Anyone have experience with Mike M. ?

Question

Mike M. you are always touting your killer strategy for the Phoenix market and I wonder if anyone has actually worked with you and gone through the process. If anyone has experience working with Mike M. and is willing to share I would love to hear about it.

Account Closed · Answer

I've bought two from him and I'm getting ready for my next one. I can vouch for him. Have you tried to reach out to him directly? Anyway, he has a program that if you buy two he teaches you to do what he does. I'm in that program and I can confirm he is real and it works.

But, who are you?

Noel R. · Answer

@Scott B. I did not. It appears this dude promotes the ish out of himself wherever he can on here and may have success but no one wants to vouch for him

Account Closed · Answer

Sure. I can email you the paperwork and the checks of actual deals. It works in most markets but not so much in CA or WA. Here's one I did in AZ. I'll even tell you the pros and cons,. How many turnkey providers will do THAT for you? ;-) I even teach people how to do what I do, imagine that! (and how to Avoid the Mistakes I made getting to where I am) It's for Safe, Secure, Long Term, Cash Flow, Investing, enough said.

3 Ways to Wealth in Real Estate – Fix & Flip, Buy & Hold, Turnkey (Cash flow) – Here’s How

https://www.biggerpockets.com/forums/311/topics/780022-3-ways-to-wealth-in-real-estate-cashflow-flip-hold-here-s-how

Mike M. · Answer

@Account Closed

Dang. Stickin it to ‘em. Did you happen to take Blair Halver’s course?  I’m interested in the more transactional RE and I’ve just recently read about this. Any suggestions on resources to get smarter on that?  Thanks!

Scott B. · Answer

@Noel R., did you ever get any feedback on this? I PM'd him and he sent me some super-sketchy website with the world's most generic domain/company names so researching it was a bit hard. It's an interesting strategy that I was actually keen to investigate some more, so curious what you heard back.

Account Closed · Answer

These are Turnkeys. I find "off market" properties, I take over the loan using Subject To, give the seller cash for their equity and prepare the property for Tenant Buyers. I make the property safe, clean, and livable. These are in decent neighborhoods where it is safe to take a walk in the evening.  I do not rehab the property. These are not Fix & Flips, though they could be if someone wanted to but that isn't the objective.

Then, if there is little equity, I keep the property, put in a Tenant Buyer who gives me $20k to $25k on an Option fee. And I cash flow it for $500 a month or more. If there is a lot of equity I sell it as a Turnkey for usually $60k to an investor. The numbers have to work for an investor or I just keep it in personal inventory. The investor takes over the loan (no bank financing needed), the Title is transferred into the investor's name, we put a Tenant Buyer into the property on a Lease Option who gives the investor $20K to $25k for an Option fee, the Tenant Buyer does all maintenance and repairs, so there is no CapEx to the investor and the investor gets the cash flow of $500 a month or more, the investor gets the tax write offs and the principal paydown, etc.

These are usually lease optioned to the Tenant buyer on a 3 yer to 5 year LO. If the Tenant Buyer exercises their Option, the investors gets the rest of the equity and usually reinvests into more of these, but doesn't have to. Many tenant buyers stay in the properties for years and years and years and don't exercise their option. It's their choice. That means ongoing cash flow for the investor along with principal pay down and tax write offs. I don't calculate appreciation into the mix because markets go up and markets go down.

This is NOT zero down. There is no such thing. An Investor needs the initial investment plus money for title, escrow and closing costs. The investor needs cash available to cover the underlying mortgage payment, electricity, water etc for the time that it takes to find an acceptable Tenant Buyer. It takes 30 days to find a Tenant Buyer willing to put $10k down and 60 days to 90 days to find one who has $20k to $25k to put down. I choose the larger amounts because it means the T.B. is more stable and plans for the future. Any investor should have a reserve of $5,000 for a property to cover expenses. Remember, you are taking over someone's loan and that loan has to be paid whether you have a Tenant Buyer in there or not.

The typical mortgage payment is around $900 - $1200 a month PITI. The typical rent from the Tenant Buyer is $1650 to $1950 a month. There are no "rehab fees, management fees, gotcha when you weren't looking fees" that you typically see in the Turnkeys in the midwest. These Turnkeys have built in equity in nice neighborhoods and because they have equity they are Safe and Secure Long Term investments meant for passive investors. Some investors have me train them to do these on their own and there is a program for that as well.

These Turnkeys are also a little harder to find than the typically Turnkey so patience is a virtue.

Pitfalls: These are the things you need to know

1. It requires money, not as much money as trying to buy a rental and get $100 cash flow, but it still requires money.

2. There is a Due on Sale clause on the mortgage. That means the bank can (but rarely does) call the note due. I've done these for 25 years and I had one called in 2008. I paid off the loan and everything was fine. Other solutions include "assuming the loan" formally, using Hard Money to refinance, working with the seller to make the bank happy, selling the property and several other solutions. When a bank calls a loan due it is a 90 day to 120 day process which gives you time to resolve the issue.

3. These require expertise to do correctly. Naturally, I provide the expertise.

4. Some people who buy Subject To try to hide it in a Land Trust or not record the Deed. In my opinion that is a big mistake for reasons I won't go into now because it gets pretty technical.

5. Some people who buy using Subject To don't use title and escrow, again, In my opinion that is a big mistake for reasons I won't go into now because it gets pretty technical.

6. Some people who buy using Subject To don't fully disclose to the seller and the buyer what is transpiring, again, In my opinion that is a big mistake for reasons I won't go into now because it gets pretty technical. Everything needs to be fully disclosed in writing so that all parties are aware. It's the only ethical thing to do.Your comment: "Do you have any strategies for turning 500K into $1million in 5 years?"Turning $500k into $1M within 5 years is very doable. I could work out the math on how that would look, but that isn't particularly aggressive.

Wilson Linder · Answer

Are the tenant buyers doing like a rent to own deal with $20k down?

And I'm wondering what motivation do the sellers have to do this?  Struggling to make payments so this is a sale without closing costs?

Tony Kim · Answer

Interesting. Will send you a PM.

Thanks for summarizing!

Tony Kim · Answer

Hi Mike,

The process you described in the thread you linked requires very little initial capital outlay. You are giving these sorts of deals to your clients for a fee? What exactly is it that you provide for your clients? Do you have any strategies for turning 500K into $1million in 5 years?

Anyone have experience with Mike M. ?

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