All Forum Posts by: William Harvey

Completely agree with @Marty Boardman. My partner, @Dan White is our "GC" in a sense and quarterbacks the entire flip by hiring subs and making sure they do what we want them to do. As I read through your post it seems like you are a layer removed and aren't really privy to what is going on day-to-day with the rehab. I think having a boots on the ground approach is crucial.

We didn't have anything go wrong to the extent you described, but a few years ago on our 2nd flip we had one of our subs just make up things to do at the property that weren't necessary and we paid him for a bunch of wasted work. We originally hired him to do some random "handyman" things and he'd just send us an invoice for what we owed him every few weeks.....big mistake leaving contractors to their own devices. 

On the next flip we spelled out his scope of work CLEARLY in writing and agreed on a price ahead of time and told him that is the amount he's getting paid and nothing more. From then on, he did exactly what we asked and nothing more. 

I agree with Marty about the document for contractor #2 telling him not to proceed without written approval. I think you do that, have a "come to Jesus" talk with him about your frustrations and how to right the ship, and spend more time at the property overseeing until it is completed. 

Best of luck man! 

 They've been hiking rates aggressively since March of 2022. Almost a year now since the first one went into effect. Please tell me what I don't get. 

In our area the market started softening in April of last year, so we've been in a much worse market for almost a year now and have completed 3 or 4 flips in that timeframe while making adjustments as we go.   

Do you have a crystal ball? Do you know for sure what will happen in May/June like you suggested? If flippers focus on ARV's and being very conservative, and they buy properties right, there is going to be a lot of opportunity on the horizon.

I hope every flipper has the mindset you have because then there will be less competition! 

@Carlos Ptriawan Respectfully disagree on the rate hike comment.... We bought a flip in early November, sold end of December and made about $74,000 on it. There are definitely opportunities out there right now. 

It's all about how well you buy it, regardless of external factors. Every property is a deal at the right price. 

 I agree - I would never do it, but I know some people who have. Just a though I wanted to throw out!

@Luis Ramirez First thing I'll say is that the TV shows about house flipping are good for entertainment, but nothing beyond that! 

Second - this is a pretty broad question. I'd start by reading some books on here to give yourself a good baseline understanding of things and I'm sure it'll answer a lot of the questions you have. 

Everyone's strategy is different and what one investor deems important, another might not. There is no right or wrong way. 

For our house flipping company, we look for properties in neighborhoods that are fairly easy to comp, we try to buy in the $200-500k as-is range, and then we shoot for $40k or 10% of the ARV as our profit, whichever is higher. If we find a deal that fits those criteria, then we'll try to pursue it.

As far as actual components of the house, we don't really look for anything. Every house is a deal at the right price, so we focus on buying right first and foremost. Biggest piece of advice I can give is to be ultra-conservative with the ARV and buy right! On my first flip, I made every mistake in the book, but since I bought it right, I still ended up walking away with about $50k in profit. Best of luck!

@Kelly Stanton Yes, it is just myself and 1 other partner. Hmmm, in this case the only workaround I can think of (if you want only a single entity) is to have XYZ House Flipping LLC as the company that buys the properties, and then "hire" the different partners and pay them as 1099 contractors.

In order to have it be K-1 income from the business, they would have to be an owner. So, if the 1099 route isn't appealing, then I think you'll have to create a separate entity/bank account for each different partnership you have. 

@Simon W. is an accountant and might be able to touch on this from that perspective a bit more!

@Kelly Stanton The way I do it with my house flipping business is to have a single entity to buy all properties. As you alluded to, it'll get reallllllly complex if you do it where you create a new LLC for each property. Especially if you have partners. Each entity would have to file a tax return every year and the cost and headache from that would be big.

Just make sure with each flip that you have the proper liability insurance and property insurance and you should be good. Disclaimer: I'm not an attorney or insurance expert, just telling you how we do it in our business based on professional guidance received from experts. 

@Kelly Stanton Click the link in my signature to check out our product (DealSimple). You can analyze a single property and compare different strategies side by side (flip, BRRRR, rental).

If I were in your shoes I would use the PDF reports to create all the different exits for a given property and then review them to see what the highest/best use of the property would be. 

Feel free to reach out to me for more info!

Regardless of what you do with forming another entity or not, make sure you have proper liability insurance. I'd imagine this is at least one reason why you're thinking of forming a separate entity. 

"Piercing the corporate veil" is usually not difficult, so for peace of mind it is always good to have a policy in place so you can sleep at night!

@Jacob St. Martin Awesome stuff! I'll dm you