All Forum Posts by: Aaron Wortham

My question is two fold:

The first part of this is that I have a long time friend who is a general contractor. We have discussed him running the rehab portion of investments in exchange for an equity share. Is there an industry standard for how much of an equity share to do here? Is this a 50/50 split? I want to make sure that he is well motivated to turn out a great project whether it is a flip or a BRRRR. I am handling the financing, legals, and have a deal finder as part of my team.

The second part of my question is: I am just beginning the process of raising private capital. I have been the lender before, so I know what interest rate I was given when I lent the money. Is there an industry standard range for private debt-partners/investors?

I am looking for a win/win/win situation here and am more concerned with building a great long term team and doing 1000 deals long term than I am about getting every bit I can out this next one. If I take a bit less, but all sides are happy, that should lead to many more deals in the future and we will all be better off because of it.

Thoughts?

Investment Info:

Single-family residence wholesale investment.

Purchase price: $295,000

This was a realtor's pocket listing. We initiated the contact and then passed off the property to a flipper friend.

I kicked off the summer with several goals that would stretch me.
The first was to run a mile in 5:59 or better. (The summer is not over yet).
The second was to get my first investment property under contract. My lead measures were: analyze 100 properties and make offers on 30.

What made you interested in investing in this type of deal?

My goal for the summer was to get something under contract. My buddy has a steady flipping business in the Portland area, so we decided to partner up with him in order to get some experience.

How did you find this deal and how did you negotiate it?

I have been running numbers on properties from the MLS all summer. My wife loves talking on the phones and interacting with people, so she started calling selling agents. She called this agent a couple times about some homes and he offered her a pocket listing.
Estimated ARV $500,000 and he thought the seller would take $300,000 for the property.
My flipper buddy went to the house and ultimately made the offer of $295,000.

What was the outcome?

My wife and I have added a valuable team player in this agent who offered the pocket listing. We are set to receive a finders fee for the property. (Probably between 5k and 10k) And we are back on the hunt.

The amazing part of this is that I had went on vacation, and then had a harder time finding 100 properties to analyze than I anticipated, so my lead measures for the summer are currently only 32 properties analyzed and 1 property offered on. And goal achieved!

Lessons learned? Challenges?

This taught me that this is indeed possible. Pocket listings and making purchases with these kinds of numbers seemed like a unicorn to me previously, but finding this has blown the glass ceiling off my world.

A couple of questions here - I 'think' there is only a 1 year owner occupied rule for FHA's? (I could be wrong on that) There is another forum post regarding FHA requirements here: https://www.biggerpockets.com/forums/12/topics/609067-fha-owner-occupied-requirements that you might take a look at. 

Also - did you refinance into another FHA? Or did you get a different loan program from your local lender? If you refinanced into a different loan program, then you are good to go.

Ultimately, this might be a question for your lender or a thorough reading of your loan documents.

Thanks guys - I appreciate the input. I hadn't thought of only signing for properties she is showing me. Might be a good thought. 

I started talking with a realtor about a week ago and was assured that she was the investment specialist in their office. She said she works with lots of investors and would love to help me find my next investment. I decided to run a few properties past her and asked her to run comps on a few addresses.

I was surprised when she got back to me - not with comps, but with her opinion of whether the property was worth investing in based on her comps. I haven't seen the comps and still don't know what a good ARV might be, but then immediately after, she sent me a buyers contract that she expected me to sign. This contract would lock me in to with working with her.

I'm not yet sure I want to work with her, especially in light of the fact that I didn't get comps or ARV when I asked about them. But is this a normal thing for realtors to do?

Also - is it normal for them to give their opinion on whether a property is a good investment or not, without presenting any numbers?

I had pictured that I would run the numbers and decide whether it was a good idea to move forward or not and the realtor would provide market insight and provide comps for me. 

I could be wrong though. Pretty new at this. Thoughts?

@Jared Stoneman One to think about when considering a move to Colorado is all the little micro cultures. For example - Boulder is very left wing liberal, while Colorado Springs has a strong military presence and a lot of churches and so is much more conservative. If you are strongly opinionated in either way, that could be something to think about.

Another thing is the amount of snow you want to get at your place of residence. There are places in Colorado Springs that do not much snow, but do get a fair amount of wind. However, 20 minutes north in Monument, you might get a couple feet at a time. It feels much more mountainous there, forested areas and you are closer to Denver, and if you you enjoy the increased snow - that might be a good place. 

If you are looking for an area that has a strong tech presence, then Boulder or maybe Castle Rock will be your jam. I recently read that Thornton was up and coming because it is midway between the tech companies in Denver and the tech hub in Boulder. 

I'm not sure of good resources to point you to, but if you can find a local who lives in the areas you are looking at, that would be a big help. 

Feel free to direct message me if you like and I'll do my best to answer. I lived out there for around 14 years and still have lots of family in the area.

Perfect. Thanks @Christopher Orr. I'll reach out to them.

I listened to the recent podcast titled "How to Laser-Focus on the Wildly Important With Author Chris McChesney". I absolutely loved it. It resonated big time with me and I've listened to it more than once and taken notes. 

In it they discuss 4 main points: 

1. Set your wildly important goal (less than 1 year)

2. Focus on your lead measures (3 battles that if you win those, you are betting you will achieve your WIG)

3. Set up a score card to track those so that at a glance you can tell if you are winning or losing.

4. Find a weekly accountability group/partner to weekly review goals.

My question is regarding the 4th point here. I do a lot of talking about my real estate goals with those in my circle, but my current group of friends are in one of 3 categories:

1. All they see is risk and would never do real estate

2. They like they idea of real estate investing, but just aren't ready to get started.

3. They are already beasts in the real estate world (too many steps ahead for me to be good accountability to them).

I'm looking for a master mind group or something along those lines in which myself and others can accomplish the 4th point above. But I'm not sure where to start. Are there master mind groups available here on bigger pockets somewhere? I've attended a couple of local meetups, but haven't yet made the local connections. 

@Davian Brown are you talking about a short sale? Can take months. No rule

Hey @Tramone Russell You might take a look at David Greene's book Long Distance Real Estate Investing. It's an excellent resource for learning how to set up systems to handle and manage real estate from afar. It takes a little extra work, but you are definitely not tied to one location. The world is getting smaller as technology opens doors and lets us contact people, send video, build teams and buy or sell real estate without ever stepping foot on the property, if that is what you desire.