Here is my thing. I know that REI is for me and I’m ready to try to get the ball rolling, but what would you do in my situation.
My first choice would be rehabbing fixer-uppers, but I work 50+ hours a week. I do however get off by about 2pm because I go in so early. Is it really realistic that I could work w/ fixer-uppers having contractors do all the work if I’m not able to be around that often on the jobsite? I don’t have any relationships w/ independent contractors right now so I would have to completely trust some stranger. I do know a few people that would do some work… a floor guy, sheet rock guy, cabinet guy…but for anything else I’d have to use someone I don’t know.
Even though rehabbing would be my first love should I look into other methods?
Since you want to go into rehabbing and contracting it out can sometimes be costly plus you can not do it all yourself, look into partnering with a GC that can do all the work and will get paid a percentage of the profits when you sell.
To maximize your profits, create a corp with you and your GC for tax benefits. The 1st deal will make the expense of a corp worthwhile.
There are many GC that can do a full rehab but are just looking for the money man. I do that now. I do not have time or skills to do rehabs,so I provide the financing and he finds the properties, negiotates the price and does the work with his crew and designers. In return when the home is sold, we split 50/50 from the gross profits…been working great since we do about 4-6deals per yr this way wth avg profit of 70-100K per deal divided by 2…
Wow that’s a good idea. Haven’t came across that in any of the books I’ve read so far. I have a question though…if I found a contractor that would do this with me and formed a corp. like you say would I be stuck in it w/ him forever and never be able to go off on my own?
The cost to file a corp is very inexpensive and is tax deductible for the corp. It is to provide a tax shelter on your profits since you want to flip. I flip properties and because how I have my corps set up, i pass all my income over to my personal income and pay a small portion of what a regular flip would be especially since i own the property for less than 1yr.
I open 2 corps with each person i do joint ventures with, price is $2020 for the 2 for me. This fee outweighs the tax benifit. I generally pay only about $8000 in taxes per $100,000 in profit based on a home i have owned for less than 1yr…So 8% with the LLC or 27% without it… You choose…
Also the corp will protect you from lawsuits as well and problems you may have with your partners.
Just remember to dissolve any corp you plan on not using as you are required to file taxes each yr regardless…