All Forum Posts by: Tim Silvers

I am forming an LLC with another partner/member to facilitate the purchase of properties via short sales, REOs, and trustee sales. Having one LLC will make it easier to have all income and expenses accounted for under one roof as opposed to using our own entities to purchase, account for, and divide profits which is what we'd been doing before.

Funding for the deals will be from private money which includes that from friends and family. We will both be signers on the company account.

For short sales and REOs, the acquisition funds would be made available at close of escrow and secured via a deed and note. For trustee sales, the funds need to remain liquid in the company account while awaiting deployment at a moment's notice since our auction requires cashier's checks for the full amount to be presented prior to bidding. As such, the funds are therefore unsecured and "exposed" and therein lies the concern.

For those of you with multiple member/partner/owner LLCs, partnerships and corporations, what safeguards do you have in place to protect and prevent another member/partner/owner from siphoning funds from the company accounts?

Since there aren't any major banks that enforce dual signatures on accounts, an idea I had was to use a licensed and bonded 3rd party custodian account which requires dual signatures before disbursement. When the deal closes, escrow will cut a check back to the custodian since the title would be held in the name of the custodian for benefit of XYZ, LLC.

Any other strategies?

Insofar as our previous file with D&B, know that this was at a vastly different time when lending actually existed :) and there weren't nearly as many hassles in getting a business credit file ramped up in a relatively short period. That being said, we were able to get an unsecured line of $25K with no PG (try and get that now!) and had about a half dozen other tradelines regularly reporting to D&B. I really don't know now since it's a whole new playing field and I would suspect a whole lot less lenders willing to do NO PG lines and loans (even secured). They all pretty much want PGs now which defeats the purpose unless you're talking about store cards like Sears, BestBuy, Home Depot, Walmart, etc. That's at least my take for whatever it's worth.

I'm starting over with a new slate with a new co. and just want the store cards again. If I get anything else to go through, it'll be a bonus!

I refuse to pay a dime to these hucksters! Never did on my last co. and never will - and I never recall having to pay for the paydex! That must be something new? To me it's like the advance loan fee scams - you pay the points upfront regardless if you get the loan or not. It is obvious they have purposely made the process of getting and maintaing your DUNS # file less user friendly now than in the past for those of us who want to DIY for free. The attitude of EVERYONE there is that unless you are going to go for one of their fee-based programs, they are quick to write you off and will just transfer you to the robots in India who you just want to cuss at all day because they are absolutely worthless!

Perhaps I should go back and tell them I have need for a govt. project. Fight fire with fire!

The problem I'm now having is that I keep getting an error message when registering for iupdate to gain access just so I can view the data and no one wants to help me.

The D&B operation is a joke. If you apply for a free DUNS #, it will take over a month and you will NEVER get any support to help navigate your account once you get one. The customer service is deplorable and all they are trained to do is sell you a service YOU DON'T NEED. Anyone who doesn't agree to pony up the $$$ for their services gets routed to customer svc reps in India that are completely inept at handling your concerns. Just be forewarned if you're starting out getting a free DUNS #.

If anyone has sone shortcuts to getting around their BS, please share!

Although this is getting off the topic of my post, I think the writing's on the wall that eventually, all property acqusitions and sales can be executed online in automated fashion with a choice to go "full service" as with full service securities brokers vs. discount brokers. One would have the choice of a value added appraisal service similar to Moody's that does extreme inspections and that the buyer would, of course, have the ability to do physical self-inspections if they so desire. The days of full-service brokers getting 6% will become a thing of the past.

Funny you mention "trade". Flipping is really no different than day trading equities in a bear market. We're just doing it with a tangible investment, albeit with no where near the same volatility and secondary market liquidity. The trustee sales are like a crude version of the floor of the NYSE! And the foreclosure bidding services are analogous to the floor traders taking the order from the various firms' clients. Even some of the trustee sales in certain counties now offer real time online bidding.
Check this out:
http://www.bubbleinfo.com/2010/02/21/on-line-trustee-sales-fl/

I like Vegas because there's never a shortage of distressed product to mine, but I don't like it enough to buy-and-hold even if I had the millions in cash reserves my competition supposedly has for the very reasons proven by the statistics! Those with adequate liquidity can weather the storm of this declining market for many more years to come because they are buying the cap rate - and to them - 8-15% is better than anything else right now. These are passive investors, most likely retired, and don't want to bother with doing flips even though the ROI is many times better vs. buy-and-hold.

Generally, my exit strategy has been to sell to retail buyers, however, since over 50% of our buying market are cash buy-and-hold investors, I can't ignore them. In fact, my last deal was sold to a cash investor. We take a little less on the price, but they close fast and as is.

What do you suggest is a long DOM? Even @ 90 days, banks are rejecting offers unless at least 90% of list. These banks are complete idiots because the prices keep dropping and what they are forced to lower it to is at or even less than what we offered 3 months back!

Like the buy-and-hold speculators, these banks are betting on the come that pricing will pick up, a highly risky, if not losing proposition indeed!

This article in today's local paper tells it like I was saying:
http://www.lvrj.com/business/investors-shake-up-residential-neighborhood-mix-117482953.html

More than 50% of the buyers are all-cash buy-and hold investors, happy to earn their 8-15% annual returns. These buyers are some of the ones I need to sell to, NOT compete with, as they are buying retail and I need to buy wholesale. It's like trying to buy at wholesale prices at Walmart. Ain't gonna happen. The bottom line is that wherever there is product easily accessible to the buying public, it quickly becomes a losing proposition for flippers and wholesalers.

And yes, you can eliminate this competition by working pre-foreclosures and short sales, but then it's a hit and miss since you're at the mercy of the lender because 99.9% of all motivated sellers here in Vegas have zero equity.

So, again, what flipping strategies are left at the end of the day?