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All Forum Posts by: Ryan McGrath

Ryan McGrath has started 2 posts and replied 16 times.

Post: LLC's and 1031 Exchanges?

Ryan McGrathPosted
  • Contractor
  • Middleboro, MA
  • Posts 18
  • Votes 24

Thanks Dave. Much appreciated! Yes, our primary intent is resale for the first 2-3 years. We are flexible on how we approach this but doesn't sound like we have many options. 

Post: LLC's and 1031 Exchanges?

Ryan McGrathPosted
  • Contractor
  • Middleboro, MA
  • Posts 18
  • Votes 24

Hello BP Community! After many years, myself and two family members (yes I know, mixing family and business gets dicey) have pooled together enough cash to really start investing with a focus on buying land and developing single family homes. We have enough cash to turn our first deal (including land acquisition, design/engineering, construction, etc) and ready to take the plunge and set up the LLC and get moving. I'm pretty inexperienced on the legal side when it comes to RE so have a lot to learn but figured making a post here was in my best interest.

My question is it possible to utilize a 1031 exchange into a new investment after every deal? Our plan is to have two LLC's, one for the real estate development company, and another for the GC (I will manage and contract the builds myself, pull permits, etc). 

Our goal is to keep our money in the company and re-invest into new deals, until we're able to have multiple deals going and invest in larger developments. 

My other two investors will just be financial investors and have no involvement in the operations of either company but plan to give them an ownership interest in the RE company. Basically I put the deals together, see them from concept through completion and they get a cut of the net profits. 

I know this is more of a general post and not asking very detailed questions, but looking for some general feedback on how to approach the LLC and 1031 exchange process, if possible. 

Thanks in advance everyone. 

Post: Open Carry, Concealed carry or no carry while do business

Ryan McGrathPosted
  • Contractor
  • Middleboro, MA
  • Posts 18
  • Votes 24

Concealed carry is best. I get that open carry is a deterrent, however when you walk around open carry, that's a very loud statement and now everyone knows you carry.  Never blow the element of surprise. 

I don't know the legalities of telling someone whether they can and can't carry, but to me, it's none of my business whether someone legally carry's a gun or not. 

Post: Year One - 7 Deals and No Money Invested

Ryan McGrathPosted
  • Contractor
  • Middleboro, MA
  • Posts 18
  • Votes 24

Congrats!! Sounds very exciting and I'm currently pursuing my 1st BRRRR. Would love to see a deep dive!!

Post: Urgent Help Needed - Kindly assist

Ryan McGrathPosted
  • Contractor
  • Middleboro, MA
  • Posts 18
  • Votes 24

An internal french drain would help, but that's not going to resolve your issue. Think about it this way, if the drain is on the inside of the foundation wall under the slab, its only able to be effective once water gets to it. By that time, its already traveled through your foundation wall. I looked at your video--you have a CMU block foundation wall, so you have joints all over the place that are susceptible to water intrusion which will eventually crack the mortar and it will need to be re-pointed if you don't stop the water. If you are going to finish the basement walls, now you are covering them up and preventing you from being able to re-point the CMU. So you ideally want to stop the water before it gets through your foundation wall. 

Post: Urgent Help Needed - Kindly assist

Ryan McGrathPosted
  • Contractor
  • Middleboro, MA
  • Posts 18
  • Votes 24

I've dealt with many water issues in basements on various projects. It's a common issue here in the northeast and elsewhere around the country. 

My current residence was built in 1970 and has the dryest basement I've ever been in. This is for 2 main reasons. #1 I have very sandy soil on my property which results in good drainage, and #2 water pitches away from my house via grading and proper gutters and downspouts. 

My advice is to halt the basement renovation until you resolve the water issues. Make sure your the grade around your house is properly pitched which could be a lot of work right off the bat depending on what your existing conditions are. Make sure downspouts extend away from the house at least 2'. The goal is to get water away from the house. 

You can use drylock paint at the interior of the foundation walls, however you want to solve the water issue before it gets to the outside of foundation wall, not inside. 

Depending on how much you have to spend, one of the best things you can do is to install a french drain and crushed stone at bottom of foundation/top of footing. But now you are getting into excavation which is not cheap. If you want to swing for the fences, install waterproofing around the foundation wall but 90% that is cost-prohibitive. It all depends on how much you are willing to put into it. But definitely start with making sure water pitches away from the house with downspouts and making sure your soil is properly graded away from the house. 

Post: How can I get my foot in the door?

Ryan McGrathPosted
  • Contractor
  • Middleboro, MA
  • Posts 18
  • Votes 24

@John Moorhouse To set yourself up for success, I would identify a few different good GC's you want to work for. Write up a cover letter that drives home that you are motivated, want to learn and take direction well. GC's will appreciate that and you will have a great shot at getting hired. You won't make much at first but the knowledge and experience gained will set you up for success when it comes to investing in highly distressed properties. 

Best of luck! 

Post: How can I get my foot in the door?

Ryan McGrathPosted
  • Contractor
  • Middleboro, MA
  • Posts 18
  • Votes 24

@John Moorhouse  

Typically not. Because the market is so strong and every GC and subcontractor need good people, you should be able to get your foot in the door with no experience at all. 

The biggest thing I want to point out is you need a good attitude. Its NOT easy working as the newbie on a crew around seasoned guys who have been doing it for 10-30 years. You will be tested daily. 

If you HUSTLE and do what you are told without talking back, they will teach you more and more and you will do just fine. I hear from my subcontractors all of the time about how they can't find enough good people. But the Boston market is insane right now and there is more work than people to perform it. 

I started out as a laborer, then worked my way up and before I knew it I was framing houses and able to run a crew.  It will take years, but if you build that knowledge base, you will have an edge that most don't which will help you TREMENDOUSLY when first starting out.  

Although I can't recommend a GC in NJ as I'm in Mass, I'll give my 2 cents after being in construction for almost 15 years. 

This is a VERY tough time to find a good GC and establish a good relationship with. It's the hottest construction market in decades, and all of the good GC's are extremely busy. 

Construction escalation costs have been through the roof over the last 2 years alone, mostly due to labor shortages and subcontractors having more work than they can handle, so they start submitting high bids that leave owners and investors scratching their heads. 

If you have the knowledge and ability to manage and hire the subcontractors directly, I would do that. Then find a core group of subs, especially important on the plumbing, electrical and HVAC side.

Payment terms are also very important to GC's. So you will have a hard time finding a GC that will agree to anything beyond 30-day pay terms and many residential guys want better terms than that. 

But best of luck in your search--there are too many inexperienced morons out there who call themselves GC's and botch projects left and right. 

Post: How can I get my foot in the door?

Ryan McGrathPosted
  • Contractor
  • Middleboro, MA
  • Posts 18
  • Votes 24

Hey John,

My best advice is to find a way to set yourself apart and give you an EDGE. In my opinion, the best way to do this aside from learning and reading about REI, is to learn CONSTRUCTION!!!

Find a general contractor that does new construction and remodeling and start from the bottom as a laborer and apprentice. Learn the ins and outs of building construction and you will be able to walk into any potential investment and know exactly what its going to take to get it where you want it. Of course there are always unforeseen conditions, but if you can manage and even self-perform the construction aspect of your deals, then right off the bat you can be more competetive than the next guy who has to hire a GC to do everything for him, usually at a 15-25% profit margin, depending on the size of project and area you live in. So in theory, a 50k renovation you could get done for 40k simply by managing yourself and hiring and negotiating with subcontractors directly. Even less if you are able to self-perform the work and use temp labor (always go through a legit agency, never hire off craigs list as if they get hurt on your property you can kiss it goodbye)

I was into construction long before real estate and very glad I went that path as it gives me a huge edge. 

Hope this helps.