All Forum Posts by: Rick Turman

BP Family,

I am looking to see if others have done something similar to this and or experienced this and what have you found to work best.

I closed on a property in the business name to BRRRR as I found a portfolio lender that can turn Commercial loans faster and without limitations. This loan was packaged as a 6 month interest only note rolled into 15 yr mortgage at 4% there after. I've purchased this property for 74K and will be all in at about 105K. ARV is looking like 155-160K and with it being a duplex, will be 100% occupied by the time I refinance. It's at 50% now turning 1050/mo. With all these numbers aside, here comes my delema.

My thoughts were to have the business flip the property, and once completed, refinance into a conventional loan in my personal name to take advantage of the better rates and longer term loans.  Is this a good idea or should I keep it in the business name if offered an attractive refinance package?  

From a tax perspective, the down payment was a capital investment from the personal side and the bank structured the loan as a construction loan covering the renovation costs. Since I am not selling the property afterward but simply renting, can I write off the Capital investment as a loss or what can be preserved as a loss from this purchase/transfer into personal loan if any? Also, at what point can I claim depreciation over 27.5 years? Is it from the time the property went into service, or is that year along with following years a given based on new ARV? Thanks everyone and looking forward to see what others have done.

@Anthony Benenate Anytime my friend.  That's what i'm here for.  To learn, Take Action, and provide value to others so that they too, do not make the same mistakes.  

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4 Years Later..

To be honest, I completely forgot I even posted about this :-). It's things like these that you re-visit and smile upon as now I can speak with infinite wisdom on my successes and failures over the past 4 years. Keeping it simple, we have flipped 4 successful and very profitable flips to build that bank roll, and are now building our Buy and Hold portfolio while we wait for this Market turn. What was a struggle figuring out this venture, and a year and a half stuck in analysis paralysis, I'd say the system is now being built so that any DIYer can follow the process from start to finish.   As for the Buy and holds... Well what went from trying to land 1 unit, led to landing 8 units in 3 weeks recently. End of Rant for me.  I could go on with what I sucked at the most, or brag about how I landed all contractors and the perfect team, but that would be boring for the seldom folk.  I'd like to bring 1 Gem to the table that I hope one day will bring enough value to someone like me 4 years ago needed, you know... That nice KICK IN THE *** to just START!

I just finished writing up this same passage for another colleague so I am going to spit out what I submitted to save some time. I hope it finds you and others well so that you too can spearhead the Analysis Paralysis and just PULL THE DAMN TRIGGER!

SAVE TIME - SQUASH THE YELLOW LETTERS, THE MLS & THE SHERIFF AUCTION!!! Those are a thing of the past now to me at least. I too was a click away of doing yellow letters until my buddy in Orlando let me in on a little secret on what he was doing that worked. He called it "Skip Tracing" and has built a team to trace and take the deal all the way to acquisition without any single stroke of the keyboard. Until he has to file paperwork that is for the purchase agreements :-)

Basically I have built my own team to work on a funnel that I created based on a list that seems to be having quite a bit of success. I have this down to being almost completely automated. If only I can find someone to pull the lists for me now off the below site, and trace for me i'd be golden. Skip tracing is simply a team of people who take the list, and comb the internet for phone numbers affiliated with that owner, then it's added to a new Excel sheet. Easy as that.

Instead of sending out letters and waiting for someone to open and respond (could take multiple attempts to call) We have been skip tracing and have found to have about 75% success rate. I was going to do a discussion board on this here to help others out as we have seen amazing results but perhaps this post will entice others and keywords within will sound alarms to their biggerpockets notifications section.

If you are not familiar with this, you obtain a list from your choice of sites, we use listsource.com obtain our lists based on a given set of criteria you choose from, and it pumps out a CSV and or XSL file with Owners, Primary address, and any information such as LTV, Years of mortgage, dwelling size, all the way down to how many and what type of windows a building has. That list then goes to the Skip Tracer who combs the internet to find the owners contact info (Cell or Personal home phone). My agent then starts cold calling to see if the numbers are legit, and if they are, request if they are interested to sell.  Then Negotiations hit and if the deal is right, we get it under contract.  The others that don't work, well, you've now found a motivated seller that A your Agent can benefit from, or if you were smart, you would get it under contract and find another savvy investor.  Congratulations, you are now a wholesaler on the side!

There are companies out there whom do the combing, however I lucked out as my buddy bought a company, and provided me access to a trial of 1K addresses. If anyone is interested in his business check him out. cashflowinvestorsportal.com. Sorry for the shameless plug however I never returned the favor and perhaps this can help.

Continuing on.... At this point you already have spoken to them (Property owners), eliminating the need to wait for them to throw your mailer away 5 times before opening it, increasing their time to respond rate, and money of course. Most say yes off the bat at X $ some say yes we are interested. Let me get with my accountant about depreciation, and please follow back up next week. I tested this new "Thing" out on a list of 10 that I pulled from my list, had my agent call around, and 7/10 responded where two were bad numbers, and 1 just wasn't interested in talking.

I am bringing this up to you as your area may still be a hot market. Mortgage rates are flattening pushing buyers to not want to buy but rent. Homes are way too inflated to where Rental rents will increase but still be tasty to the eye. This may be by far the most efficient way to get responses and be a step ahead of others as the MLS and Sheriff auctions are a thing for amateurs and seasoned investors. Sure you may find something, but you will still see the seldom few get burned on a bad deal continuously.

Ok end of rant :-) I hope this information finds you well, and saves you from countless and endless sleepless nights of researching and never taking action. Stay thirsty Mis Amigos!

Now just to get in touch with my agent to see if there are any good eats today :-) Have an awesome day guys, and keep kicking some *** out there!

@Ruth Lyons,

To be honest, I completely forgot I even posted about this :-).  It's things like these that you re-visit and smile upon as now I can speak with infinite wisdom on my successes and failures over the past 2 years.  Keeping it simple, we have now turned yet another 2 properties (4 successful and very profitable flips) and are now building our Buy and Hold portfolio while we wait for this Market turn.  What was a struggle finding 1 unit, let to landing 8 units in 3 weeks recently.  End of Rant for me.  Now to answer your question:

I just finished writing up this same passage for another colleague so I am going to spit out what I submitted to save some time.  I hope it finds you and others well so that you too can spearhead the Analysis Paralysis and just PULL THE DAMN TRIGGER!  

SAVE TIME - SQUASH THE YELLOW LETTERS!!! Those are a thing of the past now. I too was a click away of doing yellow letters until my buddy in Orlando let me in on a little secret on what he was doing that worked. He called it "Skip Tracing" and has built a team to trace and take the deal all the way to acquisition without any single stroke of the keyboard.  Until he has to file paperwork that is for the contracts :-)

Basically I have built my own team to work on a funnel that I created based on a list that seems to be having quite a bit of success. I have this down to being almost completely automated. If only I can find someone to pull the lists for me now off the below site, and trace for me i'd be golden. Skip tracing is simply a team of people who take the list, and comb the internet for phone numbers affiliated with that owner, then it's added to a new Excel sheet. Easy as that.

Instead of sending out letters and waiting for someone to open and respond (could take multiple attempts to call) We have been skip tracing and have found to have about 75% success rate. I was going to do a discussion board on this here to help others out as we have seen amazing results but perhaps this post will entice others and keywords within will sound alarms to their biggerpockets notifications section. 

If you are not familiar with this, you obtain a list from your choice of sites, we use listsource.com obtain our lists based on a given set of criteria you choose from, and it pumps out a CSV and or XSL file with Owners, Primary address, and any information such as LTV, Years of mortgage, dwelling size, all the way down to how many and what type of windows a building has. That list then goes to the Skip Tracer who combs the internet to find the owners contact info (Cell or Personal home phone). My agent then starts cold calling to see if the numbers are legit, and if they are, request if they are interested to sell.

There are companies out there whom do the combing, however I lucked out as my buddy bought a company, and provided me access to a trial of 1K addresses.  If anyone is interested in his business check him out.  cashflowinvestorsportal.com.  Sorry for the shameless plug however I never returned the favor and perhaps this can help.  

Continuing on.... At this point you already have spoken to them (Property owners), eliminating the need to wait for them to throw your mailer away 5 times before opening it, increasing their time to respond rate, and money of course. Most say yes off the bat at X $ some say yes we are interested. Let me get with my accountant about depreciation, and please follow back up next week. I tested this new "Thing" out on a list of 10 that I pulled from my list, had my agent call around, and 7/10 responded where two were bad numbers, and 1 just wasn't interested in talking.

I am bringing this up to you as your area may still be a hot market. Mortgage rates are flattening pushing buyers to not want to buy but rent. Homes are way too inflated to where Rental rents will increase but still be tasty to the eye. This may be by far the most efficient way to get responses and be a step ahead of others as the MLS and Sheriff auctions are a thing for amateurs and seasoned investors. Sure you may find something, but you will still see the seldom few get burned on a bad deal continuously.

Ok end of rant :-) Let me know if this is something you are interested in, and I would be more than happy to discuss over phone and get you in a direction that may benefit you as it has me. Now just to get in touch with my agent to see if there are any good eats today :-) Have an awesome day Linda, and keep kicking some *** out there!

@Yonah Weiss,

Amazing.  Thank you sir!  Looking at 8 units this Wednesday so let's see where this takes us.  Thanks again.

@Mark Trebor,

Thanks for your explanation.  This Goes for any Business Expense.  My idea was to capture all depreciation on my personal 1040 if purchased in the business Name.  Is this possible?

@Lane Kawaoka,

Would you mind elaborating a little further?  I've heard of something similar as a delayed financing or something of that nature.  Thanks Lane!

Going to be diving into some rentals here in the next few weeks. I'm actively making deals, but most out this way want too close to Market value as supply is diminishing. I have built an LLC for my active Flipping Business, however thinking of keeping these new coming Rentals in my Personal Name for Depreciation purposes.

My question for my BP Family, and really the only thing holding me back in this structure is, can the Depreciation of 27.5 years be passed through an LLC to the Sole Member as it would in the Personal Name?

Reason i'm asking is if I pay all cash, I can get 80/20 Cash out Refi with no seasoning in a commercial aspect through my business but if done on a personal basis, that seasoning of 6-12 Months follows Fannie and Freddie's guidelines.

Has anyone else done this before?  What is your take on this?

Also, if Syndicating, do you syndicate Rentals through Personal or Business Name?   Does depreciation work the same?  Thanks guys, and looking forward to these responses.  

@Jonathan Dunn,

I am terribly sorry for not responding Jonathan. I did not get any notifications about replies until just now from the most recent however thank you for chiming in. I may have listened to that episode and do remember how (If this is the episode) he would somehow get the rehab costs added into the deal prior to closure with the title agency. I could be off on a tangent here but there is an episode similar to this that I am going to need to find now. As I had to re-read my initial thread to remind myself of what I was doing at that time (about a year) I have actually done a little more extensive research around banks. I found a lender that will lend 80/20 on Conventional terms which are strict at following your normal guidelines with seasoning etc. etc. However, on the Commercial side (Now I formed an LLC for the Rehab side of things) The also offer 80/20 with Zero seasoning. Interest only 12/1 notes. All financials are ran through the individuals credit as the business is a pass-through and as long as the DIR (Debt to Income Ratio) is within acceptable means, I am aloud unlimited loans as more or less a Portfolio.

This should definitely help on the flips, new construction, and Cash out Refi's as all are very similarly packaged just with different terms.  I plan on turning 8-10 Flips per year now that I have acquired a team to turn a property every 2 months as a starting point to slingshot us into the next direction.

Upon diving into this adventure and networking, I came across an individual who has been in the roofing and construction industry for years, who wants to team up on bigger scaled projects in which I can also bring them in on these loans with no issues.

Enough of me, what have you gotten into in the past 5 months?  Any new endeavours?

@Odlin Sainvilus,

You may have found your answer by now however I usually start with obtaining the address of the home.  Once you have this, visit your County Auditor Site (For me it would be Hancock County Auditor).  You should be able to do a property search based on address.  Put the address in and it will give you Everything you need to know about the property from Size, sketches of floor plans, Rooms, Baths, Age, Taxes, Location, Flood Maps, Owners name (Gold to start another search), and even valuation of property (Appraisal Land/Dwelling).  Once you have the name of the owner, you can then start another google search on this to try and locate a valid Phone Number for that individual.  Get creative.  If you need to Facebook Creep go ahead!  It's all part of the due diligence process.  My colleague pays a 3rd party company for something called Skip Traces.  This individual does all the combing for you for a fair price.  He also pays another company to call those individuals once the list is provided from the initial search, along with another company to do the negotiations.  Once the negotiator brings the deal, they get a small percentage of the deal, and he seals it with the Purchase agreement.  Overhead is kinda high, however if 1 deal is made, it pays for itself.  This system almost nearly automates the process.   Good luck and Crush it!

@Jeff Grove,

Thank you kindly for your response!  Yes!  After you said "Delayed Financing" that is what the podcast was over.  I'm not sure if Podcast 301 was over this but that was the term being tossed around that triggered this post.  I now have a clearer idea of the direction I would like to go however want to dive back into this genre of financing just to see if I can add it as another tool in the tool-belt.  I really appreciate your thorough explanation, and love everyone's opinion.  Thanks again Jeff!

So I called a meeting together and we jotted down some ideas from each side so we could obtain each view and long term goals.  It seems as if one of his subs wants to break away and start his own flipping/investing venture and has come to me on the sidelines for assistance.  

Instead of losing two great contractors, I started a discussion that would trigger motivation to stay and work as separate entities while providing deal flow and monthly funnel overviews of how business can keep moving if they stay with me.  

This seemed to spark interest, and we began brainstorming.  I came up with the idea that on average with our team, we turn a flip with a total of 800 man hours or roughly 6-8 weeks to complete.  This equates to 6 flips each year and they are not to take on another project on the side but allowing time off for vacation with family.  This will be contractual once we iron out the incentives.  

If we can complete a flip in less than 8 weeks, I will kick back or profit share with the team.  This will motivate them to drive to completion faster and stay on site.  If each contractor picks up another employee which is in the works, we have the advantage to turning these faster at a rate of 10 per year increasing their potential profit/year salary 10K.  The only caveat to this is that 1 contractor wants Bids, the other is stuck in the Time and Materials mindset.  If I can get past this hurdle, I think I will be on track to having an unstoppable team, with a bright future ahead of us.  

Well thanks for tuning in and if you have any suggestions on how to solve the bid/labor materials hurdle, it would be amazing!  

Thanks everyone for voting on this topic.  I would like to reach out to see if there is anything you would like to see or add to this calculator?  Any issues, suggestions, considerations or anything you want to discuss?  I did promise to finish my running sheet for cost of renovations.  This was an interactive worksheet that you could walk a property and check boxes as you go.  Based on averages of cost per projected item, it would total the $ amount as you incremented your boxes.  Once completed, it would create a nice little quote for you to print as your new Projected Cost of Renovations.  I have the inter-workings down, and it works on my touch-pad however I am having issues with the iPad version as it doesn't like the Macros so much.  It has been several years in the making due to other obligations hindering my ability to complete but it will come and I WILL share with my BP Family.  Thanks guys and looking forward to your feedback!