All Forum Posts by: Adam Sheren

Excited to learn from some some of the best minds in the business! Thank you @Joe Fairless and your team for putting this together! 

@David Thompson - Hoping we may have the chance to meet in person! 

It’s a tremendous (first) read. Not for someone who seems to already know everything they need too. Changed my life. Had I not read that book 7 years ago I would still just have a day job. Would love to hear some other recommendations for new investors, as this is who the book was geared too!

Thank you for Sharing, @Nicholas W. - not sure if anyone's mentioned this as I haven't gone through the 8+ pages of responses, but TECHNICALLY your BRRRR is not complete... until you repeat! Just messin' with ya. Looking forward to seeing the next one.

@David Boroughes what are going cap rates. Purchase price of $1MM with that NOI calculates to a 6.5% cap rate. After calculating debt service your roughly at 4-6% CoC (not great). If you could get for $850K and increase rents 10-15% with little or no cost to improve the deal looks much more attractive (12-14% CoC) Again, this is assuming the place is structurally sound and you don't foresee any Large expenses needed in next 5 years. Does your NOI include a reserve? You should add a 3-4% reserve as well. I hope this helps!

Is there any upside? Meaning is there room to add value to increase rents? What are market rents? What’s your unit mix? Expense ratio of 35% seems low? Perhaps means an opportunity to manage more effectively (meaning addressing some existing issues that would help the property and the tenants - could be a way to add value and increase rents) I would double and triple check. I would have to assume at 35% ($35,000 expenses vs. $100,000 gross rents) that all utilities are paid by tenants? With what you provided cash on cash would be 23-25% after you factor closing costs as well. What’s your 5-7 year plan? Or do you plan on holding for as long as possible?

They say you should always start with why; that what you do is not nearly as important as why you do it. The saying really plays to persistence and strong will - it reminds us to think deeply about why we do what we do, AND, if that 'why' is strong enough than success is only a matter of time, as a strong enough 'why' will never allow us to give up when things get tough.

This is also true when it comes to real estate investing. Now, I don't want to downplay the role of your personal 'why' - however, in every potential transaction you take part on from this day forward, the 'why' you should concern yourself most with is that of the sellers.

As we learn more and more about artful tactics to employ in our impassioned pursuit of the next investment, we must never underestimate the power of truly understanding WHY the seller is selling. Here are a few things to consider when getting ready to make that next offer.

1) Who is the seller?

Knowing who or what you're dealing with will help you diligently prepare an acceptable offer. Is the seller a middle aged single woman, a Bank, an investment firm, a down on their luck married couple, a couple going through a divorce, a growing family, an Estate? Knowing who the seller is will allow you to take an educated guess as to what aside from financial gain, could be motivating them to sell.

2) Why are they selling?

The first two points go hand in hand, who and why, and ultimately, are are usually not to difficult to put together. Once you know who your seller is, with a little bit of due diligence and detective work, you can almost always find out the REAL reason behind the offer to the market. Knowing the way will aid you in unimaginable ways when negotiating. As we all know, there is much more to be decided when purchasing an investment property than just the price. Knowing Who the seller is and Why they are selling could help you negotiate in the following ways:

• obtaining a reduced purchase price
• obtaining seller financing
• provide a lease-back option
• offer an equity stake in new development vs. cash at close

There are countless ways that the terms and structure of a deal could be altered to get you to the finish line, and sure, it's possible that you could get a win-win deal for you and the seller without knowing their true why, but just like you should always make sure you know what you're buying, you should just as well know why they are selling. With a little extra effort, you may uncover something that would steer you away no matter how good the price.

3) What do I have to offer (outside of $$$)?

Well to begin with, I hope you have access to funds - as in almost all cases, there will be some type of currency exchanged to take title. But outside of money, is there something you can offer that would be of such great benefit to the seller, that they would strongly consider taking less money.

Case Study:

The last property I purchased was a 5 bedroom 3 1/2 bath SFR in a great neighborhood. The asking price was at market value. I was looking for an asset with these exact characteristics for my next flip. When touring the property with the Seller's agent, I was able to find out that the Seller was a married couple who was in the process of building a new home. They had 3 kids and 2 dogs, and were unsure of when their new home would be ready.

I knew what the sellers may be going through. I had just sold my home as well, as my wife and I were getting read to build our new house. Let me tell you, the construction process can be a nightmare, and the thought of having two mortgages with a middle class income can be a very scary thought.

My wife and I were very lucky, and had arranged a place to stay (for the cost of utilities) while our home was being built. We were fortunate to have this lined up before even putting our home on the market, which took 3 months to sell, knowing that we had a place to go no matter when it sold.

We had no timetable as to when we had to be out of our home so we were literally worry free during the process.

This was not the case for the sellers of this particular home. While I knew the home was priced correctly, I also knew that I couldn't make any money on it without getting it for a much reduced price, 15%-20% less.

As I made my initial offer (18% below asking) I contacted the seller's agent and asked them to run a scenario by the sellers. What if:

I purchased the home from them and we closed as soon as possible, and then I would lease-back the home to them for the next 3-4 months, depending on how much time they think they'd need for their new home to be completed.

Seller Benefits:

Reduce anxiety of possibly having two mortgage payments

Eliminate the need for moving twice - once after the close of this sale, and then into their new home

Reduce anxiety of trying to find big enough space that is also pet friendly

Enjoy one last Thanksgiving and Christmas in their own home (not a rental)

Buyer (my benefit):

Get a quality investment home for 18% under market value

Have my first few months mortgage payments made for me through the lease-back

After a bit of back and forth, we were able to come up with an agreement at a price 15% below market value, with a lease back option for 2 months, with a one time option for a 30 day extension. The rental rate was $100 more per month than my mortgage payment with taxes and insurance, and they were to cover all utilities and maintenance during the 60-90 day period.

Ultimately, they decided that avoiding the anxiety of two potential mortgages and the hassle of moving twice was worth a deduction in their final net from sale of this home.

In conclusion, when considering your next purchase, strongly consider the following three items:

• Who is my seller
• Why are the selling
• What can I offer outside of money that would prove to be beneficial

The answer to these three questions could be the difference between a good deal and a phenominal deal.

P.S. It may not hurt to pick up a copy of 'Start with Why' by Simon Sinek either! Best of luck!

(disclaimer: I have no affiliation with author Simon Sinek and am not being compensated for the recommendation of this book)

They say you should always start with why; that what you do is not nearly as important as why you do it. The saying really plays to persistence and strong will - it reminds us to think deeply about why we do what we do, AND, if that 'why' is strong enough than success is only a matter of time, as a strong enough 'why' will never allow us to give up when things get tough.

This is also true when it comes to real estate investing. Now, I don't want to downplay the role of your personal 'why' - however, in every potential transaction you take part on from this day forward, the 'why' you should concern yourself most with is that of the sellers.

As we learn more and more about artful tactics to employ in our impassioned pursuit of the next investment, we must never underestimate the power of truly understanding WHY the seller is selling. Here are a few things to consider when getting ready to make that next offer.

1) Who is the seller?

Knowing who or what you're dealing with will help you diligently prepare an acceptable offer. Is the seller a middle aged single woman, a Bank, an investment firm, a down on their luck married couple, a couple going through a divorce, a growing family, an Estate? Knowing who the seller is will allow you to take an educated guess as to what aside from financial gain, could be motivating them to sell.

2) Why are they selling?

The first two points go hand in hand, who and why, and ultimately, are are usually not to difficult to put together. Once you know who your seller is, with a little bit of due diligence and detective work, you can almost always find out the REAL reason behind the offer to the market. Knowing the way will aid you in unimaginable ways when negotiating. As we all know, there is much more to be decided when purchasing an investment property than just the price. Knowing Who the seller is and Why they are selling could help you negotiate in the following ways:

• obtaining a reduced purchase price
• obtaining seller financing
• provide a lease-back option
• offer an equity stake in new development vs. cash at close

There are countless ways that the terms and structure of a deal could be altered to get you to the finish line, and sure, it's possible that you could get a win-win deal for you and the seller without knowing their true why, but just like you should always make sure you know what you're buying, you should just as well know why they are selling. With a little extra effort, you may uncover something that would steer you away no matter how good the price.

3) What do I have to offer (outside of $$$)?

Well to begin with, I hope you have access to funds - as in almost all cases, there will be some type of currency exchanged to take title. But outside of money, is there something you can offer that would be of such great benefit to the seller, that they would strongly consider taking less money.

Case Study:

The last property I purchased was a 5 bedroom 3 1/2 bath SFR in a great neighborhood. The asking price was at market value. I was looking for an asset with these exact characteristics for my next flip. When touring the property with the Seller's agent, I was able to find out that the Seller was a married couple who was in the process of building a new home. They had 3 kids and 2 dogs, and were unsure of when their new home would be ready.

I knew what the sellers may be going through. I had just sold my home as well, as my wife and I were getting read to build our new house. Let me tell you, the construction process can be a nightmare, and the thought of having two mortgages with a middle class income can be a very scary thought.

My wife and I were very lucky, and had arranged a place to stay (for the cost of utilities) while our home was being built. We were fortunate to have this lined up before even putting our home on the market, which took 3 months to sell, knowing that we had a place to go no matter when it sold.

We had no timetable as to when we had to be out of our home so we were literally worry free during the process.

This was not the case for the sellers of this particular home. While I knew the home was priced correctly, I also knew that I couldn't make any money on it without getting it for a much reduced price, 15%-20% less.

As I made my initial offer (18% below asking) I contacted the seller's agent and asked them to run a scenario by the sellers. What if:

I purchased the home from them and we closed as soon as possible, and then I would lease-back the home to them for the next 3-4 months, depending on how much time they think they'd need for their new home to be completed.

Seller Benefits:

Reduce anxiety of possibly having two mortgage payments

Eliminate the need for moving twice - once after the close of this sale, and then into their new home

Reduce anxiety of trying to find big enough space that is also pet friendly

Enjoy one last Thanksgiving and Christmas in their own home (not a rental)

Buyer (my benefit):

Get a quality investment home for 18% under market value

Have my first few months mortgage payments made for me through the lease-back

After a bit of back and forth, we were able to come up with an agreement at a price 15% below market value, with a lease back option for 2 months, with a one time option for a 30 day extension. The rental rate was $100 more per month than my mortgage payment with taxes and insurance, and they were to cover all utilities and maintenance during the 60-90 day period.

Ultimately, they decided that avoiding the anxiety of two potential mortgages and the hassle of moving twice was worth a deduction in their final net from sale of this home.

In conclusion, when considering your next purchase, strongly consider the following three items:

• Who is my seller
• Why are the selling
• What can I offer outside of money that would prove to be beneficial

The answer to these three questions could be the difference between a good deal and a phenominal deal.

P.S. It may not hurt to pick up a copy of 'Start with Why' by Simon Sinek either! Best of luck!

(disclaimer: I have no affiliation with author Simon Sinek and am not being compensated for the recommendation of this book)

@Joe Miller

https://www.biggerpockets.com/renewsblog/brrrr-buy...

This blog by @Andrew Syrios would be a great read for you and I think help you understand the method a bit further.

For 'newbies', or anyone really, this is a great way to start building wealth and positive CF, while minimizing your long term out of pocket expense.

Thank you, all. John Casmon - Yes. That would absolutely be one takeaway. Also, If you recall, I didn’t just get what seemed to be a great deal on the property, but also lined up a very good financing structure as Well. The overall moral, if you will, is to figure out what you want and learn how to ask for it. I wanted that 10 unit for a fair price, then once I made my decision to take action, I found out about them moving to FL and that this was their last property in Michigan. This aided me in learning how to ask for it. I presented them with the low offer based on my analysis and the thought that because this was their last property they may be willing to take less than market value.

John Casmon I am not certain they received any other offers. I believe this was the product of good ole fashion timing. That coupled with the fact that the property owners did the one thing that hurts the sale of RE the most: listed way above market price. This, unfortunately, is a killer in garnering a timely sale because it scares would be buyers away from making that ‘offensive’ offer. P.S. Enjoyed the Chopra podcast!