantage of you from the start. All I know is way to many contractors give other contractors a bad name from doing this. I will start working without a deposit but I will not purchase any materials without one. In his situation requesting a deposit to get you on the schedule is normal with some companies but not so much with the smaller ones. How much was the total job for? If you paid most or half to he job upfront he has no reason to come out and do the work. Ultimately you want the work done right? So if you can work with him to get the work done then that might be easier then battling for your money and court and everything else. You learned a lesson here which unfortunately is tough to avoid. Its guys like him that make the good contractors lose work and good clients get bad work because they fight over when payment is due.  A strong contract with small payments at completion phases seems to be the best. I have seen 5-10% deposit to get on schedule but that would mean that job is 20-30K which I don't think it is. If it was I am sure he would be doing it. So maybe try giving him a call tell him you'll work with him help him to get it finish buy materials if needed increase the price if materials went up so you can get your work done. You never know maybe materials went up and now he's not making much on your job but he doesn't want to ask for 750 more so instead he just dodges you. If you still don't have the work done I would try this option. Swallow your pride and work with him and see if you can't get it completed. After this just expect to have to hold hands for some guys and the ones that do it right expect to pay more for and wait longer for them to be available. 

Also not for or against him just playing devils advocate and seeing if another way will solve your problem. 

@Patrick Bergeron

Dwayne poster has the right idea of going after the title holder but John Greene comment is also pretty correct. It’s tough but possible. I have purchased short sale and from auction and also bypassed the auction by going straight to the source, which was the bank, if it’s up for auction the home owner won’t have much control anymore. You would prob have to pay a ton to get them out of the hole if the bank will

Even accept it at that point. But you can bypass the auction by going direct to the bank with an offer. I did this a couple years ago and got the property under contract. We later backed out for other reasons but it’s possible. We had to call multiple times direct to the bank to

Get through but persistence will help. If you want to get seller prior to this you need to catch them in pre foreclosure.

@Rebecca E.

The world was suppose to end Y2K then again is 2007. The market crashed in 29’ and black Monday in the 80’s hyper inflation back then as well. 08’ crisis and now we’ve been in a nice run for a long time. I wasn’t inveSting in 08’ but in my opinion we will have a correction not a crash. I can’t see a crash with This low of inventory. Even if we had double the houses for sale we still would be under what we are used to. The prices might not go up substainally like they’ve been but I can’t see a crash. But we crashed in 08 but saw the bottom in 12’. So if you were smart you beat the down flow

By pricing right and getting out of your risky investments asap. I am a flipper and multi family buy and hold investor and I’m still buying everything. I am actually buying more now then before. I just make sure my flips will work as a buy and hold or I have enough margin to fire sale it and break even. I don’t like cash and will never keep cash in my bank account. I believe

In strong reserves to weather the storm but I also believe in taking risks and being an investor. This is my opinion snd I fully intend on continuing to invest now in a crash at the bottom doesn’t matter there is always a estimate to profit when you do things correct!!

@James Sloan

Your obviously asking this question for a reason. Why didn’t you ask this on the past two jobs you paid him half up front? Your signals are buzzing with an off feeling about this project. People change and if you want to say no just ask all the divorced people in the world. So maybe he was good for the first two. Doesn’t mean he’ll

Be good for the 3rd. That’s why you have to keep constant accountability on everyone. It’s human nature to slack if there is no whip to crack when you do. I think you have a bad feeling about how he’s acting and he’s obviously pushing you to decide quickly which is a red flag to me. He doesn’t want to give you time to think and is threatening to do other local jobs acting like he’s doing you a favor. But then again will

He even go for you buying the materials? Or

Paying him less? I’ve paid people 50% up front that I didn’t know and never met in person just spoke on the phone because it felt right. Others I had them go to depot and use my account to buy materials since it didn’t feel right. You have to go with your gut. Your gut seems to be telling you that something is off. But your brain keeps Justifying and making excuses for him. Maybe he lost money on the last job and just wants a payout. Maybe he’s behind on another job and needs to use your funds to finish another job then those funds to start your job. What I would do is to communicate this with him. Meet him

In person and tell him something feels off about this project. He’s being pushy and you don’t like it. Ask if there is anything you can help with. I have a crew that I advance money to but they’ve also been with me for a year and they always answer when I call. But communication is key. Good luck with this I wish you the best.

I knew I would invest since I was like 15 years old. I got into some trouble in my young adult life which hindered me but as soon as that was cleared up I started investing immediately. 

I am a jump and build the parachute on the way down type of person so I didn't struggle with the confidence. I did worry about it not selling for some reason and being stuck with it so I made sure it would work as a rental as well for the first one. 

As for education, information isn't the issue in this day and age. You can literally find contradicting view points on the same subject back by research in a matter of minutes of each other. Look up coffee is good for you, then coffee is bad for you. Every year a new study comes out. Drink 4 cups, drink one, drink none, drink 2. So my best advice on the education piece is two things. First is learn by doing. Find a deal and jump in blind with partners or yourself but learn by doing. I love to learn along the way. This is risky so be weary of this option. Second option, in my opinion, is the get clear criteria on what method you want like, single family brrr under 300K with carpet and paint renovations. That way whatever knew information you take it is just that information but you stick to your criteria until your seasoned. Another thing is just to read the basics and get started so you don't overload on information and keep switching criteria. Everyone is ADD today because everything is so accessible. Just pick something and stick to it.