All Forum Posts by: Robert Fabian

The house is a 4 bedroom, 1 1/2 bath colonial. The four bedrooms are all on the upper level of the house and they all share one bathroom. Would it add value or take away value if I turned a smaller bedroom adjacent to the master bedroom into a master bath and a walk in closet. It has neither as of now. This would make my rehab now into a 3 bedroom 2 1/2 bath. Any advice?

Can someone tell me the best way to elect to be taxed for an LLC? Corporation or Partnership? I do have two partners.

Thanks Nuhan.

"If the deal loses money they both lost. If the money partner is made whole on the next deal when does the technical partner become whole? Never?"

I feel like you understand my question here.

J, investing 200 hours in ordering materials, working, dealing with trades, etc. and not making money is not an economic loss? Really?

"Personally, if I were working with someone who valued his time more than my money (as opposed to equally), I wouldn't be happy with the relationship.."

This is not the case. I actually dont know how you get that? I just can not have there be NO value on my contribution.

Dawn, thats why I would assume he should only be entitled to a $10k recoop right?

Starting to think there is no good answer to this issue. Didn't think it was that unique.

BTW J, I really enjoyed your podcast. Thanks for the info.

Im having trouble understanding how there is no loss on my end. In my other business I bill my work out at $400 a day. If I put 200 hours into a flip that loses money, I definitely lose out. In all economic transactions time and money are expended. Both have value. If I put a dollar sign on my time, it becomes easier to see. For example, if I put in $7000 worth of time and the financial loss is $20k, then he should only be able to get back $13k on the next job before we figure out compensation. That way, both losses are equal. Correct?

Going into the next job he would be in a $20k hole and I would be in a 200 hour hole.

FYI, I am also the project manager, business manager, etc. Due to his busy schedule, he is merely the financial contributor. We are hoping to grow the business large enough to provide a possible change in career. Just want to make sure that we get off on the right foot.

In all honesty, I do not plan on losing money, and if it appeared that way, we would probably rent. Just need to have this squared away for the lawyer. Its also only an issue until we are playing with house money.

This does help in other ways too. Due to my success as a contractor and some of his connections, we have about $600k of hard money available if we want it. My choice is to succeed on our own first. In those situations, if we pull in an investor for a certain project, would the same hold true in your opinion?

Well, its tough to see it that way from my point of view. Sweat equity with no financial return is loss. No? If he recoups that money, than technically there is no risk. I would never receive any compensation for my equity?

My LLC is registered with the state, the finances are set and we are looking for our first property. We must first however get our Operating Agreement set. We have actually agreed on everything thus far. There is one sticking point though. The partner who is providing the capital for the initial flip or two is concerned about financial losses. I bring just about no capital to the deal. I am a contractor who is putting all else aside and providing sweat equity.

If the situtation occurs on flip number one where we lose $20k, he feels that he should make that money back off of the next flip before any compensation is distributed. Meaning that, if we make $30k on the next flip, he gets his $20k back first before we divy up the remaining $10k. Coming from the world of finance, he said that is how it is done in his industry.

My concern is that on a loss of $20k for him, I have turned down work and lost money, plus put in countless hours into a flip without pay. Now I am supposed to go work on another flip for pretty much nothing to help him recoop his financial loss?

Has anyone encountered a situation like this? If so, what is the common way to handle it?

Thanks!

Nate,

If you were to buy a property to rehab, would you do it under your LLC or your name?

Thanks,

Rob

Welcome Eric. I am new to BP myself. It is by far the best resource around. Good luck!

Hey George. I have used companies before. Through a lot of research, I realized that there are a lot of different products with a lot of different promises. There have been recalls on several of them because over time they begin to fall off basement walls or deteriorate. I found a product called ICYNENE to be far better than any others. I have never used the Home Depot kit. As a matter of fact, as a contractor, I try not to use Home Depot at all anymore. Definitely research the foam product that they sell more than the system. Thats what counts.

Good Luck!

I agree with Randy. Although I have had a few issues with tenants in the past, never so soon and without collecting a single dollar. Although all areas of the country have different laws, no money was ever paid! Good luck. Keep us updated.