All Forum Posts by: Justin Phillip

Hi @Nicholas Aiola

Thanks for this!

Quick question - I’m working on a flip that was acquired late in 2020 which were still working on and will sell in 2021.

Do we file 1099 for the vendors and work that was done in 2020? And then deduct that from that specific property’s profit in sale in 2021?

Thanks

Investment Info:

Single-family residence buy & hold investment in Austin.

Purchase price: $170,000
Cash invested: $15,000

BRRRR. Purchased for 170k with hard money. 17k Rehab and completed in 40 days. Rehab included floors, paint, fixtures, bathrooms, countertops, and appliances.

Hard money 1.5 pt and 10.9%.

Appraised for 230k and refinanced to long term financing.

Current payments at $1,500 PITI, and rental income is $1,750.

Current Value should be around 240k.

What made you interested in investing in this type of deal?

Simple rehab and easy to rent. Multiple outs.

How did you find this deal and how did you negotiate it?

MLS deal. Property did not show well because of condition (paint, floors, cosmetics). Great deal and not many similar options in MLS today. Importance of presenting solid offer and assuring seller of closing.

How did you finance this deal?

Hardmoney for quick close.

How did you add value to the deal?

Cosmetic rehab.

What was the outcome?

All in about 80% ARV, which is harder to come by now in Austin. Good outcome with solid rental demand and overall market appreciation.

Lessons learned? Challenges?

Expect rehab to be more than expected. Expect rehab to take longer than planned.

**Anticipate time delay with underwriting and getting refinance complete....especially with freddie/fannie investment loans.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes! Reach out to me and I'm happy to recommend them.

hi @Rob Bergeron, do you have a recording of this chat?

Hello all, I'd appreciate any feedback or input you can provide :)

I love the BRRR strategy and have done a handful of deals. I intend to keep acquiring [cash flow positive] rental properties through BRRR and hold them long term.

I have quite a bit of friends and family who also wants to 'invest in real estate', but don't have the time or are in geomarkets that aren't ideal for the BRRR strategy.

Have any of you partnered with multiple investors to raise a fund that is specifically used for acquiring longterm rentals? For this scenario, let's say the investors are less interested in getting 'interest' on their investment, more than they are owning equity in the deal long term. I would function as the manager of the fund and would source the deals, project manage the rehab, and manage the rentals. Additionally I will take responsibility to secure long term financing on the property (with all of the investors guaranteeing the property) and then using the cash outs to keep acquiring more properties.

I realize that all of the investors eventually want to get paid back which can be resolved through an eventual liquidating of the portfolio or refinancing the deal to pay off investors.

Do any of you have experience doing this? Any recommendations or resources you can point me to? Any ideas on what type of entity should be formed, structure, etc? 

The reason I want to do this:

- avoid costs with lending 

- scale and grow portfolio faster

- bring value to my friends and family

- i love real estate and BRRR

TLDR - My friends and family would like to partner with me in doing BRRR (building a portfolio of long term rentals). They would solely function as providers of cash, and I will source/acquire properties, rehab, rental management. Is this possible?

@Timmy Fritz

Yes, I’d appreciate that. Thanks!

 Good hearing from you, Nicole. Do you have an idea for what you'll charge your family friend for this service? Will you be an equity partner? Or do you anticipate being compensated for the service.

I was hoping to get more feedback from the greater BP community on this :)

Thanks for your input, Nathan. If you heard the last podcast issue, @Brandon Turner briefly talked about syndication for smaller 'residential deals'. Do you have any idea how that would work?

My thoughts are that you and your partner form an entity that acquires the property, and then divides the gains (and losses) as agreed upon. That said, do you know if lenders would be OK lending to the LLC, and will we still be able to use my partner's credit to be the sole borrower with regards to the loan?

We hosted thanksgiving this year, and my family spent last week with us. They come from various states, mostly the west coast.

Of course during part of our catching up, I had an opportunity to share some of the [BRRR] RE deals in the local market. With most of my deals, I was able to complete the house within 75-81% ARV, and positive cash flow.

They are all interested and would love to also invest in rentals here locally, and of course I’d love to help them. They are all busy professionals who don’t have the time to source deals, manage rehab, process the refi, etc. But of course they see the value in investing in RE long term.

They’ve asked if I could help with getting them deals, and pretty much managing the whole process until it is rented out or given to PM. They want to make it worthwhile for me as well, and asked to come up with a creative way where I could also be compensated for making the deals for them.

Any recommended ways to “partner” with others in acquiring buy/hold/brrr single family properties? They will be providing the funds, and we’ll also be using their credit for the mortgage, etc.

Some points to highlight:

- I love making real estate deals and I love my family. Honesty, I would probably enjoy helping them with these deals for them at no “cost” , but it’s rewarding to see they value this and want to make sure I’m equally compensated.

- I am not an agent

- if possible, I’d prefer more of compensation through equity in the deal, rather than a one time “service fee”, or margin through selling “turnkey”

- if equity is not an option, maybe because my partners rather own the home entirely, could i charge a flat rate for my services? If so, what is a reasonable amount?

I’m really grateful for the community at BP and look forward to hearing how you all have partnered with friends/family who were the money providers!!

Thanks in advance.

Thanks, Nathan. Great idea to emphasize their funds are 'non-refundable' . What do you mean by "screening them properly"? They submitted an application via zillow - and their background check is clear, as well as a decent credit score. Is there any other check you would do to verify identity and history? They currently own their home (where they're moving out of), so I can't seek a reference from a previous landlord, and I'll be calling to verify employment.

Does anyone rely on zillow applications for their rentals? If so, do you find that it is sufficient to qualify tenants?

@Colleen F.

Thanks for the advice with the seal/fedex !!