Just Starting Out
I will be attending a workshop given by Success Development in about 4 weeks. I am very excited, but don't want to wait that long before I get started. Should I go ahead and form a LLC and start looking for deals or just do more research. I want to get started flipping properties. What is the best way to do that? How do I find money for buying properties that I want to flip?[ Edited by kjack871 on Date 12/18/2003 ]
Hold off for a little bit before starting the LLC, though that is recommended for flipping properties.
When you have a prospect that looks promising, you will need to form your LLC, which depending on your state, can happen very quickly. Look into your states costs and rules re: LLC formation
You WILL need your LLC formed before you make offers or do flips because you NEVER do deals in your personal name, always in the name of your business entity.
Check your private message box for some more info. Thanks, Dave
You don't need money to flip properties, just get a property under contract for 60% - 70% of market value (minus expenses, repairs, and your profit) and then assign the contract for a fee.
Example:
House, after repair value (ARV) = $100k
Repairs = $10k
Marketing, Holding costs, misc = $2000
Your Profit = $2500
So, to flip this property you must get it under contract for:
( 100k * 0.70 ) - 10k - 2k - 2.5k
= 70k - 10k - 2k - 2.5k
= 70k - 14.5k
= $55,500
So, you MUST get this property under contract for $55,500 OR LESS, or you will not be able to flip it to a retailer. Many people get emotional and don't run the numbers, or they "adjust" them so that they work out to be a good deal. Don't do this.
The hardest part is finding a seller who is motivated enough to sell at such a discount.
iglooman
It's my understanding that if you flip a property you do a simultaneous close. You match the buyer to the seller and take the profit.
Check your pm for some info I just received today that may help you.
"you NEVER do deals in your personal name, always in the name of your business entity. "
Dave, why is that? I have heard from other professionals to get a few deals under your belt before you consider forming an llc. I know lots of people that invest in their own names, with no problems. the way I understand it, An LLC is used to protect your assets.Well if youre new, you probably dont have much assets to begin with. Kjack, concentrate on finding the great deal, not forming a company.
Craigthecubfan
we live in a litigious society, like it or not, and if you put your name on that document, YOU are on the hook, you meaning you and all of your personal property, assets, accounts, etc.
Why would anyone take that kind of risk? The investors you speak of are winging it, regardless of whether they clear $100k profit per deal or $1k, they are taking a big risk.
I agree on concentrating on finding the deals first, but you are giving dangerous advice if you are encouraging people to do deals in their own name.
I have spoken to heavy hitter investors and lawyers who are all millionaires, and they all the same exact thing.
Dave
Whether or not you form your LLC is a personal decision that you need to make. When some people say it isn't necessary, they basically don't want you to not do anything because you don't have it. In other words, if a deal is in front of you and it is a great deal, do the deal and worry about the LLC later. It isn't required.
However if you are going to make a living doing deals, then you should definitely have an LLC or something. You should talk with an accountant and attorney to decide what is best for you.
You don't need to wait for the seminar to get started. The best education that you are ever going to get is in the field, so get out into the mix with others and start to get to know your neighborhoods. Knowing your neighborhoods well is the single most effective thing you can do to be quick in evaluating deals. Quickness is what makes or breaks you as a flipper.
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