All Forum Posts by: Zach Westerfield

I closed two cash out refi's with Fannie Mae back mortgages a few months ago. Not sure if something has changed since then. I do know it was getting more difficult to find banks that would cash out refi. I also heard there were some additional fees being added on by Fannie Mae specifically for cash out refi's. I havent heard of any restrictions though

@Garrett Hollenbach This is an open ended question. There is no limit to the ways and details in setting up a partnership. Its like negotiating a real estate deal, you and your partners own goals/desires plus imagination are your only limitations. That being said, there are a few things I recommend addressing up front, in writing regardless of who the partner is. 

1. Exit Strategy - what are you and your partners long term goals? If one wants to sell in 5 years and the other doesnt, that could lead to issues. Play the "what if" drill with scenarios and try to think through and discuss all possibilities. What if the property doubles in price? What is one partner wants out and the other doesn't? What if one partner passes away?

2. Roles/Responsibilities - make sure the roles and responsibilities are clear up front. Is your partner a silent partner only contributing money? If so make sure that is clear and write it down. If something goes wrong and big decisions have to be made, make sure he/she is aware you are the one who will be making that decision. 

Once these are cleared up, you can discuss ownership and profit sharing. This can be structured anyway you want, but the traditional way is the money gets 50% and work gets 50%. If you are less experienced, then usually that risk is incentivized by offering up more equity, maybe you get 30%. You can do it any way you want, I would encourage you to find a way for everyone to win, and you will find great success. 

That is a personal decision. At the end, all the money funnels back to you. When I set my budget for a flip, I factor in paying labor for everything, that way if I decide I dont want to do something its already accounted for and im not stuck (learned this the hard way). If I do wind up working on a project, I pay myself. I actually have a separate company I use to charge for any hands on labor, such as installing cabinets on a flip or mowing grass on a rental property. At this point, I only do things I enjoy. I use the proceeds to buy tools and such, that I use for the business (tax deductions). For me personally, I like woodworking and working on things as a hobby, so I would be buying the tools anyway. 

This method also helps when you partner on a deal. I have had partners that put up the money for a flip. If I did labor work, I paid myself just like I would have paid a contractor. 

I havent used artificial, but when i have done landscape I use low maintenance and hardy options. Specific plant choices will depend on what area of the country you are in. Here are a few suggestions

1. use a quality weed fabric underneath mulch. It cuts way down on weeds, which really cuts down on caretaking. 

2. look for drought tolerant perennials. this plants require little maintenance a come back year after year. some plants i use

- Gardenias

- lantana

- knockout roses

- liriope 

- evergreen trees and shrubs, such as leyland cypruss. 

Absolutely not. As the saying goes, don't let the tax tail wag the investment dog. 1031's come with a number of drawbacks, one of the biggest being the timeline requirements. Currently in almost every market, Real Estate prices are at record highs. If you 1031 now, you may be forced to over pay for a property. The money you could save by waiting for the right opportunity could far out way the taxes you pay. 

Another thing to consider, a 1031 exchange defers taxes, it does not erase them. All you are doing is kicking the can down the road. If you sell later, eventually you may have to pay back those taxes. No harm in paying that bill later, and freeing up more depreciation down the road. 

Try to find a good local bank. The smallest ones have limited online and mobile capabilities, which can be a pain, but most are catching up. My advice, make a list of local banks that have the lowest fees for business accounts. Then, go talk to each of their lending departments and see what they can offer. If you find someone who might make a good future lender, open an account with them. Start building customer loyalty. 

@Andrew Freed The first question is what is your overall budget? Are you trying to cut cost you make your numbers work or maximize profit? Is this a flip or a rental? Rehabs typically fall into different "levels" of finish, just like homes. There is no set definition or rule saying what defines each level. In my opinion, a low level rehab (ARV under 125K) would be carpet, rolled vinyl flooring, paint, Formica countertops or countertop covers, etc. The mid level would be LVT flooring or refinished hardwood, entry level granite countertops, entry level stainless appliances, etc. To me, you are mixing elements from both levels, which is perfectly okay. But if your goal (and market) dictate a low level rehab, just replace the carpet, dont bother with LVT, or go with rolled vinyl. The bathroom floors seem fine for that level.

It really comes down to comps in that market. Some people try to renovate for the lowest possible budget. My philosophy is create a product (whether rental or flip) that will demand a premium in the market, without going overboard. 

I use the Kwikset smart key locks. They are the same price as a standard door knob, and come with a little tool to rekey yourself. you can rekey them in about 10 seconds. No more need for a locksmith. I actually only keep about 4 different keys (since all my SFRs have these knobs) and just rotate keys between properties. That way I dont have to keep up with a board full of separate keys. 

Thats how me and my partner have set it up. He is an agent, and i buy both flips and rentals. We market together, and if a property comes up that he cant list and i dont want, we will wholesale it. I will do the paperwork in my companies name. His broker is fine with this arrangement. 

@Margarita 

@Margarita Reyes i dont know the legality of wholesaling in CT, but if its legal that is an option. In some more restrictive states, he could also double close, which is a form of wholesaling. Basically yall buy the property and immediately sell to the investor. This typically has higher fees but avoids assigning the contract. 

Another simpler option is your husband could charge a "bird dog" fee. this is simply a fee for finding a deal. Many investors offer these to friends and family, such as $500 if you bring me a deal I close. This would work well if yall already know the investors. 

One last note for wholesaling - IF its legal in CT, the actual process is relatively simple. The thing that makes it a "whole other thing to learn" is the marketing piece of it. Successful wholesalers need a steady source of deals, which almost always involves setting up and running marketing companies to produce leads. Since your husband is already an agent producing leads, the hard part is over. However, if he works for another broker he will need to check with them to see if they are okay with wholesaling on the side. Most brokers want their part of the commissions for any transactions they agents complete.