All Forum Posts by: Roman Pak

So what you're saying @Brie Schmidt is that if my LLC wanted to buy all of my investment properties I would need a commercial lender? How is the process different? Do I have to personally guarantee the loan and provide my credit history, etc?

I recently purchased my first flip in Arlington Heights, IL. I purchased this first property as a primary residence (non-investment) and the lender for this deal told me that in the future if I wanted to buy and rehab properties I would need to continue buying them as personal or investment properties in my name. 

I've read all over BP that it's possible to buy properties as a business (LLC), is this not the case in Illinois? My lender told me that all future properties would need to be purchased by me and could not be purchased by an LLC, if I wanted them to be in an LLC I would need to transfer them after the closing.

What am I missing here?

UPDATE:

Wanted to update anyone that is actually following this post. In December I closed on my first rehab property in Arlington Heights, IL. 4BD, 2BA 1800 Sq. Ft. within walking distance to downtown Arlington Heights (a great location). 

The design plans have been created, contractor quotes have been reviewed and work is scheduled to begin next week. There's not a room in the house that we aren't improving, and we are even adding a full bath. Excited to see what's in store. 

Welcome to the site @Dave Gibson I just recently bought my first flip in AH as well. Work begins next week! Maybe we'll cross paths in the near future, but for now welcome to BP and good luck. 

I took the rich dad poor dad 3 day course several years ago when I was just starting out, they slam you with a ton of redundant information, none of which is complete or actionable, then make you feel stupid for not knowing what they're talking about, and finally tell you that the only way to be successful is to buy their training program. Then they separate those that do buy up to the next level and leave the rest of the people to face a barrage of follow up phone calls and "discounted" training session offerings. 

Thought this article was interesting, and it mentions BP

http://finance.yahoo.com/news/this-man-wants-to-teach-you-how-to-flip-homes%E2%80%94for-a--34-000-fee-150349468.html

If they've submitted earnest money, done the inspection and passed attorney review, and are now out of the allotted time for due diligence (typically 5 days), you can keep their earnest money. 

Hi BP, I'd like your input on something. I'm finding it very difficult to schedule a viewing for my contractor to walk through the property before I make my offers. Does anyone have a good idea about how to show the property to your contractor without them being there. I've thought of things like recording or photographing the entire walk through, or even a live skype session or something. I know this may sound stupid, but here's the reason why. 

In the last week and a half I've lost out on two potential flips. I had to cancel my purchase contract on Property 1, and Property 2 was snapped up in literally 2 days, just before my contractor could see it. 

I visited property 1 with my partner, we made a list of renovations and things we found "wrong", put an offer in, it got accepted, but upon inspection there were many more things revealed; enough to double the rehab cost as a matter of fact, we ended up cancelling the deal. I feel that if my contractor was able to be there or see the property beforehand we would not have made an offer on the property in the first place. 

Property 2 had great flip potential. It had a huge profit margin and mostly cosmetic work, priced very low even for an REO. I saw it on Tuesday. I wanted to put an offer in the next day (wed.), but decided to wait until my contractor could see it the following day(thurs.)

Sure enough, the property went under contract on Thursday morning. 

Do you think I'm going about this incorrectly, or do I need to do a better job getting my contractor to see the property in one way or another, again with video, pictures, whatever. 

All suggestions are welcome, especially if they work well for you.

UPDATE:

Our first accepted contract has been cancelled! I was buying the property as-is and after looking at it with my agent, I wasn't sure if it made any sense to pay for an inspection. Luckily, I decided not to be a cheap *** and paid the $300. 

The home inspector I used had many years of experience and grew up in the industry as his father owned an inspection business that did home inspections for 6 major banks. Long story short, he provided his inspection results which revealed several major problems with the property that we did not immediately identify and probably never would have without his expertise. 

What looked like a good roof turned out to be covered in improper patches and soft spots, the attic had improper structural supports that held up a section of the roof, and we found out that our 5BD, 3BA house started its life as a 2BD, 1BA, and thanks to two very well concealed additions had grown to be a decent sized house. Furthermore, there was no A/C although a condenser was sitting outside, there were two furnaces, neither one of which worked, and a mess of DIY electrical and structural projects throughout the property. 

In short, the $300 inspection revealed a rehab budget that would have been more than double the expected amount, and had we not gotten a trusted and experienced inspector would not have found these issues until after closing. 

Needless to say we bailed out of the deal and are now on the hunt for the next property. My story here just goes to show how important it is to do home inspections, even if you think you've seen it all. 

@Nick Wing is absolutely correct. That's how most rehabbers work. However, my situation is different as I have negotiated my terms with my partner that way. I have little money to put towards this project, so our agreement is that I put in the ernest money ($5000) to secure the contract, and pay any associated fees. This way my partner/lender is not on the hook until the property actually closes. Once the property is ours, we have an agreement that my partner pays 10% when we sign paperwork with our GC, 20% increments as the various phases of the project are complete and the final 10% once we do the final walk-through. 

So in my case, my lender is cutting checks directly to the GC once they verify that a phase is complete.