All Forum Posts by: Ben Zimmerman

A large number of people on this forum don't know 9 other people who have a 100k sitting around to partner with, much less have the money AND would trust the person enough to invest their money into the syndication.  Unless you are a seasoned real estate investor, nobody is going to just willingly give you hundreds of thousands of dollars for you to go play with.  Even if someone came to me with what looked like a smoking hot deal, but if they had no experience I still wouldn't invest in their project because I don't trust that they will be able to properly execute a deal of this size. Add to that the fact that there are a ton of laws surrounding syndication and who you can take money from, so even if you found someone willing to give you money, there is still a lot of red tape to jump through.  If they are a non-accredited investor this becomes even harder.

Further, owning 10% of a 100 unit building isn't so dramatically different from a cashflow perspective than owning 100% of 10 units.  Yes you have economies of scale that allow for better property management, and repairs, but you also have the added problems of additional accounting actions, providing status updates to your investors, and just the wasted time looking for investors in general.  With syndication I need to find both investors, AND find deals.  Personally I would rather spend my time looking for an extra deal, than spend it trying to find someone to partner with.  It just seems like an awful lot of work raising capital and figuring out a lawful way to syndicate a deal just so you can achieve economies of scale.  

And finally, there are a limited number of 100 unit apartment complexes for sale in whatever geographic area you are operating out of, but there are an unlimited supply of SFR or smaller deals available. Instead of trying to force something into being a 'deal' just because its for sale, I can instead review an unlimited supply of smaller deals looking for the best ones that fit my criteria. Syndication can be absolutely fantastic for some people, but being a syndicator is for seasoned veterans, not for someone who is trying to escape the rat race.

Don't overthink it, if you want to sell, and he wants to buy, then go ahead and sell it.  

Don't worry about his 1099, or mysterious bank deposits. That isn't your concern, that's the concern of the underwriter. If he has a 50% down payment then he can likely get a loan from a regional bank even with questionable finances. Agree to sell, get an non-refundable EMD deposit, and let him worry about if he can get financing or not. If he gets the loan then there isn't a problem, if he doesn't get the loan then you made an easy few grand off his EMD and then you start deciding if you want to evict or not.

I have a pretty big dislike for wholesalers in general for a wide variety of reasons, if you need a loophole in order to operate your business, then you probably shouldn't be in business in the first place.  This is especially true when there are hundreds of thousands of dollars on the line, and the ability to completely screw over a seller if things don't go right.

With that said, the SC real estate commission doesn't dictate what is or is not considered 'equitable interest'. Only applicable state laws and/or court rulings can do that. Unless a new law/court case just came out then I would largely ignore the SC commission. As always if you are putting up $100 or some other trivial amount of EMD for wholesaling then you are likely going to have problems in court justifying how $100 should be considered 'equitable interest' in a 300k home. On the other hand if you are putting down something like 3% EMD, then you would be hard pressed to find a court that wouldn't think that to be equitable.

If you want to spend countless hours becoming a telemarketer and being told to "F off" then go for it.  As @Randall Alan said the amount of cold calls an investor gets is nauseating.  I'm just jealous he only gets 3x a day.  I've even started getting calls asking if my primary residence is for sale.  They call from google voice numbers so you can't block the number since its a different number each time.  You would think that if I block your call then I'm not interested, but they don't get the hint.

With how annoyed I am at these telemarketers, I can honestly say that there is -NO- price at which I would sell to them, even if they offered double I wouldn't do it out of principle alone.

I would double check the rules of the HELOC you are applying for and verify that it works the way you think it works. Typically during the draw period (first 10ish years) you only need to make interest only payments, which would mean your monthly payment is $700.

After the draw period is over, you make interest and principle payments for the next 20ish years.  Since you are now making principle payments on top of the existing interest payments, this means that your minimum monthly payment jumps significantly after the draw period is over.

I put a trivial amount of money into fundrise about 2.5 years ago just to check it out. As far as returns, initial investment was $1k in august 2019, and now is about $1350. Its essentially the exact same thing as buying into a stock REIT such as Avalon Bay with a few minor exceptions.

1.  Illiquid.  With fundrise you can only sell your shares at certain points, and if you haven't held those shares for a minimum of a 5 years you get accessed a 1% penalty when you try to sell them which is pretty small as far as penalties go, but something to keep in mind.  With a REIT you can sell whenever you want with no penalty.

2.  Since the shares are relatively illiquid, it also means you don't have mass panic selling during turbulent times so the price remains relatively stable.  When the covid crash happened, most stocks including REITs took a massive hit to their price, often slashing 40-50% off the value.  With Fundrise since the shares are illiquid, the price didn't drop at all.

Doesn't seem like a lot of thought was put into layout or functionality.  I only use desktop so can't comment on any mobile optimizations.

You can only see 2-3 different discussions at a time on the screen even with a large monitor.  This causes you to need to do an awful lot of scrolling to find a post that interests you.  I would recommend significantly scaling back on how much of a post you can preview without clicking on it so that you can see more posts on the screen at once to more readily identify posts that you actually want to click on and read.

The fact that you can only see 2-3 different posts at a time is compounded by the fact that advertisements are included in the same general space.  Ads could easily be moved to a sidebar area where they could remain static and always visible while you scrolled posts in the main section.

Hovering over the forums tab at the top doesn't provide any sort of breakdown of sub categories like the education and network tabs do.

Clicking on the actual forum categories button pulls up a list of categories that involves significant scrolling to see what options you have available.  Real estate isn't rocket science, I should be able to see all of the forum categories on one screen without needing multiple full scrolls of the mouse wheel to scroll through all of the different categories....

Which leads to my next point, there are WAY too many forum categories, many of which are HIGHLY redundant.  

You have a "general real estate investing" which is separate from your "general info" subcategory.  

There is an "investor deal diaries", as well as a "completed deal diaries", and a "rehab diaries", and a "success stories" and a "not so success stories"

"Rookie investing" as well as a "first time home buyer", and a "starting out".  

"Real estate events and happenings", and a "BPCon attendees", and a "BP real estate investing summit"

"Housing news and real estate market discussions", and a "real estate news and current events"

I could probably find other many examples of redundant categories, but you get the point, many of these categories are redundant and would be better off merging them together to create a more unified experience.  Additionally having links to the various podcasts inside of the forum categories further clogs up the searching since forums and podcasts are two completely separate products.

Some categories like BP con 21 are completely irrelevant since the entire event is over, other categories like the investing summit category only have 4 total posts.  Other categories like Real Estate Quizes sounds like it should be something in the education tab and not in the forum tab, not that it really matters since there isn't even a single post inside the real estate quizes category.

Podcasts are a big enough part of what this site offers that it deserve its own tab at the top just like forums, education, and network have instead of burying it in the education tab.  

I could probably go on with other things I dislike, but in general someone needs to put some serious thought and effort into the layout and functionality of the desktop version of this site.  As it stands it looks like a product that was created by paying some guy on Fiverr $20 bucks and he used a generic wordpress template.

What makes you think you need to move on from RE, or that you need a 'next'?  

It sounds like you are still relatively small with your RE holdings due to how personally engaged you are with your dealings.  Why not focus your efforts to growing the portfolio and scaling to the point that you are no longer personally involved in the deals, but rather manage your team and your team acquires deals.  Either by continuing to find SF homes, or venture out into the world of apartment complexes.  A transition to MF would be exponentially easier than trying to transition into franchises.

Do you know anything about running a laundromat or franchise?  Why take the time to learn an entire new industry instead of focus on the industry you are already familiar with?  

Having less debt is less risky, so in the event of a severe market downturn you are much more stable and able to weather the storm.

However, mortgages are generally the cheapest loans you will ever get, so by paying these loans off, you essentially save (or 'earn', depending how you want to view things) an amount of money equal to the interest rate.  For example if you had 100k dollars in cash, would you be happy if that money was only earning you 3-4% annually?  Now instead of having 100k cash, imagine that 100k was equity in your home.  Having large amounts of equity 'earns' you a rate equal to what your mortgage interest rate was.

By using loans, you are able to expand your portfolio much, much faster.  You can either buy 1 house free and clear, or buy 5 houses with a 20% down payment on each of them.  Over the next few decades, having 5 houses with a mortgage will make you an insane amount more money than if you had simply bought 1 house free and clear.

Some jurisdictions have weird laws, but I would be highly surprised if anywhere mandated that a tenant notify you if they were fired from a job.  

Are you legally allowed to confront them?  -Sure, you can legally do most anything you want in life, all you would really be doing is talking to someone asking if they are alright.  The more important question is should you?  Regardless of what happened its going to be an awkward conversation for the tenant to go through, and he will likely get defensive.  And honestly, no matter if the conversation goes well, or if the conversation turns hostile it doesn't matter what he tells you because you can't evict someone just because they lost their job.  Maybe they have some savings, maybe the girlfriend can cover the rent by herself, maybe he gets another job.  You can't start to evict them until they have failed to pay the rent as agreed upon, so no matter what he says you still can't take action against him.  In todays job market I would be highly surprised if he can't get another job in a day or two.

I follow the mantra hope for the best, plan for the worst.  If they pay next months rent on time then great!, but I would assume they aren't going to pay and start lining up my budget accordingly.  However my real concern is you mentioned that your bills depend on their ability to pay as well which implies that you don't have sufficient cash reserves to handle financial hiccups without putting yourself and your family in a financial tight spot.  If that's true, I would highly recommend building that reserve stockpile as fast as possible because even if this particular event goes smoothly, I can guarantee you at some point something is going to go horribly wrong and you are going to want to have the funds to cover whatever curveball you get thrown without needing to stress out about it. 

HVACs break, roofs leak, basements flood, storms cause damage, carpets need replaced, tenants cause damage, tenants don't pay, etc.  You are going to want enough cash on hand to simply write a check for these types of things instead of worrying about if things are going to be alright or not financially.