All Forum Posts by: Alex Witte

Thank you both for the feedback! It is much appreciated. 

What about in a situation where they aren't lending you the full amount? 

What if you are asking a friend for $25k that I can then take to a bank and use for a down payment?

That is more of the situation I am trying to work out. 

 Yeah man! Tenants just moved in yesterday. Really nice couple. They signed for 1 year, but already have admitted that the last house they lived in they didn't leave for 10 years! I hope they are good tenants and do stay for 10 years! 

And @Dawn Anastasi yes the home was built in 1943. 

Hello Everyone!

When presenting the idea to family & friends about them lending their money to you to invest into real estate how do you do it?

Do you have a pre-drafted contract that shows what guaranteed money they will get? 

What does the paperwork look like? I am interested in seeing an example if anyone has one.  

I understand that the variety of opportunities will determine if they want part ownership or a simple fixed rate of return, but I don't know how to present the options to them. 

As you all know a lot about real estate is proving your credibility and making other people comfortable and confident in your ability so I am trying to figure out the best way to do that...

Thoughts?

Thanks for all the feedback! I seriously love this community. Being able to talk openly about these types of topics is so useful. 

Alex

Hey Cody,

Quite the opposite actually, I found a free to use WB-11 form which is the Wisconsin option to purchase form and sort of filled it out. 

In the addenda I simply added that the "option_to_purchase_provisions.PDF" was part of the agreement. The "option_to_purchase_provisions.PDF" was simply a word document of statements I made relating to "buyer shall do this and seller shall do this" and saved it as a pdf...

Sounds cool, but it is really simple. 

Hope this helps. 

Alex

So after I got my first deal under my belt I got super excited and started searching more rapidly!

One thing I absolutely love about REI over any other form of investing is that you are helping people solve problems they have and this story is a prime example of just that.

So the story starts with me hearing this tragic story about a man being accused and taken away on charges. The house was in a pre-foreclosure status because of this. I found the name of the attorney defending the man and contacted him to inquire about the property. The attorney is adamant his client is innocent and will be released, but the property would probably be foreclosed by then. This has been the man's home for over 12 years!

I said I would love to help the man not lose his house and good credit rating due to a foreclosure, so I asked for more details.

After investigation of the property there was quite of bit of neglected maintenance so the house was not suitable for rent and would not sell for what he still owed on the property. They had tried listing it on the MLS and it sat for 3 months.

We worked up an Option to Purchase (I've heard it called a lease option, a subject to, etc) where essentially I took over the man's payments on the house so it didn't go into foreclosure in exchange for 'ownership' of the property.

I have the right to rent it and the right to sell it.

I paid $0 up front to the home owner because the property needed quite a bit of work to be suitable for rent or for sale.

We have terms and agreements to protect both parties for insurance and liability and such.

In the instance that the property sells, then both parties get a split of the profits!

So without further ado the details about the property and the numbers I expect to see!

3 BR 1 BA SFH in Waukesha WI near Milwaukee Wi.

1200 sq ft with a small yard and a 1 car detached garage.

The main thing this property needed was the plumbing.

The 1 BA is in the upstairs and there was evidence on the main floor of water damage.

If you flushed the toilet or ran the water in the bathroom you could watch water run down the plumbing stack in the basement! 

Here are some pictures of the before. 

The during

And the after!

The contractor obviously laid trim and put up the fan etc. I just didn't have the final final pics available **

So anyway! As of 1/12/2018 (paperwork signed and rent/security deposit received) the property is rented!

$1200 per month

Tenants pay all utilities. 

I pay trash/recycle service. 

Expected return 27% CASH ON CASH if I continue to rent it

If I sell the property, and it sells for $130 (comps in the area have it around 130-140) then I will cash out another $20,000 after being repaid for my capital investment! 

Needless to say I've had a rather fruitful 2017 and I will continue to invest in real estate! 

I don't always expect things to be this good, but one can always hope! lol

 Thanks Dennis for the link!

No real reason, I just figured it would be easier to get ownership of the property first and then refinance. 

In hindsight I probably could have just approached a bank initially and accomplished the same thing. 

I actually need to learn more about ratings of neighborhoods. I believe that this is a B neighborhood, but I'm not 100% sure. Do you have a link(or a BP Podcast Episode) where they explain ratings? Is there like a neighborhood rating website?

I guess I will say this is a neighborhood where you could potentially leave your doors unlocked. Elementary, middle, and high schools all rate 6 or better. 

Thanks everyone else for the words of encouragement!

Hello everyone!

I wanted to share my success stories from 2017! 

I started reading up on REI in June of 2017. I got a new job in sales and moved to a new area. I had zero experience with real estate other than owning my first and now second primary residence.

Like many, I stumbled upon the BP podcast and began listening to them ALL! I joined local groups on Facebook and attended a few meetups. After learning the lingo and understanding calculations I started searching for leads. I sent out probably 15 offers before I finally got one accepted! 

It is a duplex in Milwaukee Wi. I partnered with @Michael Henry who has taught me a great deal about REI in a very short period of time!

2 BR 1 BA Upper

2 BR 1 BA Lower

The initial financing was structured as follows:

Purchase Price $65,000. 

Down Payment $20,000. 

Seller financed $45,000. 0% interest for 3 months. 

The upper and lower had been recently remodeled and with comps in the area we figured the value to be roughly $80,000. 

I rented out the upper for $775 and the lower for $750. 

30 days after closing I refinanced the property with a local credit union and the appraised value came in at $75,000! 

I got a nice big check back at closing! I now understand why BRRRR is such a great strategy!

It now cash flows roughly $620 per month and I am very happy with it so far! 

That property got me super excited and I immediately began looking for my next one. After just a month or so I came across my second deal...I will post that in a separate post. 

I want to thank BP for being the place to go when I have questions. This is a great community! Thanks to everyone who contributes to it! 

I added the example I spoke about. I forgot to attach the snapshot. 

I appreciate the feedback! I am aware of the terms of commercial loans. This institution requires 25% down 20 yr amortization. 

But if the numbers work out to still have a good return then why would the shorter terms and higher down  payment be a concern? 

I am still interested if others have been able to do it early on in their investing career and how they did it. 

I have been evaluating larger deals. An example is the attached numbers. It is a portfolio purchase for 10 properties. 

My question is: How is a relatively new investor able to finance these larger deals to scale my operation quickly? 

I have shared these exact numbers with a few commercial lenders and have been turned down with their reasoning being lack of experience. For example, First Federal bank said they require 3 years of proven cash flow on properties under my control before they would consider me for financing of a deal as large as the example I have provided here. 

I understand I am new with only 1 duplex deal and 1 land contract deal under my belt, but when I come across deals that involve many properties I want to be able to make an offer and stand behind what I offer if it is accepted. 

Does anyone have any recommendations or thoughts? 

Thanks in advance!