Buying one per month? How?

Question

I see people on here discussing adding one new home each month, 8-12 each year. How are they able to do that?

I am just curious about the dynamics of how they pull that off (mainly the financing).

Also I'd love to hear any creative financing tips anyone wants to share.

Thanks

Aaron Mazzrillo · Answer

I'm averaging 1 per week right now. I like to buy at a big enough discount to allow me to choose which exit strategy I want and not let the deal dictate what must be done. Wholesaling is my primary conversion to cash, retail is secondary and finally, I hold the properties that I get seller financing or subject to financing on.

Under my retail program, I do a lot of as-is priced below market sales. I might spend $5K max on general clean up/trash out and repairs, but I'm definitely not replacing kitchens, bathrooms, painting, flooring, etc. More like termite work, home inspection punch list, and safety issues. I sold one as-is recently and we tore down a poorly constructed addition on the garage, installed a toilet paper holder, some screens on the windows and a stove. I'm hoping to close another one today.

On my heavy fixer flips, they must have a minimum $50K profit. I'm doing 2 now that are much further north of that number. I use a private lender who charges me 2 pts and 12% interest. Some people in my market have much better rates, but along with the money, my private lender has successfully flipped over 2,500 houses and owns a good chunk of commercial real estate. So I gladly pay more because I get the added bonus of experience I can tap into. I'd much rather borrow money from him at higher rates than from some guy working in a totally non-related field at lower rates.

Another strategy I use when money is tight, is to put together a rehab deal and close it with my private lender's money. I pay all the monthly carrying costs. Then I partner with another rehab/flip investor and have him pay for and oversee all the rehab. When the deal closes, we each get back all our individual invested cash, and then we split the profit 50/50. I currently have 3 houses I'm doing this on.

Dawn Anastasi · Answer

@CL Tumlin typically that's not a newbie strategy. Once you build up a relationship with a bank, they will allow you to take out loans as long as you meet their financing criteria and the investment is a good deal.

Account Closed · Answer

Cantu has some memorable ones.  I was at his first Real Estate Island presentation years ago in LA.  I loved the story about him being grateful for REI working out so that he could be self employed because his worst fear was being caught in rush hour LA traffic with a giant cup of coffee and a bran muffin.

Account Closed · Answer

I remember you writing about the thing about tile and carpet in another thread awhile back.  I had never noticed it before, but now I notice it every time I go into a bank.  Especially last week when I went to my business bank (small locally owned) to get a cashier's check. They had recarpeted the entire floor, including the teller area (which is sit down counters only).  No tile!  I'd say they are addressing the public perception on this issue.  One of the owners is the Kinko's guy.  Perhaps he knows a few things about public perception.

Aaron Mazzrillo · Answer

I have to give credit where it is due; I got that saying from Mike Cantu. Well, to be fair, most of what I do and the way I approach this business is a derivative of his philosophy with some Jack Miller, John Schaub and a lot of Peter Fortunato mixed in.

Aaron Mazzrillo · Answer

If you want to be successful in this business and get some traction going, you seriously need to look elsewhere for financing. Banks are not in business to make you money. Once you realize that, you'll only walk on the tile and not on the carpet when you go into their stores.

Jay C. · Answer

CL,

Your right, that kind of buying you better have some big pockets. Many folks who post that are buyers for hedge funds and yes they have the deep deep pockets of wall street behind them. The Joe average doing this or trying to do this in many cases are leveraged to the hills. Between those guys and the idiot banks who loaned them the cash they tanked housing in the late 2000`s. Be smart and dont use those cats as a roll model. Do what you can and do not over extend.  You will be buying those levered to the hills properties for a discount down the road. History has and always does repeat itself.

Brant Richardson · Answer

A lot of cash and a portfolio lender is one strategy.  If you have the cash (or hard money lender) to complete a few properties then you can finance them with a portfolio loan.  The speaker in podcast 64 is doing this.

Roger Rouse · Answer

One a month is going to require some deep pockets to cover the down payment requirements.

After four, the down payment requirement for a conforming loan goes up.  After 10, you can't get a conforming loan, so the bank will need to loan to you directly.  Since they are now risking their money (instead of selling it off to someone else), the terms will get worse again.  It will get more difficult to get fixed rate financing.

Also, any single bank is going to want to limit its exposure to a single investor.  If one loan goes bad, chances are they all will.  So you will need a relationship with multiple lenders.

Levi F. · Answer

We've realized closing one per month is a lot of work. We are setting up a procedure in steps to simplify the process. Just a step by step checklist taking us from accepted offer through to setting up utilities so nothing gets missed or even causes delays.

Buying one per month? How?

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