It’s official… Restorations by Day is closed for business.
Sat down this weekend to do books and look at money in/out for my business, which I had not done in quite awhile (I’ll slap my own wrist).
I started out on my own 6 years ago doing reno’s, roofing and filling in the holes with handyman work. Around 4 years ago I got into house flipping and got my RE license so I could buy and sell my own properties. I have managed to stay constant through this downturn with both the construction business and as a Realtor. Around 9 months ago my wife, an engineer, received a job offer she couldn’t refuse and we moved to near Kansas City. I changed brokerages and moved all my tools and started the business up here.
I have been able to pick up a couple of jobs and resumed real estate activities as well. I have found myself spending more and more time dealing with business as a Realtor with construction seemingly getting in the way. I spent a lot of time and money advertising for both and working with RE clients and writing bids.
It has come to the point where I can’t do both effectively and am neglecting both to do both. I have known this for months but yesterday I looked at the books and it kind of hit home. With insurance and overhead I have lost thousands of dollars this year on the construction business and as a Realtor and investor I have made quite a bit more than I ever did in construction in my best years. Talked to my wife last night and showed her the numbers and I have her support. So as of today I am closing up shop. I had 3 bids out, 2 decks and a kitchen, that I called a withdrew.
I am still going to be doing construction work, but it will only be for myself on my rental properties, flips/investments and my own home. In the next few months I need to decide what tools I need to keep and what is better to be rid of and rent if I need it, eg scaffolding, the gas powered compressor,and the transit are getting sold.
I’ll still come here and post, though I admit I do more lurking than posting.
My DW says this is a good thing even though I am a little apprehensive about not having a plan B, will miss the actual work and when I got my RE license I swore I would not be sucked into doing it full time.
Guess it’s time to jump,
-Day
Replies
Sounds like you made the right decision. Don't second guess it for a minute.
We don't like realtors around here, so you'll have to leave BT.
(-:
Seriously - I hope you find that you've made the right decision. Best of luck with the new gig.
Hey, Its not like I'm selling John Deeres.
Houses and some commercial real estate.
Well, you know me - Always poking fun.(-:
The existence of a market does not guarantee the existence of a customer.
Boss, any good online source for MF parts?
Got that backhoe I posted about somewhere here, Catskinner delivered it to my new place couple weeks ago. Nice guy too by the way.
It needs a little TLC and no local dealer so gotta be shipped to me anyway so online is it.
Joe H
My first suggestion would be to get your own parts manual. That way you can look stuff up yourself and get part numbers. They can be had at Ebay and probably other sites as well.Take the parts book with you when you go buy stuff. That way you can point at stuff and they can cross reference part numbers. I don't really know of any online parts sources. But most major farm equipment suppliers can now gets parts for all makes and models of equipment. If you go to a CaseIH deal they won't have MF parts on hand, but they should be able to get them in a day or two. You could also find your closest MF dealer and call them directly. Any dealer should be able to ship stuff. If they don't have something on hand they should be able to ship it directly to you.
Never trust a stockbroker who's married to a travel agent.
My local dealer (here in Cedar City) was able to get me the parts book & the service manual so I'm set for books.
Guess I'll see what dealer is local when I get down there (next week if escrow closes)
For now I ordered a brake part I need from the dealer in Gallup, they had it in stock and will mail it to my PO box so it'll be there when I get there.
Thanks, Joe H
Day,
You might want to talk to an accountant about the advantages of keeping your business open on paper but, its only customer would be you with your real estate flips ? I know someone that does used cars, but also has an auto repair business on paper just for repairing the used cars that he sells ?? Does not make sense to me, but he says there are tax advantages. Just something to look into.
Bill Koustenis
Advanced Automotive Machine
Waldorf Md
Yes there are tax advantages to keeping the business open.
I have several LLCs one was the construction business and another is for short term buying and selling houses (flips), another is for the rentals and yet another for my RE income. They are separate and limit liability and allow me to get taxed at a business rate rather than a personal income rate. If I get sued the worst that could happen (theoretically) is I could lose the current assets of the LLC, a good lawyer can 'pierce the corporate veil' but it helps. -Day
So, it's been a couple of months now...............how are things working out?
"When the spirits are low, when the day appears dark, when work becomes monotonous, when hope hardly seems worth having, just mount a bicycle and go out for a spin down the road, without thought on anything but the ride you are taking." — Sherlock Holmes, 1896
Did not see this until just now, I have been busy. I did $500k in volume last month, and am going to do just over $3.5m this year I think. I have an investor I started picking up foreclosures with here and am flipping again. I will post more later.
so were discussing this in another thread.
you hold a license,buy ,resale for profit. are the profits taxed like self employment incld social security?
hows kc holding up,here in wichita we have just got started with the slow desent.
the older i get ,
the more people tick me off
man... never look back... just evolve...
I all but never look at my books... I enjoy what i do every day that i do it... BTW I ONLY work on my own property and only build my own projects... and i have more tools than god... no reason to ever get rid of a tool... unless you have no place to store it or just have to have the cash...
Not that anyone would hire me to work on their property anyway... but i could never see anyone hire'n me... heck if i didn't work so cheap and bring my own tools I wouldn't even use me...
man enjoy the new road...
p
My buddy told me that he was incorporating in Delaware because they are one of the few states where the coporation's other holdings can not be gone after if someone sues another...
I have a couple of LLC's set up in my home state (if only for ease of management) and keep separate the business of each. It is not easy but it limits my exposure, or so I have been told. One is for my rentals, one is for my construction business (I closed the 'Restorations' one and this one is exclusively for flipping), one is for my RE commission income. I am under no illusions I could lose it all if I really screwed up and a good lawyer went after me but I try to carry good insurance... E&O, Umbrella, so on and try not to put myself in a position where I could get sued. I work with a guy who has an LLC set up for EACH rental he has... he ends up paying his accountant a lot of money.
Have you considered holding the propertys in a land trust? The reasoning behind this strategy is that it hides the name of the property holder even though it is all public record. A search of the public records will show up all your properties that you hold but the searcher would have to know which land trusts you are the beneficiary of.
Actually the properties are all owned by the LLCs. Title is taken by the LLC and that is what is on the public tax record and public deed record. If you look at the public record for the LLC you will find my lawyer as the 'Agent'. The mailing record for the property taxes is my accountant. If you go to the recorder's office and look at the actual deed of trust you will find my signature but frankly you can't read my name from it. Yes I see the benefit of a land trust but it is not common practice around here.
The method of buying and holding the properties in the LLC makes sense. I had a problem getting a loan without moving the prop into my own name though. The Land Trust idea further insulates the LLC. Instead of opening a new LLC for each property, the LLC can be the beneficial owner of the trust, and many trusts. The idea is this: when someone decides they want to sue the LLC, the lawyer will search the public records to see if there are some deep pockets. A search of jimAKAblue LLC will turn up no property records. If they searched "jims family land trust", they would find one property. If they searched "blue land trust unlimited" they might find another. It makes the task of finding assets incrementally harder. So the conversation between the suing tenant and lawyer might go like this: Tenant..."can I sue?" Lawyer: "Its not worth it...I found only one property and it has a 110% mortgage on it. There aren't any deep enough pockets to go after. If you will put up a $5k retainer, I'd be happy to file a lawsuit". You are allowed to file a mortgage on your own property...right? Yes, you can record the 110% mortgage in the name of any one of your entities. This further obfuscates the situation. Land trusts are extremely easy to create but you should make sure the first one (your model) is done properly in your state. After that, you only have to switch the names in and out. The trust document itself is not public record. You keep that document in the safe. The beneficiary is public record. The normal routine is to name the seller as the beneficiary, and then in the next document, have him sign over the beneficial interests to you. His name shows up in the public records because you don't record your secondary signing. You do that on the exit.
jim i'm going to read that post about 50 times and come back with questions.....
i really need to get my stuff isolated a little bit.the older i get ,
the more people tick me off
Sorry AOB I never responded to you.
Yes, I hold a license and represent myself in the purchases and sales. For purchases I get paid the full commission and I split $500 to the brokerage I am licensed under, for sales I just pay $500 to the broker and no commission gets paid except to the buyer's agent. I never ever will represent the buyer of a property I am selling and own, too easy to get sued.
The properties are bought under an LLC and I often have a partner so the profits are taxed at the business rate rather than the higher (in this case) personal rate. I then pay myself and do not pay taxes on that but I do withhold SS. My understanding of it is crude at best and this is the best of my knowledge. Honest to god, I have a tax accountant that I trust and he tells me when I need to write a check and for how much and that is that. I think if I tried to do them and understand them myself I would get myself in a lot more trouble and lose a lot more money than what I pay him.
Said I would post more later...
I am happy I made the leap. I am home to see my 2 year old and my wife more now than I ever was before and much less stressed out. Granted it is Real Estate sales so there is a fair amount of stress but it is not as bad as running two businesses.
I miss being able to create things but the business end of contracting always seemed to take the joy out of that. There really are days I wish I could go back to swinging a hammer but I have enough to do around my own house to keep me happy.
As for business wise, I am doing quite well compared to other agents and I feel like I am gaining steam. I have a couple of houses ready to go on the market in the next three months that are in that price range that is getting snapped up by first time buyers.
That tax credit is really helping but I see some trouble in the future couple years but I doubt it will slow recovery of the housing market that badly. Mortgage interest rates will go up to 7%-8% within the next three years as the stock market gets better and the tax credit did move up buyers that would have bought within the next two years anyway so there may be a drop off in first time buyers which is really what drives the market. I think that a lot of these people that have been foreclosed on recently will hop back into the market when the economy recovers... hopefully in a more reasonable manner.
When I was contracting I just saw that as being what I would do for the rest of my life as long as I had good health and a good back and having rentals as my retirement plan. Now though I am not sure what the future holds... but I know it does not rest on me having a good back 30 years from now.
-Day