All Forum Posts by: Nelisa Lee

Quote from @Troy Zapp:

Quote from @Bruce Woodruff:

Agree with @Nathan Gesner. Beyond that, I used to do this and was the General  Contractor side of the deal. My money patner (and friend) provided all of the money. I did everything else.......the legwork to find the property, I purchased it, I used my crew and subs to do all of the necessary work, I got it on the market and sold it.

The split was 50/50, and sometimes slim or even a loss.

Think about how this scenario would work for you. It definitely can work, but as Nathan said, there must be a very good relationship between the partners!

 Thanks @Bruce Woodruff! That is actually amazing to hear you were the GC side of it. I am so curious on your experience with it. The GC is my neighbor/friend, so I know him well enough to feel like it would be a good fit thus far. If he would just be doing the rehab work on the house (I am the money, property finder, everything else in the process) would you think it would be OK to offer a 60/40 split or 55/45? Don't want to insult him with that offer, but I feel like we have more of the risk?? Or should it be 50/50?? Also, as a GC would you do all the rehab and materials as close to cost as possible since the bigger the profit you could produce in the end the better for you both? Thanks so much!

 The way we typically do splits is in 1/3's (1. bring the deal, 2. finance the deal 3. GC the project). So, if we partner with a GC, lender or wholesaler, they will receive 1/3 of the profit split. We have structured lots of different partnerships this way... but it is always transactional because as others have mentioned, people in relationships for years can still end badly. If it's a transactional relationship, then worst case scenario, you don't work with that person again in the future. I've seen a lot of business relationships go south, so I personally wouldn't recommend jumping into a long-term relationship especially in the beginning.

But, the split can be whatever y'all agree is fair for everyone based on what they are bringing to the deal. We've done 50/50 depending on who the partner was and what our business needed at the time. 

Quote from @Gladys Villa:

Hi all! For anyone who started out on Biggerpockets and still doing real estate, how has BiggerPockets helped you? 

Listening to one BP podcast was all I needed to get the real estate bug. We went under contract on our first investment property (had never even bought a personal residence yet) just a couple weeks later. The second investment property we ever bought came from a connection we met through BiggerPockets and that was years ago before it has grown into what it is today. We now own over 50 SFH's and have flipped hundreds of houses.

Quote from @Lane Mcdonald:

Being only about a year into my investing career I'm still very green and don't have many re investing relationships other than my loan officer and realtor. I hear and read time and time again that it is very beneficial to be in the same room as people that are where you want to be financially but I don't know how to make that happen exactly. First of all, my town and the ones surrounding are pretty small and don't have much for events for these types of people often enough to make a huge difference. I have contacts with a couple of bigger investors in my area that I would like to get in touch with, but I fear I have little to offer for their time. I'd like to think most people are kind and would give me the time of day but from their prospective I'm just some 19yo kid who's going to waste their time. Even if they did give me the time of day it doesn't seem very fair that I can't offer much to them in return. I know it's not all about the tradeoffs, but I also don't just want to be a leach to them. Any advice would be appreciated! :)

Hey Lane, my advice would be if your town doesn't offer any networking or events, I would encourage you to take matters into your own hands! Why not start your own? I've seen so many investors in my area start their own meetups... anything from breakfast meetups, lunch at a local restaurant, grilling out/firepit in someone's backyard, etc. If you're providing value, people will come. 

I would also continue to nurture those relationships with the bigger investors you mentioned you already know. I would try to find opportunities to bring to them that you could partner on with those investors. In the beginning of my investing journey, we did lots of partnership deals and learned so much from the process. 

Hope that helps!

Quote from @Josh Akins:

Quote from @David Ramirez:

Yes, we do it completely remotely. We send someone after going under contract. It's been great for us because we no longer have to waste time going to appointments.

Difficult? If you are referring to it being more difficult than going to the property, it might take more time to build trust over the phone.

But if you are talking about it being difficult overall, I mean if you don't have sales experience or haven't done a wholesale before, it would take time to learn and get results either way.

Wholesaling is not easy...

 Hi David thanks for your input, that's very interesting. Do you find someone on places like craigslist to get "boots on the ground" to look at the property and assess any damage? And what if your person on the ground finds more damage than anticipated, do you change the offer price in the contract? Or do you rely on the buyer in the area to assess the damage and modify the offer accordingly?

Agree with what the others have already said about finding boots on the ground that you can trust! The way we found ours was through networking. We realized that the same guy was doing this for several other local investors. It made it super easy for us because he already knew exactly what pictures to take, how to make sellers feel comfortable (if he was going to an occupied home), things to look out for, etc.

Unless a seller has grossly misrepresented the condition of the property, we very rarely have to renegotiate after we "inspect" the property. But some of that comes with lots of experience. 

One of the main reports we use in Stessa is their Capital Expense Schedule, instead of using a spreadsheet. It keeps track of all of our capital improvements, loan costs, cost basis, etc. The report includes placed in service dates, useful life, categories, property, portfolio, basically anything you would need. It does not provide the depreciation amount but this obviously differs depending on how your business handles that. And then we still use QBO to record all of this. 

We use a property management company for our rentals and our VA is copied on all communication. So, when a property becomes vacant, they update Stessa in real time and don't have to wait for monthly owner statements to make changes. They also have access to our PM's online portal so they are able to look up a lot of information on their own if they have any questions. We've found this to be the most effective way for us to manage that process.

We don't use most of the financial aspects of Stessa though since income/expenses is available to us in QBO. The only financial data our VA adds to Stessa is collected rent, mortgage balances, market value and any capital expenditures. Since the VA is updating things as we go, this allows us to easily see up to date things like outstanding balances, SREO, rent roll and equity position all in one system. This is just what we have found to work for us. 

Everything is a bit piecemeal using different systems for different things but with leveraging VAs, it helps make it a little easier. They sent us reports from each of the systems on recurring basis so it just comes to my email when I need to review.

If I knew how to design a software, I would be all over this! I struggled with this in the beginning a lot because I don't self-manage any of our properties so a lot of things that these other softwares provide were overkill and provided way more than I needed. I use Quickbooks for all accounting and to get more of the KPI data that you're looking for like vacancy, we use Stessa. It's not ideal working in multiple systems but it's the most cost effective solution we have found. We just have a Virtual Assistant that keeps it all up to date for us. 

Quote from @Andrew C.:

I'm using Quickbooks to track overall finances. So I have a FixedAssets account in the chart of accounts, but that's not really usable for tracking the per-item depreciation...there's no entry for when it was placed in use, no way to state depreciation lifetime, nothing that ties loan points to the loan so you notice when you refinance that you should take all the rest of that line item as depreciation immediately, etc. You can, ofc, record the depreciation once taken so the books are accurate, but it's a lousy tool for figuring out what the depreciation should be (or, providing your accountant with the relevant info so they can do it).

What tools is everyone using for this? bonus points if it somehow links to quickbooks so it's easier to keep them aligned.

Alternative question: CPAs - what tools/formats do you prefer your clients to use to give you the information needed, so you can calculate their depreciation?

I use Stessa for this. One of the reports they have provides a capital expense schedule that includes the total amount, placed in service dates, useful life, name, categories, properties, etc. The only thing it doesn't provide is the depreciation amounts but I just manually calculate and then enter them into the "notes" section. Unfortunately, it doesn't help with the integration with QB but if you've got the amounts set up, you can always create recurring JEs in QB to automatically post the depreciation/amortization expenses as often as you prefer.

Quote from @Kelly Langlas:

Hello BP!

I am new to (actively) using BP, and I am looking for someone in the Charlotte area who could use some assistance in their real estate investing to in return help mentor a newbie (me), as I hope to start learning more in a hands-on way!

I work full-time as a CPA audit manager at a Big 4 public accounting firm, and in my free time I would love to help and learn from an experienced investor with strategies similar to what I’m interested in (appreciation, single family (potential multi family), mid-term rental (potential short-term)).

Open to any advice as well on how to make my first leap into actual investing!

Welcome to the community Kelly! What's your end goal with investing? My advice would just be to focus on one thing. 

There are companies that sell turn-key rentals that could be a great solution for a busy professional, or maybe finding a reputable wholesaling company or realtor to help bring you deals to leverage your time better. My husband and I both came from audit at a Big 4 which can be an incredibly demanding career. As Basit mentioned, the last thing you want to do is spend even more time working after work. We purchased our first investment property during our time in public accounting and hired property management. This was the best thing we could've done to help get us started. 

As others have already recommended, attending local networking and meetups in Charlotte is an awesome way to connect with people in your market! 

Quote from @James Brand:

BP,

Stessa was once (maybe still is?) a platform advertised for on the BP podcast...

I have recently adopted it and am aggressively working through prior years' data to get the most out of the system. My question is if there are any Stessa savvy CPAs. To me it seems like an incredible pairing, someone who knows and understands to tools available and has the professional ability to leverage those tools not just for tax returns BUT also for tax planning and strategy.

I'm a Stessa Pro member and in talking with the pro support team they do not have any preferred CPAs/vendors at this time.

Does anyone know of CPAs who know the system? Are any BP members familiar with it?

Cheers,

James

Hey James, I'm a CPA and use Stessa in my own business (not for accounting purposes). However, I'm happy to help answer any questions you might have about it! What's your goal with finding a CPA familiar with the system?

I'm sorry to hear that your rentals have caused so much added stress. The highs and lows of real estate can be intense especially in the beginning! I've learned that the more experience I have, the less extreme those highs and lows feel. My solution to everything was volume. If one deal doesn't work out, another deal makes up for it. But, my husband and I both quit our jobs to go into investing full-time and the stress at the idea of going back to our previous jobs was enough to allow me to work through the stresses of real estate investing. Now, I'm immune to a lot of the bad things that come with investing because I've been fortunate enough to reap the benefits of the positives and I know to expect them.

I also love that most real estate problems can be solved with money. So, if you have the money, then there is no problem. But, that's the way my mindset has had to shift.

My question would be why did you purchase those rentals in the first place?