Cool my jets or get into the game?

Question

Before I ask a question, I try a keyword search.  However, I may not be using the right keywords.  So if this has been answered before, feel free to post a link.

Two part question.

1. I have a plan, to save the 20% down + reserves, for my price target by June 2014.  Yet I feel like I should be doing something materially proactive, aside from reading and researching.  Should I just cool it and work my plan or should I try to push my way into the game?  Aside from the funding aspect am I fooling myself with a delay or being prudent to ensure I am properly capitalized?

2. If I should push. A seller finance situation with sweat equity would be ideal.  I'll do anything except 220 lines.  Are there any examples of ads on BP that I could build upon, to make sure I am talking the same language and model a deal that is to the benfit of both parties?  Since my targets are MFRs, my potential sellers will be other investors.

Thank you and have a great day.

Steven J. · Answer

Michael Spindler,

As your starting out I really think the investors meeting is a way to go. I know its built my confidence and because I attend many in my area people recognize me and remember me, even though I haven't done a deal yet.

I would also recommend doing what I'll term 'fake' wholesaling. Go through the processes as much as you can to follow on wholesaling without spending the money on marketing campaigns. The reason I recommend this is because you'll be in talks with people, you'll get told no a number of times and feel really crappy when things don't work out for you. Get used to it because my guess is the first property you want to go after you will get told no about something on it. And if it doesn't work be prepared to walk away.

If you do manage to find properties cheaply doing this you'll also get into negotiations which that practice will help down the road. And if you close on a deal GREAT! That's just more money towards your goal. If you're told no a number of times, no worries, you'll only have time invested into it, which in this case will be real world experience of dealing with sellers. Hopefully, when you find the property you want you can go back on this real world training.

Good luck!

Dawn Anastasi · Answer

Michael Spindler - everyone started somewhere!  I was nervous to go to my first REIA meeting locally and it turned out great!

Regarding finding a property, there's nothing wrong with pretending that you are going to buy now even though you are going to buy in a year.  If you want to leave an agent out of it for now there's still lots you can do.

a) Research the MLS to determine prices.
b) Drive around the neighborhoods/zip codes you want to invest in to really get to know the area.
c) Even better, park the car and walk the neighborhood.  You notice a lot more when you walk around than when you drive.
d) Do research on agents -- who are the best to work with?  This information can also be gained by your local REIA meeting and speaking with other investors.
e) Firm up your plan:
- Where your target neighborhood/zip code will be.
- Your desired price point.
- Your desired level of rehab. (Get contractor references through the REIA.)
- Property management companies. (Which you can get referrals for through REIA, or if you want to self-manage, landlord contacts you can bounce ideas off of.)

When you come across a property on the MLS that you like, perhaps speak with an agent about seeing it.  Then do a walk through and estimate rehab costs to get it rent-ready.  Create a spreadsheet.  If you do this enough times you'll feel way more prepared in a year.  Also perhaps there is another investor at the REIA meeting that will let you tag along on a rehab project to see how it works.

Michael Spindler · Answer

Hi Shera,

I do appreciate your insight and experience.  Thank you.

The next monthly meeting is on July 18th, both an eternity and yet one of many before I can make the first deal.  I do have my business cards ready, but am nervous as a you could possibly imagine.  In my mind, they are rock stars.  I expect I will be dismissed for awhile.  As you say, there is a bit of a revolving door in the business and others will behave accordingly.  Chin up I suppose.

The credibility is the part I am finding difficulty with.  I don't want to waste a realtors time looking at properties, myself knowing full well I can't buy at this time.  I respect the value of ones time and do not wish to impose upon them.  Or do they expect this to some degree?

Again, thank you for your time.

Michael Spindler · Answer

Shera Gregory

I just wanted to share this with fellow newbs.  Anything in this business is possible.  Provided you have the resources in either money, time, or labor.  One way or another, you are going to pay in some form.

The seller was kind enough to entertain a workable solution, something I did not think was going to happen.  However, I had to turn this opportunity down.  Though golden...  I know, what was I thinking?  Primarily, my resources in all 3 categories are limited.

I wish this person only the best and am grateful to him for a renewed sense of purpose, spirit and direction.

--- On Mon, 7/8/13, craigslist ********@sale.craigslist.org> wrote:

> From: craigslist ********@sale.craigslist.org>
> Subject: Re:Investment Property - 4 plex
> To: *********@reply.craigslist.org
> Date: Monday, July 8, 2013, 1:07 PM
> I can have
> available to look at today at
> your convenience.
> 
> Sorry I am currently out of
> town and
> cannot be there but you can look.
> 
> Three units are rented and
> unit A top
> right is vacant. 
> 
> Let me know what
> time.
> 
> Call to discuss
> options.

Shera Gregory · Answer

Michael Spindler Looks good!  Keep us "posted" .. pun intended.

Michael Spindler · Answer

Shera Gregory Thank you for that. Simple and straight to the point. : ) Here is my reply and we'll see what happens. Back to the books. : ) Have a great weekend. --- On Fri, 7/5/13, Michael Spindler wrote: > From: Michael Spindler <*****@ymail.com> > Subject: Re:Investment Property - 4 plex > To: "craigslist 3867980141" <*****@sale.craigslist.org> > Date: Friday, July 5, 2013, 5:49 PM > Hello, > > I do appreciate your reply. > > My goal is to buy a property of this type. Can we discuss > alternatives to a cash down payment? Your ad does > mention a partial remodel. Perhaps we can come to a > mutually beneficial arrangement? > > If you would like to discuss further, I would be more than > happy to meet with you at the property. I am free > Saturday through Monday, but can make arrangements if > another time is more suitable to your schedule. > > Thank you and have a great day. > > Sincerely, > > > Michael J. Spindler

Shera Gregory · Answer

Hi Michael,
One thing that I learned from biggerpockets is that you always learn something from starting to engage with a real deal even if it doesn't wind up being something you buy.  So this is a good step forward because it makes the whole process much more in the realm of reality vs theory.  Just remember that you don't HAVE to buy anything if it's not right and/or you aren't ready.

I don't have much experience dealing with craigslist postings for property but it seems to me that you would want to get into an actual discussion fairly soon vs e-mail negotiations.  So I would keep it very simple.  Something like "My goal is to buy a property of this type.  Can we discuss alternatives to a cash down payment?"

Michael Spindler · Answer

In reviewing the ad: (sorry about the caps)

INVESTMENT PROPERTY: GREAT CASH FLOW FOUR PLEX - $110000 (INDEPENDENCE)
GREAT CASH FLOW :: 4-PLEX FOR SALE IN INDEPENDENCE. PARTIALLY REMODELED, 2-3 BEDROOM UNITS, 1- 2 BEDROOM AND 1- 1 BEDROOM UNIT. HAS PATIO AND COVERED PARKING.
NEAR STERLING AND WINNER ROAD
MONTHLY INCOME OF $2000
ASKING 110,000 Make offer.
Possible financing.

What I get from this is someone with a possible cash problem as the property has only been partially remodeled.

Would a reply back be along the lines of a sweat equity arrangement?

For example:  "In lieu of a cash down payment, would you consider... me to complete the remodel over a 6 month period, I will cover costs and labor.  In turn, you carry the loan at 6% for up to 3 years at most, until a mortgage can be obtained by me.  During this period, I would collect the rents, starting from the date I begin work."

Feel free to shoot this down.  : )

Michael Spindler · Answer

Steven Johnson Your timing is impeccable. (I will definitely go to as many events as possible. It is easier to say hello to a familiar face.) On July 4th, I found a seller of a four plex that was open to options. I sent an email, just to get an idea of what he thought were options. He just replied back... asking What can I offer as a down? The problem is, I have no down. Is there a way to approach this? I was not at all prepared for a reply. Thank you everyone. --- On Fri, 7/5/13, craigslist 3867980141 <********@sale.craigslist.org> wrote: > From: craigslist 3867980141 <********@sale.craigslist.org> > Subject: Re:Investment Property - 4 plex > To: ********@reply.craigslist.org > Date: Friday, July 5, 2013, 4:06 PM > I am open to options. > What can you offer regarding down payment > > Sent from IBM Notes Traveler > > Michael Spindler --- Investment Property - 4 > plex --- > From:"Michael > Spindler" > <********@reply.craigslist.org>To"" > <********@sale.craigslist.org>Date:Thu, Jul 4, 2013 6:56 > PMSubjectInvestment Property - 4 > plex > > Hello, > > In regard to your Craigslist posting: Investment Property - > 4 plex > > You mentioned possible financing options. Can you clarify? > > The CAP rate is very attractive, but being new to the > business, it will be 07/2014 before I can put down 20%. > > Thank you for your time, I sincerely appreciate it. > > > Michael J. Spindler

Michael Spindler · Answer

Hello Dawn,

Those are excellent ideas.

I have been practicing crunching numbers for the 50% rule.  I think you right, it is time to get into the field.  : )

Thank you!

Cool my jets or get into the game?

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