All Forum Posts by: Art G.

I wholesale in Ventura County and I can tell you that it seems far from affordable when you are in the trenches. Properties are very expensive and sellers know they have the upper hand. Oh how I would love to have your housing prices up in Bak. But I know you guys are almost pure renters up there.

Anyway, thanks for the market posting.

You still have this one available? If so we need to chat.

Any time @Kedrick Thornton !! I have become way more technical in my in depth costs eval since this post. @Brennan Lytle the answer to your question is 10% of the ARV would go towards holding costs for the rehabber (not including the interest on a loan, rehab, or purchase costs). I went through and ran tight numbers on 3 deals, the answers were 10.9%, 9.9% & 10.3% so I would say 10% is a fair number to go with. Also I ran the numbers with the 80%ARV projections and they were about 1% less. Here is a break down for a deal of mine with an ARV of $322,599. [Overview of deal Close to Close 135 days. Rehab $40k. Purchase price of 185,819.30]

Holding & Closing

Wholesale fee= $13,677.97; Property Taxes= $756; Utilities & Insurance= $1,052.43; Real Estate Agent Commissions 5%= $16,129.95; Title & Escrow Closing Costs= $3,548.59

Grand Total of Above= $35,164.94

Percentage of ARV= 10.9% on a 70%ARV less Rehab deal.

Investment Profits= $61,614.75

Total Cash out of Pocket= $240,549.70 and ROI of 25.61%

Good luck gents!

My pleasure Chris. Think about what impacts you, when someone reaches you, when you walk away going....   ...   ... just kinda tripped out. Its bc they empathised with you, were direct with you, addressed you, and were real with you. 

You have sincerity in your words, I can feel them. Just stop telling yourself you can't and start reminding yourself you already are.

Do you know what your reward is for being a sincere, honest guy, that listens, cares and takes one for the team on occasion? Your reward is that you get to live that kind of life.  I will take that over money or my ego or all that ******** out there any day.  Now imagine a full lifetime of that... Sounds to me like you are already on that path, just forgot for a sec that you don't have to conform, you get to be you all day long baby ;)

If you have not read this already its time, if you have read it, you need to be reminded. Check this quote out, its short. 

First of all you are right. It is about reaching out and connecting... networking. Thank you for posting that little reminder to us all. I have been so bogged down with work in the office I have neglected expanding new relationships.

As to your topic, I would offer the following advice:

It is not what you are doing, so much as how you are doing it.  No matter your method of contacting people, it is how you do your method that dictates success.

I read your comment about not believing in direct mail (paraphrasing), and I felt compelled to respond to that. Most people do as you said a very bold and abrupt announcement of intentions and you are again correct that no one wants to hear it or is compelled by it. But there is always another way...  I have a two tiered method.

First I send them a bold colorful announcement that my LLC buys houses in cash. Nothing pushy, just easily seen in the mail stack. Not with any intention of them calling. But solely for the purpose of planting the thought in their head about selling their house. Then a week later...

I send out my letter. We don't call them yellow letters at my company, we call them sweetheart letters.  I literally get people calling me to apologize because they don't want to sell their house right now.  

I use quality stationery and matching envelopes.  I carefully crafted a letter that expresses interest, motivation, curiosity, and is non-threatening, all the while conveying that I would like to purchase their home.  I typed it up, my assistant has much nicer handwriting than I do, so she hand wrote it on white paper. I scanned it into the computer, cleaned up the letters so they are real sharp, without ink blots, if an individual letter (abc...) was poorly formed, I replaced it with a letter found elsewhere on the page.  When it was done, I sent that to my printer to print a massive amount of stationary & the handwritten return address is printed on the envelopes too.  The only downside for my assistant is that she has to hand write out the addresses, but at least she is guaranteed job security lol.

We are all humans, with feelings and concerns, dreams and fears  and we all want to connect to each other.  So with great sincerity that is what I expressed to people in my letter campaign, because I do care.  I thought: How would I want to be approached? How would they get my attention? The answer, of course, was sincerity.  

I am a wholesaler, and my job is to think for everyone else before they even know they are in my deal. That requires reaching into their fears and concerns and addressing them. I have to think about competing interests between buyer and seller and make sure that in the end everyone walks away not just thinking... but knowing they won.  This real estate game is about people, money and land is just an outcome.  By focusing on the people we win... even if we lose the deal.

Just my two cents... thanks for the reminder about continuing to network, and the chance to share some thoughts. Good luck and here's to improved avenues ;)

You need to access the money that is your hands that you do not see. Let me explain it the way my mentor did, who is one of the nation's leading financial minds.  The topic was free and clear vs mortgaging the house.

The good people in Katrina's path are the subject. Two houses, one free and clear, the other with a mortgage and the cash in the bank. Both worth $100k.  One neighbor has no debt to worry about bc he owns a house free and clear.  The second neighbor has $100k in the bank bc he took cash out of the home to invest in real estate.  Katrina hits. Floods wipe out both homes.  One has no house, no equity and no money in the bank. The other has no house, no equity, no collateral his mortgage is attached to and most of all.... $100k in the bank.

You cannot invest equity. But you can borrow against that equity and leverage it to earn more money. Search for a great rate, borrow as much as you can and invest.  But... there has been a lot of great points made about an upcoming drop in value. In CA a lot of us think its coming next year too.  So what you should do is invest that borrowed money in a legit fund that offers a well thought out and safe return, around 7-9% is legit.  You are borrowing at 3% and earning 9% means you profit 6% on your money. That is way more than your equity is earning.  Check out Crowd Funding sites, they are vetted and serious professionals and you can choose which project is right for you.

Then when the market dips again, you can pull the money out of the investment fund and buy more properties.

You should look into buying mortgage notes. That is your goal after all is the note. So why take on the liabilty of being a seller, and the headaches that go with it. Why not just buy notes? You can get them at a large discount, and still get interest and principle, protection if default, all of it! This cuts through Dodd Frank, liability of being owner, and gets you to the meat.  I think there is a whole forum on here for that topic.

And as far as Dodd Frank interpretation goes... ask 20 people, get ready for 20 diff answers. A real estate attorney I know, that is super smart and experienced as an investor, said he read it twice, (its like 3 feet tall of paper) and he said he still doesn't understand it completely. So any advice you get will be grey.  But at least if you go to an attorney, you now pass the buck off on his liability insurance. So think of the retainer fee as an insurance premium ;)

Yeah, that link I put in the title of the book, takes you to amazon. But here is the kindle link on amazon.

It was my pleasure. Good luck brother.

You MUST read this book, The Wealthy Code by George Antone. It changed my life and will change yours too. It is the single most important book you will ever read in real estate. It explains deal structure in a very simple way (the new words make it complex at first, but easy once you absorb them) and it shows you how to structure any business deal to maximize profit and minimize risk. The book is short and sweet. You will learn that you NEVER 100% finance a deal. You will learn what an equity partner is and why that is the correct decision for you. Also, you will learn how to analyze deals and present the numbers in a way that partners and banks will be asking you. Have you worked out your: NOI, Cap Rate, Loan Constant, Spread, ROI, BRE, DCR and ascertained volatility? Are those results within acceptable ranges? After you read this book, you will answer those without hesitation.

When you come to them with the deal numbers already worked out, you show them its a good deal and that you are competent. This is your TRUE core foundation for investing.

As to your main concern how to ask... WOW! You are already doing the correct method that few people learn to do!!!!! NEVER ask for the money.  It is an immediate turn off, and you just lost them as an investor.  You do not ask individuals or banks for money. I will explain the approach to each.

Banks care about the guarantee to get returns and their money back and most of all the security of their money.  When you read the above book, you will know how to present a deal to a bank.  You do not ask them for money. You approach them with a business venture with investor math to back it up. Thus showing them this is a good investment for them too.  Then, you will tell the bank, I am seeking funding for the venture I have laid out to you. What rates and terms are available? That is strength, that is confidence.

Now as to explaining why you did the correct approach to the individuals.  Any time you directly ask for money or for them to invest, you instantly create withdrawal in the listener.  Imagine someone walking up to you and saying, "Hey I have a great investment opportunity for you! Let me tell you all about how much money you will make! All I need is ___thousands of your dollars." Unless you are truly gullible, then you cannot help but want to get away.  

Which transitions into the next point, always vet your investors. You have to grill them, ask tough questions, put them on the spot. How many investments have they done?  What level of experience do they have with real estate? Do you understand that I will do everything in my power to protect our venture but there is no guarantee with any deal?  If any potential asks you about a guarantee, your response is always, this is not the deal for you.  You may be eager to get funding, but it is not worth it to have someone without experience that is calling you all the time and stressing you out about details.

So how do you ask for money? You don't! You do exactly as you were doing. You discuss deals you are working on. You talk about the investor math you will learn in that book. You talk about structuring deals to protect your partners. (Any real investor will only want to hear that anyway, they do not want to hear about how much money they will make, they only want to hear: is my money being protected, will I get it back, what level of risk, then what are the returns.) When you talk in front of someone about the solid deals you are structuring and do not invite them. It instantly makes them feel the need to be included. Which is why those people you did that to responded as they did! You made them want to join. I call it the club mentality, like a night club with people waiting outside, it makes you need to be a part of that scene.  Any person with money, after hearing your knowledge on the subject will want to get in on the action.  When they do ask, you say, "Possibly... I will need to learn more about you first. My deals aren't for everyone. Let me organize the numbers and get back to you with questions. I can meet you next ____"  You just told them what is going to happen, not asked for their permission. 

As to your final query... and to summarize the involvement and resulting partnership discussed above, you will learn in that book how to create an equity partner. By doing this you shift risk away from you, create less risk in the deal structure, earn more profits, and can repeat this process infinitely. An equity partner works like this, I hear about your deal and want to invest, you offer me 50% ownership in exchange for me putting up the down payment. When we sell the land, I get down back and we split the remaining profits 50/50. The profits from rents are split 50/50 as we they come in. You acquire the loan, they put in the down. The benefit to you is that you got a deal with no money in the game, the benefit to them is you brought them a deal. They are often to busy with their own job to educate and hunt down deals. So why in the world would you give away 50% of your deal? Let's say you have $50k in the bank, that gets you into two deals. You get the two deals. Now you have zero in the bank. Third deals comes, can you get it? What about the 4-20th deals that come after? By getting an equity partner, you can do as many deals as you can find investors for. 100% of 2 deals and all your money at risk? Or 50% of 100 deals or more and your money is not at risk? Then when you go to the bank as mentioned above, in your explanation of the structure, you show them you have an equity partner that has this much down payment, the BRE, DCR, Spread, and ROI are these ____ numbers. You have run scenarios and found this structure results in the least risk with maximum profits.

The entire time, you never asked one person for money. Good luck, you got natural skills. Keep at it. Read that book, you will do great.

Oh and btw, I do all the math too, I have the calculators but prefer doing it myself ;)