All Forum Posts by: Wayne Littrell

Thanks Linda, Maybe taking advantage of the fact that the S-Corp was already established is not the best idea. Maybe I should just start from scratch and form a new LLC.... and perhaps before doing that, talking it all through with a CPA first. Appreciate any other thoughts.

Lance / Javi, Thank you both for the replies. 

The S corp was originally organized with the intent of contracting as a property preservation company. I guess the S corp was chosen over an LLC for some possible future tax benefits. Regular quarterly reports are being filed, but the company at this time has no assets.

I have since agreed to partner into the company, with my bringing cash for the property purchase, and the partner handling most of the rehab work. Our intent is then to hold the property within the S corp using the BRRRR strategy.

To answer Javi's question. I understood that it was desirable to hold the property in the company name (S corp or LLC) to limit my personal liability.... I thought this was the method that most flippers used?

To Lance's point, I understand and expect that by transferring the property into the S corp, it becomes an asset of the company, to which I anticipate that I would be issued a commensurate number of shares in proportion to the financial worth of the company.  Initially the shares would be pretty heavily mine, with the partner earning shares via the rehab effort involved with improving the value of the purchased property.

I'll admit that this is a totally cooked up plan, based on ignorance, but it seemed reasonable.  If there is a BAU way of approaching partnerships like this, I'd be very interested in knowing where I can look for more information.

FYI, I've held off saying that the partner is my brother, as it is only reinforces my sense that we both would want this venture to be on sound footing.

Thanks again for your interest in providing sound advice.

I plan to complete a cash purchase of a property with personal funds, closing it into an existing S Corp that I would be joining (Illinois), which right now has minimal assets.  As I am new to the business of real estate investing, I was hoping to ask for advice on what I need to address before I put the property into the company name.

1. Amend the articles of incorporation to add me as an officer?  We would operate as co-equals, but I think there can only be one Director?
2. Issuance of stock in proportion to my financial interest in the total assets of the company?
3. Creation of a shareholder agreement that outlines how income is to be distributed?  We each bring different skills, so need my investment accounted for, but split future income 50/50.  Is this how others do it?

I appreciate any advice on the above, or other areas I should address, so I can make sure our partnership starts off on the right foot.

- Wayne

BP has been such a valuable resource, learning how to properly evaluate deals.  I've located an interesting property, and would appreciate any thoughts from those with experience. 

Subject property is a 3/1 988 sqft ranch, listed at $79.9K without a garage.  Having walked the property, it needs approx. $15K in rehab (siding, windows, flooring, kitchen, bath).  

I have three good comps, all of which appear to be recent flips, ranging $95K to $112K, with an average of $103K. If I take a $10K adjustment for the garage, use the 70% rule, and my rehab estimate, I come up with a MPP of $50K.

In 2016 there were 5 other FC properties in the area that sold on average for $61K (again, adjusting down for they all had garages). Not sure that this factors anywhere, but found it interesting, thinking it may influence the review / approval from the REO asset manager.

Open questions;

• How does my deal evaluation sound.  Is there anything else I should be considering?
• For the rehab work outlined, is $15K a reasonable estimate (limited contractor use, starter home finishes)
• If I do not add a garage, is this a considerable mistake for resale given all the comps have garages?
• How realistic (from others experience) would it be to make a sub $50K offer on a property listed at $79K and have a reasonable expectation of success?

  Thanks in advance to anyone willing to take the time to offer their insights. - Wayne