All Forum Posts by: Kyle Galloway

My partner and I have formed an LLC. We have 3 properties that we are trying to transfer into the LLC through a Quit-Claim deed transaction. Simple enough. However two of the houses have financing on them through a bank-and the loans are in our personal names. The bank does not appear willing to transfer the loans into the LLC. We are soon closing on another and while the bank says we can move the title of the property into the LLC POST closing-the loan will have to remain in my partner's name. The obvious issue-does this defeat the purpose of having an LLC in the first place? If something ever happens (God forbid) and we get sued-we would lose the investment properties and still have notes out to the bank. While we did protect our personal assets we still have the liabilities(notes) and would be screwed if we continue to scale up.

What can we do-or is this standard? Do I need to find a new bank that would write up the loans in the LLC? Is offering a personal guarantee the same as the above scenario-we'd just end up with the note if something happens? Looking for any guidance or advice.

Great info @Russell Brazil. In general my question was answered. The profit is built in to the 30%. 

With Black Friday around the corner I thought it might be a good idea to grab some items for future staging. We are currently working on a "flip" that will be done in the late winter/early spring. I've heard before that you could have a budget of only $100 to buy adequate staging materials for showings. What are some things that I should be buying-and from where? Are we talking curtains and a couple floor rugs? What else? I assume no furniture? Looking for any and all advice including budgets.

@Russell Brazil-Thanks for that answer. Can you detail your 8% sales costs and 3% purchase costs? Is this a good estimate for realtor and title company fees at closings I assume? I assume sales costs are higher because the seller typically bears the burden of paying both realtors?

So my profit is built in to the 30%? That makes so much more sense. 

I understand the math to the 70% rule in house flipping. (Conservative Market value after repairs X.70 - repairs). What I don't understand is where this 30% magically disappears to. I know that there will be closing costs, some utilities during flip, some interest during flip depending on financing, and some closing costs-but does that really come close to 30%? My brother and I are currently rehabbing a house and will likely flip it vs hold it. Here is our situation:

ARV $110,000

Purchase Price       ($58,000)

Projected Repairs   ($15,000)

Profit before soft   $37,000

Our deal appears to be a home run before considering the soft costs. How is it possible that 30% of the ARV gets eaten up by these? Here is the 70% rule math and you see a completely different picture

ARV $110,000

70%          $77,000

Repairs     (15,000)

Max Price  $62,000 (we paid 58k)

In short I am having a hard time seeing us paying more than $8,000 in soft costs, yet this 70% guideline builds in $33,000 of soft cost (30%xARC). Why am I so far off? What am I missing?

@John Christodoulakis

I’ve already learned as much as I need to about them. I called them the same day I called Property Boss. No one answered and I left a voicemail sounding like a tenant to test their response time. I still haven’t received a call back and that was a week ago. Easy choice to avoid them.

Pav-How do you keep an eye on expenses? A.G. you get your monthly summary of rent - some maint expense-how do you know that the maint actually occurred? Is that just part of the risk associated with using a property manager? Also-Do you argue and negotiate the billing of maint if you think it is excessive? Would appreciate any feedback-never used a prop mgt company before.

Glen-You were promoting Property Boss only a few short years ago. Did you used to work for them and start out on your own? 

@Pav Bay

I am also considering property boss. What has your experience been?