All Forum Posts by: Account Closed

Hi Austin BP,

My name is Abel, I moved to Austin last year back when handshakes & indoor dining was common. I was just wondering if anyone in the local CRE space (excl apartments) was looking for some free help, whether with administrative tasks or project-related.

I've done some residential/note deals before, but am more interested in the commercial tenant space and have been racking my head on the best way to get involved there while I build up capital for my first CRE deal.

I got the idea for this after helping a relative with their small businesses, and realizing maybe I can add value for someone else too, while learning a little bit along the way.

In case it’s helpful, here are some skills that may be useful

- I'm good with numbers + excel and can do cash flow/IRR models

- My schedule is flexible and don’t mind working days/nights/weekends

- Basic bookkeeping/accounting knowledge (I do this for another small business I’m involved with)

- Incredible sense of humor, though this is just based on reviews from my little cousins…

If not, no worries. Figured it wouldn’t hurt to ask!

Sounds like your mortgage and taxes alone will be close to $5,000 every month. If you rent out one unit for $2,000 (the high side of Abel's range) that means you're out of pocket $3,000 every month, and on top of that you don't have any money for a surprise large capex item. And we're also assuming 0% vacancy at all times.

Why would an investor or partner ever want to risk money in this type of deal? 

@David Zheng Maybe the risk is on your #2? You can break even on mortgage/tax/insurance but do you have backup reserves for a major capex? If not, guess that could cause the spiral down. Or maybe a capex item isn’t an issue, but if rents only cover your mortgage/tax/insurance, do you have enough at that point to cover your own living expenses?

@David Semer When you say you “found a new tenant” in the house, does that mean your PM approved a tenant and didn’t tell you or did this new person move in without your PM or you knowing?

Originally posted by @Candace Noel:

@Abel Teklu Hi Abel, I was hoping that once he received the funds from selling the note he would pay off the first lien.  

Hi - I don't think any rationale investor will want to pay $136k for a note unless the $100k note was paid off first, regardless of the terms. Why would a note investor trust that this guy will payoff the $100k loan after he gets the cash? And if the seller for any reason cannot sell the note, why would you want to take the risk of owning a $170k property that now has $236k of debt on it? 

I really don't think seller financing is the solution here. Rather than spend time looking for note investors, I'd recommend you look for private lenders or a bank that can provide you with funds at closing. That way the $100k loan can be paid off at closing and everyone is happy.

Think there's something missing? He wants $100k upfront to payoff his loan, so offering to buy the house with him carrying a 5.25% 30 year loan doesn't seem like it would solve his desire to payoff the $100k loan?

Even if he wanted to seller finance the properties to you, he couldn't because the $100k first lien loan is still there and needs to be paid off (unless he is doing a wrap around structure which has its own hurdles). If he did seller finance to you, it would mean now there is a $100k first lien loan, plus a $136k (80% x 170k) second lien loan between you and the seller, and the property is only worth $170k...so no one comes out doing well?

It seems like you need a separate lender to provide you with the funds to buy the house and payoff the seller with cash so the $100k loan can be paid off. Seller financing is usually for properties that have little to no debt on them.

I get so annoyed with Zerohedge and their clickbait. They’ve literally said the world is ending in every blog post since 2009.

Which neighborhood in dallas?

Originally posted by @Account Closed:

Say a guy has 15 credit cards with bal of 100k.     He consolodated to one loan with balance of 100.   Am i supposed to say YOU GO MAN.?

Oh please, I bet next you're going to lecture us on how he needs to "take control of his personal finances before investing"

I think it's obvious what this guy needs next - a hard money loan. 

Everyone should get a hard money loan. Especially if you don't have any money yourself, are already burdened with debt, and are new to investing. Why should he think of creative ways to pay off debt...when there are creative ways to take on MORE debt?  

And while he does that, if he has any cash lying around the house or accidentally sitting in a savings account, he needs to gather all of that as quickly as possible - and throw it away. We all know "cash is evil" and every second he isn't leveraged to his eyeballs is a 1% drag on the ROI he is never going to see in the first place. There's no time to waste. Every penny must go.

By the way still waiting for a mentor to contact me.

Hi BP - I just heard that investors are now buying the White House. I want to do this too but the problem is I just started my real estate journey 3 minutes ago and do not want to waste a lot of time listening to the podcast or researching the blog. Can someone please give me a mentor?

Feel free to send me a message when you are ready to mentor me. Really looking forward to this journey!