All Forum Posts by: David Begley

When seeking a permit in the City of Atlanta or DeKalb Co, spring for an experienced expediter.  It's not worth your sanity to try it yourself unless you have plenty of time and patience.  Good luck!  

P.S.  Remember the Arborist Permit if you're touching a tree! 

 That's why I always provide (and suggested in my response above) the pre-listing appraiser with the comps!  Don't leave it to chance!

 My experience is that they will not negotiate until they are nearing the expiration of their contract with the property owner and are more motivated (desperate) to sell.  However, in that situation it usually means the property is significantly overpriced anyway or the Wholesalers repeat clients would've jumped on it.   

There are tons of threads on this very subject if you want to search them and read other answers, but the short answer is the Due-on-Sale clause is there to protect the lender from this very situation, along with preventing the owner from selling with as an assumable or wrap-around mortgage. You'd need to get the Bank's permission is the short answer. If they've portfolioed the loan rather than sold it, and you agree to personally guarantee the loan once transferred to your LLC, they may acquiesce.

 What I do:  If you've received an appraisal you consider fair on a previous property, contact that appraiser before you list your next house and ask that appraiser to do a pre-listing appraisal for you and let him know you flip a lot of houses and want to start doing this prior to listing going forward.  Since the appraisal is for you rather than a bank, the appraiser will be more willing to let you provide input by pulling 2-3 recent comps for him.  It is important, though, that you really do provide accurate comps - sales (not pendings or listings) within the past 3-6 months; within 1/2 - 3/4 mile radius to subject; similar characteristics; etc.  That appraisal will help you to set your asking price and after the property is under contract, share with the Buyer's broker (if appraisal > than contract price) and leave a copy of that appraisal on the kitchen counter the day the Bank sends their own appraiser over.  You'll begin to see the Bank's appraisal pretty much agreeing with your own!  

Good luck!

@Edmund Ricker  The fear and analysis paralysis you are experiencing is natural.  I was scared to death and found myself sabotaging offer/acceptances because I was afraid of, as you put it, "looking like a chump".  I hate to tell you this, but eventually you'll end up looking like a chump - if anyone tells you any different, they are lying to you.  You'll make mistakes but you just need to educate yourself so you can mitigate the occurrences and size of the chumpiness!  The only advice I think I'm qualified to give you, is you should become educated, surround yourself with good, smart people and then make the leap.  It really isn't as scary once you're in the thick of things, and it does get better and easier.  Good luck to you!

@James Klafehn  You really must bite the bullet and subdivide the property.  My partner and I are sitting on an acre containing 8 duplexes and that parcel was not properly subdivided at inception and it is now a nightmare.  You are sitting on a $2.0MM investment, why be so cheap to not spend the little bit of time and money on the front end? Bankers will not care if you say "I'll never sell..." or "death is my exit strategy...".  They have to plan for worst case scenarios and putting those individual duplexes on one large lot is outside their normal business and comfort zone.   In hindsight, you probably would've been better served using your credit card cash advances for the survey and expenses needed to subdivide properly.  You'll likely never qualify for a bank loan until you take that step.   Good luck to you.  

I qualified with "generalities" and "oftentimes" because I know it would be the exception not the rule. But think about it. If a HML lends no more than 60%-65% LTV and the Borrower defaults, the HML takes possession and can [theoretically] sale it for the appraised price. If the HML has extended no more than $130K on a $200K home, $70,000 is quite a buffer and the HML should have more capacity to hold out for an eventual sale than the defaulting Borrower. Again, not every time but I've heard too many make the statement "... I hope he can't repay so I can foreclose..." to think there isn't something to it. And to your point, they've collected the points up front and are collecting monthly interest payments so they are making the revenue while the loan performed, plus the additional equity realized upon sale.

I'm not sure the Private Money Lender v HML model is any different - as I understand it, an HML is usually a company/group and a Private Money Lender is a one man band but the business model is pretty much interchangeable. I pay my Private Money Lender 1 point and 8-10% interest whereas most HMLs are more expensive - 2 to 5 points and 12 - 15% interest. There are many reasons, as an individual, to pursue that model especially if the individual is looking for a more passive route to real estate investing. You can easily earn 12% to 16% return on your money on a secured/collateralized investment; whereas rehabbing with a 50-50 JV partner will not CONSISTENTLY produce those returns. A JV partner rehabber will occasionally lose money on a deal; a GOOD HML or Private Lender rarely will since they typically have a 1st lien position and a 65% or lower LTV secured position. As a Private Lender/HML, oftentimes you can make more money when the Borrower defaults. I am speaking in generalities.....

Hi Tiffany, sorry for the delayed response. I don't log on here as often as I used to. It sounds like you are confusing LLC Member with Registered Agent. They are not synonymous. You can use your Parent LLC as the Organizing Member of the LLC and use your attorney, accountant, yourself or anyone else (in the same state the LLC is Organized) as the Registered Agent. For example, I have one LLC where Legalzoom is the Registered agent; one where an attorney is the Registered Agent and one where I am personally the Registered Agent. The sole function of the Registered Agent, best I can tell, is to receive official government and tax notices as well as receiving any process service notices, like summons or lawsuits. In that regard, I can understand why the Registered Agent must be an individual.

You use your parent LLC as the entity applying for and executing the Articles of Organization for the new "child" LLC and then use the new LLC entity to apply for an EIN. You must also craft the new LLC's Operating Agreement indicating the Parent LLC as the Managing Member/CEO/President or whatever the title.

I hope this helps, and I hope someone will correct me if I've given you any misinformation. 

Good luck!

db