All Forum Posts by: Stan Hill

My Life and 1,000 Houses by Mitch Stephen

I've had the same problem and finally found a small local bank that understands there is a lot of loans for less than $50,000 to be had. If you haven't tried small banks, give it a shot.

I found some contracts here:

http://smartlazyinvestor.com/how-to-wholesale-prop...

Anyone here use the affadavit you the buyer can record to encumber the title? I have mixed feelings about this. On the one hand, I've done the work to get the contract and don't want someone else showing up the next day or week offering $1,000 more and ruining off with it. 

David, it's all good. In fact, this discussion is very timely. It was just two days ago I was at the permits office in a small town and learned about licensing for the three trades we both mentioned. My wife and I are looking into building a house and you and everyone else provided some good insight. I have limited construction experience. I've pulled wire, installed switches and other basic electrical tasks, done some framing and built a few storage buildings. Eventually I want to be my own general contractor and manage building projects myself. My takeaway from your comments and those of others is what I usually run into when learning something new: I know very little and have a lot to learn. 

Patrick, can you point out the part where you said you want to take your own earnest money, write your own contracts, appraisals, underwrite your own loan, etc? I see some accusations and/or suppositions being made that are quite interesting. I guess you must have edited the post(s) where you made these declarations, eh?

It's all good. For some reason, people can get quite animated when talking about Texas. ;)

Texas does not allow any yahoo to do certain things. Electrical, plumbing and HVAC have to be done by well-experienced and licensed individuals. I'm not sure on the specifics but can tell you it literally takes years (at least four in the case of electrical, probably more) of experience to be licensed to do these things in Texas. 

We have several rentals and want to take a next step of building a home to sell. So far we have spoken to one builder, with him offering to build a 1,500 s.f. home, 3/2/1, all brick, 9' ceilings, nice fixtures for approximately $112,500 including the lot and basic front yard sod and a few plants. The lot is prices at $15,000.

I called their references. One was a lawyer, her number was disconnected. However, it was two years old and the lawyer web site said she was licensed for 47 years. I'll assume she retired. The second was from a city councilman who spoke highly of the men and had a home built by them. The contractor is licensed in the city we are speaking of. I am pretty good at watching reactions. When I asked the lady in permits about him, she immediately knew who he was. I sensed no dissatisfaction. I also chose not to ask her personal opinion as I doubt she is allowed to give it anyway. At any rate, he seems to check out.

Anyway, here is the situation. He has stated their usual procedure is they can guarantee me a profit of $10,000 per $100,000 spent. After that, the profit is split three ways, the CPA-type of the deal, the onsite guy and myself. I am planning to call some other builders this coming week, but thought it would be interesting to get feedback on this arrangement from people here. The numbers seem to work out to my satisfaction even if the ones presented are a bit optimistic, i.e. the house sells for $135,000 instead of $145,000. Is this splitting of profits "normal"?

Any insight on this venture will be greatly appreciated.

I did a search and didn't see this specific situation covered. I am hoping to find some insight on this.

We currently have a SDIRA. It has worked out well. However, there are a few limitations that have led me to researching other options. We cannot personally benefit with things like gas and being paid for time and other limitations. Most of you are probably familiar with what I am talking about. There's a specific term I've heard, just can't remember it right now. Also, it has been difficult to tap the equity in the 3 properties we currently own. It turns out most of it is due to being held in an LLC, though minimum loan amount has also been an issue (total value of properties is around $160k).

So I came across the idea of a self-directed 401k. The mechanics of it is we roll over 401k funds from a work 401k and start a personally-directed 401k. That 401K then invests in shares of a new C Corp. A few basic rules: there has to be at least one half-time employee. It needs to an active business. So with regards to real estate, I would need to be flipping and/or managing an 8-plex or somehow reasonably justifying 20 hours per week. 

Here is the point I really want feedback on. I have been told that a C Corp can leverage paid for properties much easier than an LLC, and that it is in fact a common practice.

As my intention is to be a full-time investor by the end of 2015, it appears clear to me that leveraging our acquisitions will be absolutely critical.

I am not very knowledgeable on business structuring. Our LLC is pretty basic, with just 3 rentals and very low maintenance. I keep the rules simple in my mind so I don't have to do a lot of thinking about and worrying about rules.

We are in the process of doing our first flip right now and my intention is to replace my income (it's pretty low due to an unwanted career change) in 2015.

Also, the cost I have been quoted is $5,500. That's a lot more than our SDIRA- 2.5 times more.

Any insight would be greatly appreciated.

I know nothing about wholesaling. However, a quote comes to mind:

"The harder I worked, the luckier I got."
- Gene Simmons

It sounds to me like you're off to a good start. Good luck and let us know how it goes!

@Les There's always another deal out there. You may regret rushing and paying a huge chunk to the IRS.