All Forum Posts by: Lukasz K.

ahh the merchant services industry.. I can tell you that these lease contracts are *VERY* easy to sell through traditional wholesale banking channels assuming credit of 620+. Now with that said you'll probably be looking at questionable risky contracts, it's at your discretion if you want to invest in that or not, there's better places to park your money IMO - but who knows it'd be interesting to see what their offer is.

I reach out to the industry vets here.
I'm looking for a reliable way to locate properties 135k-185k that I can achieve 7-13% COC. My current methods which consist of pre-negotiated short sales prior to hitting MLS are not able to meet the demands of my investors I'm simply not able to produce enough properties on a monthly basis.

I stumbled upon these forums in my search - I learned about wholesaling (which I am totally unfamiliar with I might add) in hopes of learning another way / developing a new strategy in which to achieve this. The markets we operate in are NV,AZ,CA,MI. I am pretty much looking for ANY way to get additional investment grade inventory under my belt, I will also be a licensed agent in NV to assist with this. My strategy is strictly buy and hold in appreciating markets so I can be a bit liberal with my COC %. Any advice/direction would be greatly appreciated! I'm pretty much open to any thoughts and ideas.

Thank you for your time.

@Deborah Saddler

A hard money lender is essentially a bank - you'll have to underwrite, draw docs, appraisals, title services etc. - you can partner as an investor with existing firms starting @ 50k... typical buy ins probably roughly 500k. To learn more you can call existing hard money lenders and ask them about their investor programs.

It's not out of reach but its encouraged to know people personally that either own their own firms or have the resources to launch your own - you're basically starting a bank its one notch under wholesale/secondary markets.

Shari,

I was in a similar situation years back. My group purchased roughly 500k of real estate from a bulk seller with properties under land contract. Yea, they were cash flowing alright - most were of questionable condition. We ended up hanging on to them as long as possible to season the notes for sale and ran for the hills - we did make money.

Our problem was that our purchase was on a national level with properties spread all over and this organization had a team of realtors/PMs etc that would sell them for us. They performed as stated however we later realized these were *NOT* the assets nor headaches we wanted to deal with.

If you have significant capital to invest (I don't know your situation) a safe bet is partnering up with a hard money firm and becoming a transactional funder - kind of the same concept except you don't end up being a slumlord... Personally I run away from pre-packaged products and turn-key investments. If you want to stick with your original plan/question why not just find a good Realtor in your area that currently runs property management and move slow - acquire nice properties and play it safe staying within your metrics. In essence its kind of like your turn-key idea - except you get to go through the motions together and know EXACTLY what your getting.

Find an independent agency in your area preferably a small setup that would take you on. Stay away from franchised brokers - and talk 1on1 with someone that is serious about helping you attain your goals and not afraid to make some money along the way. Preferably this would be an Agency that is currently involved in property management and dealing with investors such as yourself at this point you can share deals together.

1. Find a realtor that specializes in rentals/shortsales/insider deals.
2 Target aggressive rental market.. buy 3 properties @ 150k apiece aim for 8-10% cap.
3. Enjoy appreciation on 3 properties rather than 1.

Be patient in acquiring - do not acquire properties that need extensive rehab work. These are the metrics we operate in 135-185k 8-13% cap. Your main advantage right now is that you have CASH -you can walk into *VERY* nice deals and enjoy good rent profits without trying to beat out a mortgage or risk crazy rehabs. Or you can hunt deals and try to get the most bang out of your buck - those can present pitfalls.

Play it safe take rental comps into careful consideration to estimate your rents/timeframe. You can do land contracts season them then sell to investors increase your capital and buy more. If you move slow pay close attention to your metrics and don't go outside them *EVEN* if a deal looks solid. You'll do just fine.

*OR* you can do what I did over the years is partner up with a hard money group - and make investments WITH them, WITH your cash. You actually have enough capital to be a transactional type funder - be the bank and don't worry about the mess/risk of property management. Hard money usually only acts on deals that make sense and have many options since they are investment homes they can foreclose, get their capital back and move on in a heartbeat. You have to have a pretty strong network and be rather savvy with the investment community - but this is definitely another option to consider - real estate is a complex thing there's many ways to make profit with it.

My background is banking and hard money so I view things a bit differently than most. In my opinion the safer the deal the better! I used to take huge risks years back but have ratcheted down my risk taking over the years to nice clean make sense investments. Some would argue that my metrics aren't as high as they should be - however I'm ok with it. I'll pay more for something I have a good feeling will work rather than take a risk on low dollar deals that require a quick spin and a bit of luck.

I'm new to these forums although I have been reading them for awhile - I'm here to learn and network with the community. If anyone has ideas/advice on my strategy I welcome it!

Good luck in your ventures!

local is always good, CU's are best IMO - start with citizens, walk in and tell'em you want a mortgage get some coffee and chat it up at least get information and see where you stand from the banks perspective and what they're willing to do. bring your paystubs and all that so you have accurate numbers and most importantly figure your bottom-line income they'll take with your bonus' then you can set your sights on a property.

I've transitioned to hard-money 4 years ago but I'm still quite in-tune with the mortgage market with plans on re-entering. I 'could' take on our deal in FEB, but I'll still highly recommend you go to your own personal bank and get it worked out there just for sake of piece of mind and clarity.

mainly due to property values - there's tons of shorts on the market currently and a whole new wave of REOs waiting to hit. With FHA is problematic, I believe once an FHA appraisal is done it tags the property for 6 months, if the numbers aren't there the bank wont lend - you'll have to make up the difference in cash. FHA is a great loan however they are VERY picky with appriasals... also the multifamily property determines the loan, theres straight FHA, then there's 203k loan program that allows for rehab/repairs. Really without seeing your whole picture we can talk for hours and not get anywhere that's why I suggest the bank, because the situation will differ based on property/credit/limits... etc...

7 years ago I would've called you up and pre-approved you in 5 minutes! - and we'd be closing on your house next week... we're a bit late! haha.. anyway - just trying to help and inform you of potential challenges so you don't get too excited - best way to do this in "todays' world is to run down to the bank and get it hashed out.

you'll get differing responses as lenders have differing policies on bonus' how its structured, down payments line of work etc when they calculate your DTI.

no idea if your going FHA or conventional either - best way to do it is just go to your local branch credit union and give them your info. lending is VERY cookie-cutter nowadays, not how it used to be. They'll let you know what you qualify for instantly without question - then you can begin to determine your property needs and wants. In todays climate depending on your credit income etc multifamily may prove to be a challenge. Also 99% of the deal when your financing is at the mercy of the appraisal - so it would be my advice to hash out your numbers first before you even begin looking at properties. just make sure you tell your banker everything so he can properly guide you.

most deals I'm seeing done with financing are short-sales (as of 1 year)... this really depends on your area though. What you want to avoid is finding a property, falling in love with it, then the bank coming short on the appraisal.

Can't speak for everyone but - contacts make you money/successful in this business. a lone investor out there with a bit of cash and credit is asking for trouble. I started in mortgages back in 2002, right after I got out of the Army. Spent 2 years in that arena then moved onto wholesale -.. learned a TON in wholesale especially how money/banks really work, some of this stuff was quite interesting as it looks a lot different when you see it from the inside. I've done many deals, commercial, hard money, PE/VC, capital raises. (I absolutely love the Hard Money arena) I've dealt with many investors from SFR guys, to multiunit, to hotels... I am only NOW, just entering the arena myself with my own funds, backed by contacts I have established over the years if that means anything to you.

I've learned that in this business, again some will disagree the only way to operate is as safely as possible. All the cherry deals are long gone, people have been in it for years they have a huge edge on a new guy. My personal strategy is I don't operate within the market, I'm outside of it. I'm able to produce deals in limited quantity however my deals are unique. There's literally 100's of ways to make money in this biz. Buy houses, land contract season the notes, sell notes - fast way to build capital... Its hard to cash flow properties if you have a mortgage note on them - my metrics aim for 8-13 cap, we can even get away with 6. I also won't involve my group in flips - too risky and we don't like surprises (although I won't pass a surefire one up), however some people excel at this method - but they're also very committed and have knowledge and the network to rehab. Also pretty much my entire group just likes to stroke the check, they come from different industries in the financial arena. So its imperative my strategy caters to this particular investor.

For someone with limited experience - my best recommendation would be to actually be IN THE BIZ, become a realtor!, get your NMLS license write a few mortgages learn how banking works leverage all that jazz. I don't know your financial situation but it really doesn't matter - some people jump in get lucky and through hard work become successful others come properly equipped and fall flat on their face, I've seen it...

The main problem new investors will have is capital issues... also inexperience with high credit and a few hundred K in the bank is dangerous. To get a real feel for how you'll fit into this business, (or even if you want to be in it) would be by working in it, building out your network of differing individuals ie, real estate agents, mortgage, other investors, flippers, money managers, etc. Throughout your time you'll meet these people.. do deals with them establish trust etc. Then when you have the money just follow the exact same model that you used to make THEM successful and jump into the game yourself - SAFELY and armed with knowledge.

If don't have the time nor resources to enter the biz in any capacity to learn it.. then you *MUST* hook up with a local investor and possibly partner a few deals with him/her - its just really rough out there alone bud, I've been there... seen it... been burned. Its easy to fall into the glitz and glam because there are people making SERIOUS dough in real estate and pretty much just the financial arena itself.

Hope you find some use in my post - again don't want to deter you, everyone has different experiences/views. I just felt I'd throw my perspective into the mix!

One more thing - in this business you have to be able to take a hit(or even a few) and still stay standing. If you're maxing and running a risky strategy you might as well just light your hard earned money on fire.

Whatever you decide to do "GOOD LUCK" out there!