All Forum Posts by: Randy Rodenhouse

For myself, I would want to see an operator that has had at least 20 deals with the structure that you are discussing. How many deals have you already done? Also consider when you sell house with seller financing to owner occupied person as their primary residence you cannot balloon per Dodd Frank.  

@Christopher Lynch. When starting out it's a pretty good deal for someone lend you all the money and you give them 50% of the profits. However, after you get some experience, you probably want to get a Private Lender since this will allow you to keep the majority of the profits. I do a lot of private lending and we do make some passive interest, but the good fixing flippers make the bulk of the money. With respect to the LLC, you can continue to reuse the LLC since you're not keeping properties in the LLC. However, if you start holding properties in an LLC, you don't want to flip properties in the same LLC. Technically it would be best to get a C Corporate or S Corp. to flip properties and since you are considered a dealer if you do several properties a year and this could have negative tax consequences in an LLC.

@Roy Gottesdiener That makes sense. I too have properties where the CoC is low due to appreciation and trying to decide if should leave in or take out equity. I invest primarily in mortgage notes and do private lending. I started buying notes in 2012 and it has been good. However, today the note prices have gone up and the margins squeezed but I think it will present another opportunity in the next couple of years. Maybe not like the great financial crisis but definitely seeing some cracks.

Yes what you are getting now is low $1500x12/500,000 = 3.6% approx. However, that ship has sailed. Yes you could sell and get your 500k less taxes and then reinvest but maybe looking forward you need to look at investments with higher returns of 10% range. I have posted before in Linked In that BRRR is not a great strategy since you have to master so many things.

You have to buy the property right and at a low enough price and find the funding to do so. Then you have to renovate the property and there are sooo many things that can (and do) go wrong with the rehab process. Then, if you get the renovation done successfully, you now have to find a good tenant. Then you have to manage the tenant and deal with maintenance and repairs. Now after all that, you have to go to a lending institution a second time and try to get a loan and there are many requirements to getting loans in todays environment which make it difficult.

Wow! So many moving parts.

Even just doing one of those is hard enough, but now you have to be an expert in finding discounted properties, rehabbing properties, rental and property management, maintenance, and raising capital and getting loans.

If the property was deeded to HUD then it is an REO of HUD. Since HUD owns the property outright they can sell it at any price they wish. It is not a matter of equity anymore. You just need to find out what the as is value is. If fixer upper then usually offer 70% of ARV less repairs.

This is the loading question since not all the information is presented. As a newbie you may want to reconsider. You are in quite a complicated arena. If the first mortgage is foreclosing, it will wipe out most of the junior liens, but depends on what those junior liens are.  For example, certain liens will not go away such as property tax liens, code enforcement liens, certain city liens, etc.  The IRS lien has 120 days right of redemption. You need to run a title search and go through it carefully before trying to buy such a property.   

Capital expenditures include material and labor, but does not include your own labor. However, not everything has to be capitalized (and in turn is depreciated). Capital expenditures (CapEx) are typically items that will be used in the course of business for more than 1 year.

There are now a few website platforms where they list houses with assumable loans like Assumable (I think .io) and Roam.  Just google these two to get more info.  Of course, sometimes it's difficult to sell a house this way if you have alot of equity since the buyer will have to come to the closing table with that amount of money before assuming the loan.   

The way I understand it, you can own another home and still qualify for Fannie Mae's 5% down payment option for multifamily properties, provided you meet certain conditions. The key requirement is that the property you are purchasing with the 5% down payment must be owner-occupied and primary residence. This means you must live in one of the units of the multifamily property you are buying.

I would not form an LLC in the states that you mentioned, but in the state that you live in. There is many unnecessary structures that have a lot of cost associated with them. If you do not live in one of those three states you mentioned don't form LLC there. Many people get so focused on asset protection and have nothing to protect. I would just form a simple LLC in your state (possibly using LegalZoom or a local attorney) and you can always make it more grandiose later on. Just my 2 cents.