All Forum Posts by: Bernie Granier

@Julian Buick, thank you!  I don't know why it had not occurred to me to look for a podcast, I'm driving to Houston this morning to see Game 6 of the World Series with my dad and driving back down tomorrow morning so I've got 8 hours in the car to start listening to it.  That should give me a good

Thanks for your input, @Jeff S.  I read through several threads on the subject and am continuing to research.  I made this post in the hopes that someone that is local to Corpus or Houston is willing to accept a free meal in return for letting me pick their brain about the lessons they've learned and things they wish they'd done differently here.

I've had a few fix and flip guys approach me about lending them money for projects and I'd like to explore that some.  I'm not really sure where to start though, as I've never worked on the lender side of a deal.  So I have a very broad question of, "How does one become a private or hard money lender?"  Also, what are the rules I need to be concerned with in Texas?

I would be lending around Corpus Christi so I can go look at properties until I have a history with the flipper.  We are in Houston about once a month for a few days, I would welcome the opportunity to buy lunch for anyone that's currently lending, either in Corpus or Houston, in return for the opportunity to pick your brain.

Feel free to email me if you're willing to help me out.

@Ryan Snelson, based on what you've written, I would add that you were not actually in a Joint Venture with this guy. Anytime you expect to make money solely off of someone else's actions, you're actually buying a security, not investing in a JV. In that case, he should have created a syndication for you and others to invest in and filed Form D with both the SEC and the state. So, you can add SEC violations to the list of things he did wrong.

Since you now have the notes in your possession and are actively working them, that might have changed now however, I would bet that if you contacted the SEC and told them this story, they would probably take action.

@Jason D. That seems reasonable, they're not helping with damages but, at least they have some skin in the game. I think it's better for everyone when all involved have some risk.

I didn't read every post in this thread but, I have a question that I didn't see answered skimming through them. If your LLC has a note on the property, why couldn't you write that loan with competitive terms and then sell it once all the repairs are completed? That way you could get back the remaining balance of the note plus some of the future interest.

@Mark Bommarito

I lived in Houston for over 30 years before moving to land we inherited a few years ago in South Texas. For $150k, you can get a decent SFR in the NW Houston or Cypress. Look around Hwy 6 out to Fry Rd and close to 529. The North side of 529 is a little nicer than the South side. All if it is in Cy-Fair ISD, one if the better school districts in the Houston area, and crime is relatively low. That area is on fire with growth right now, which is one of the reasons we left, it was getting too crowded for me.

Thanks for the replies, I thought that might be the case.

I wonder though, at what size would an investor be enough of a PMC's revenue to be able to make some demands of them that they normally wouldn't entertain?  25 units resulting in $50,00/yr of revenue?  50 units and $100,000?  Or, does it make more sense as you hit that size to hire someone that answers only to you to manage it and provide bonus incentives for them to keep everything occupied with good tenants?

@Rex Celle, you Say - "However, property managers normally get 10% of rent, so it is in their best interest to screen for a good tenants because if rent does not come in, or if the place is vacant, they don’t get their 10%. This is how my agreements are structured."

I see that a little differently, if they get 10% of the rent when a tenant is in the unit but get to charge a full month's rent to place a new tenant, and they're marking up repair costs for managing the contractors, then it is actually financially more advantageous for them to put a tenant in the unit that won't pay the rent so they can charge you to evict them in 3 months, make some extra cash on the rehab and then charge a full month's rent for placing another crappy tenant in the unit to repeat the cycle.  Of course, long term you're going to fire them but, I've dealt with a lot of sub-contractors and employees that don't think about what's going to happen in 3 months or a year if they do something dumb, they only think about how much they can make off you right now.

I'm still in the research phase of my real estate investing but, one thing I know is that I want to be an investor, not a land lord, so I would be using a property management company.  I'm curious about something though, if the PMC has been given a clear profile of what a qualified tenant looks like and they put someone in a unit that they haven't fully screened or for some other reason slips through the cracks, shouldn't they have some financial responsibility for the lost rents, cost of evictions and any required rehab work that is a result of that?  What is normally done, is it typical that they get paid regardless of their performance, or lack of performance?

I understand that I would need to manger my manger, just like I would with an employee or anyone else that I delegate responsibility to however, every other area that I hire sub-contractors for they are responsible for performing the work to the standard we've agreed to.  If they don't, they don't get paid until they've resolved any deficiencies and if we have to pay someone else to complete the work, they don't get paid at all.  To me, a relationship where both parties have something to lose is more likely to be successful for both sides.