All Forum Posts by: Justine Phillipson

Quote from @Taylor L.:

I would wonder about the alignment of interests in this deal. It sounds like you're taking all of the risk and he gets paid either way, whether the deal makes or loses money. Equity (and thus share of profits) should be commensurate with contribution to the deal and exposure to risk.

 That's a good point. I know him and his partner are willing to invest financially too. We have only just started talking through our business plan so I am trying to do as much research as possible!

Hello, 

I am a Real Estate Agent planning on doing my first flip in 2024! I have a friend, who is a licensed GC who wants to go in on the deal with me. I will be finding the deal, fully financing the deal, handle the listing and do a little bit of help with the rehab.  My business partner will do most of the rehab in exchange for equity in the deal. 

I guess I have two questions: 

1) Would we want to open an LLC together? Or should I use my own LLC and he uses his separate LLC for the deal?

2) What is the typical equity split for something like this? I'm thinking that he will get paid for materials and labor, and then also get a percentage of the profit. But I honestly am not sure what the typical split looks like! 

Any other tips or advice would be appreciated! Thank you!

I am in the industry in Phoenix, I will message you!

Hi Sagar! I'm going to send you a direct message! I think Phoenix is a GREAT investment area, but it will depend on your financial goals and investment style. 

Quote from @Bob Mills:

Chase, correct me if I'm wrong but isn't New Western a wholesaler?  As such, isn't the biggest motivation to flip contracts for the biggest markup possible?  I could be mistaken but as such I think most investors would look at an agent w/ New Western as not being on their side like a typical RE agent who happens to work with investors might be, but really just more someone trying to squeeze the most money out of them possible with no strings attached.  The motivation of your company making money off the upside really removes most of the trust with an agent. From my limited experience with NW it was a situation where you had 24 hours to look at the property, no inspections, show up with cash ready to buy type of situation.  Basically the opposite of a friendly buying experience for a purchaser.  So long way of saying if you're looking to forge good relationships with investors it might be best to move to a different firm with a more client-friendly approach.

 Hi Bob, really interesting points you brought up. Full transparency, I am also a New Western agent, so I am biased in my response. But I just wanted to add my two cents!

- New Western is not a wholesaler, we are a marketplace. Our contracts are non-transferrable and we close on every property. 

- You are correct, we do not represent our clients in transactions. While most other Real Estate Agents do represent their clients in traditional transactions, we still foster amazing relationships with our clients. Most of our clients are repeat buyers, so it's in our best interest to find the best deals possible for our clients. We want them to have a great experience AND make the MOST money possible, so they come back to us for their next deal! You questioned if our business model is in best interest of the clients, so I want to mention that our clients do NOT pay us commission, whereas traditional agents are paid commission.

- You are correct, our deals move FAST and there is not an inspection period. Our properties are sold as-is. This is pretty common for investment properties, especially for investors using hard money loans. We always encourage our investors to bring their contractors onsite when viewing our properties to have a realistic understanding of what will be needed.

All in all, it's going to depend on the client on what business model works best for their goals and needs. If someone wants to do a traditional mortgage, with traditional closing processes then you're correct- New Western might not be the best fit. But if a client want's to build a relationship with an agent who specializes in off-market investment properties & is using non-traditional financing to maximize their return, then New Western could be a great fit for them! 

Lastly, I purchased both of my rentals before I became a Real Estate Agent. One of my properties I bought from a marketplace (similar to New Western), and the other property I bought off the MLS with a traditional Real Estate Agent and traditional closing process. Both properties are doing great, and have been awesome investments :)

Love this perspective! Too often we only celebrate the stories of people who scale quickly, but the fact is real estate is not a "get rich quick" path. It's a path that takes time, dedication, sacrifice and patience.

Hi Melissa, I think I can help you! Sending you a private message

I personally would not recommend vacation rentals, especially in the Phoenix area where there is a significant decline in bookings and struggling to turn a profit. Additionally, new laws keep getting passed that are not in the owner's favor. At least if you house-hack, you will be building appreciation and have more control. Southern California appreciates like crazy. 

Normally I would recommend buying out of state and doing long-term rentals, but in this current market it's hard to have rentals cash-flow. It's still a great option if you can find the right deal, but it just might take a few years before you start seeing a decent profit. 

Quote from @Miguel Suarez:

Quote from @Justine Phillipson:

Hi Miguel! 

When I lived in San Diego, I had to buy my investment properties out of state because I was outpriced for anything local. 

I have two rentals in South Bend, Indiana! It's been a great market for me.

Things to consider when choosing a market; population growth (you don't want a stagnate or declining population), crime/safety (high crime usually means more unqualified tenants and will diminish property value), state property taxes, tenant/landlord laws. 

If you are buying site unseen make sure to extensively use google maps and get a good idea of what the neighborhood looks like. Have your real estate agent not only video call you to show you the inside of the house, but have them show you the neighborhood too. People tend to have strong opinions about buying site unseen, so if that's the route you go, do all the extra due diligence you can! 

 Hi Justine,
This is all great information that I need to look into and consider when I am buying out-of-state. Thank you so much for this. I will also look into South Bend, Indiana. How long have you had those two renal properties? Are they Single Family Homes? 

Thanks,
Miguel Suarez

Hi, I have them listed on my profile :) both are 3 bed/1 bath single family. I bought the first one in early 2020 and the second one in early 2021! I bought a condo in Scottsdale in 2022 which is currently my residential property. I've been renovating it and hope to turn it into a rental when I can.

Hi Miguel! 

When I lived in San Diego, I had to buy my investment properties out of state because I was outpriced for anything local. 

I have two rentals in South Bend, Indiana! It's been a great market for me.

Things to consider when choosing a market; population growth (you don't want a stagnate or declining population), crime/safety (high crime usually means more unqualified tenants and will diminish property value), state property taxes, tenant/landlord laws. 

If you are buying site unseen make sure to extensively use google maps and get a good idea of what the neighborhood looks like. Have your real estate agent not only video call you to show you the inside of the house, but have them show you the neighborhood too. People tend to have strong opinions about buying site unseen, so if that's the route you go, do all the extra due diligence you can!