All Forum Posts by: Henry M.

For the record, title is not spelled wrong. It is a play off a name.;)

I guess this mobile app doesn't allow proper spacing... Yikes! Lol!

(Everything in the following story is absolutely true). A friend of mine told me there was a home in my neck of the woods and I took interest immediately. It was through a wholesaler he knew very well. The story was, over a dozen investors tried to secure the home, but the lady who lived there was considered crazy. She divorced from her husband five years prior and been separated a total of eight years. He stopped paying on the home and she was at minimum seven to eight months behind. She was a hoarder. She smoked, was suicidal, desperate, and lonely. All the red flags which I should have read and taken to heart. The ARV was on the low end $240K to $259K (median/avg) and she didn't want to split the profits 50%/50% with her former husband. He supposedly promised her 75% of the profits and he would keep the remaining 25%. However, every time they would get close to closing, he would change his mind to 50%/50%. This back and forth dilemma killed every deal. Yet, this was just a small part of the reason every deal fell apart. Their hatred and spite was second to none. He had not lived in the home for eight years and she felt betrayed by his drunken and abusive ways. He felt like she bled him dry and slowly groomed him to lose control. I visited her and pitched her a deal she could not refuse. I told her we would lower the price to $100K, as they owed roughly $80K on the note... And I would pay them 50%/50% each, equaling $10K net per person as I would pay all the closing costs. I told her I would provide in writing the remaining $15K upon the retail sale of the home when she would earn the remaining balance of our agreement. Now I am sure some investors are believing why bother when I could have bought it at the steps of the courthouse and wipe them both out. I could have potentially gone that route, but my best chance was to acquire the property before the auction. Needless to say, even though the wholesalers lost the deal and their contract ended... I also placed in writing that I would pay them $5,000 for the phone number. Why? The Golden Rule. I've been circumvented and burned many times in the past and that wasn't something I felt I could not do. I wanted to be different, honest, and prove I was cut from a different sheet. In the end, all the above was moot, as this couple's rage and spite for one another was too much to contend with. He would rather have quit his long time job and sit out in front of their house while the sheriffs removed her belongings from the home. On the other hand, she would rather have lost $25K and punish her former achilles heel, so every time he applied for credit, he would be reminded through rejection what he had put her through. Long story short, after three weeks of minimal headway... I knew my old lesson of never becoming attached to any property would prove true yet again. The rehabilitation and restructuring of property would have ranged roughly & up to $50K. By the numbers: $105K ( purchase price & CC ) $35K (profit for homeowners) $5k (Wholesalers) $45K (rehab: materials & labor) = $190K - Sub- Total $10K (reduced commission) $10K (holding costs) = $210K - Total $250K (potential sales price) =$40K (net profit) Within four to six months... This should have sold and provided a very good profit. However, this deal was too high risk in the sense of not closing. It was time to fold em' up and move onto the next property. Losing money I never had was not the issue. Instead, it was the idea of how do you help someone who doesn't want to help themselves. This was in a great location with real estate having increased at least 30% over the course of several years. The moral of the story: No matter how great the strategy is or how enticing the profit looms in the distance... One must know when to walk away. In other words, never become attached to the property as it my crumble apart right before your eyes. I hope this story sheds an example of not allowing a deal to dictate your terms, but instead you dictating the terms. Just my two pesos. "Big" Henry (Please VOTE if you like this blog lesson and want to see more)

Joshua,

Although this was directed, @Will Barnard... I thought I would throw my two cents into the discussion. Any wholesaler who is going to provide an estimate must do so conservatively. They do not have the luxury to assume the buyer is going to DIH (him/herself)... You have to estimate it as if the buyer was using a third party. 

Anything else is a flaw.

Next, in regards to the type of material used... This goes to the area of the house and what the price point is from the median pricing. 

Example: In San Antonio, if a house's ARV $125K, then it is most likely the buyer is not going to place granite countertops or real hardwood floors. Now does it mean s/he wouldn't? Of course not, but that would not be par with the area or buyer you are marketing to... Vs. a higher end location such as Alamo Heights (up to six to seven figure homes). Unless the buyer buys the home at a steal, then s/he may never recoup that money in a home with higher-end materials in a lower budget home.

I don't want to dispute any or all validity in your post, but this is where experience plays a large part in where the rubber meets the road.

Again, just my two pesos.

"Big" Henry

Go to search bar and type: The Truth About Wholesaling Let me know when you're done. BIG HENRY

Go to search bar and type: The Truth About Wholesaling Let me know when you're done.

Tom, * Not sure if you will like this idea... But What I would do is open an account strictly for deposits... I would have my customers drive to any Wells Fargo or Chase Bank and make their deposit any time of day or night. * Now how do you distinguish who paid their rent? There are two ways: 1) If they deposit after hours through ATM, it would print check on a receipt or 2) the teller will provide receipt as proof of payment. * It was up to the tenant to send receipt as proof... The could come into office and provide a copy for their file, send via Email, or text (which you can Email to yourself and print proof in file outside software)... * This of course outside of Auto Debit... Or have your manager hold checks (on responsible tenants) and if they are not behind on rent... Until the first of the month. * Then just one day per month you are dealing with checks. Does it mean some tenants will want a receipt in real time sure.... However, majority will want an Email receipt upon deposit. * My experience: I manage over 1,000 units and it works great for me. Great payers are consistent... Bad payers are inconsistent. * Just a friendly suggestion. * BIG HENRY

Well I would only do SFH if they are distressed... Never retail. Otherwise, Multi Units is 10x better. Keep in mind, 1-4 units is considered Residential and 5 units and up are considered commercial. I would never pay retail or discount pricing on any property period unless it was a property that you can refurbish and increase revenue. This is where patience is a virtue. Take your time and don't pigeon yourself in a mindset overlooking duplexes or triplexes... If the price is right, take them down. Is you goal to just tie up your money or earn a passive income? I'm sure you get the point. Just because you have money, never be afraid or oblivious in not being creative. Depending on your market, never be afraid to negotiate... "If you're not embarrassed by your offer, then you are paying too much." Good luck! BIG HENRY

Well I would only do SFH if they are distressed... Never retail. Otherwise, Multi Units is 10x better. Keep in mind, 1-4 units is considered Residential and 5 units and up are considered commercial. I would never pay retail or discount pricing on any property period unless it was a property that you can refurbish and increase revenue. This is where patience is a virtue. Take your time and don't pigeon yourself in a mindset overlooking duplexes or triplexes... If the price is right, take them down. Is you goal to just tie up your money or earn a passive income? I'm sure you get the point. Just because you have money, never be afraid or oblivious in not being creative. Depending on your market, never be afraid to negotiate... "If you're not embarrassed by your offer, then you are paying too much." Good luck! BIG HENRY

I believe syndication is a great resource, however I would prefer to be the syndicator... With that said, one major lesson I have learned over the years is... CASH IS KING!

I know... That was low hanging fruit. The point: Never Tie Up ALL Your Money!

I would prefer to leverage my money. Come up with a plan to obtain whatever your goal it is you are seeking.

In order to reach it, you must plan it, research it, then execute it.

Buy distressed properties at 20-40% of ARV, then Fix & Flip...

Syndication again is great, even at minimum, but normally that is for bigger purchases I.e. Apt. Complex, Storage Facilities, etc.

You should not bite off more than you could chew.

In real estate investing next to location, location, location and due diligence... Is cost of money.

And no I didn't forget experience.

With $300K, there is so much you can do on your own or with another financial partner (I.e. bank, private lender, etc).

What could you do solo?

In my area... Buy SFR properties for $30-$50K, repair up to par, collect $1K to $1.2K per month from housing aka Section 8.

Or even invest in multiplexes... And generate passive income without giving up all your fortune. 

You can buy three to five properties with just half your money. Maybe invest $50K in syndication as indicated from previous posters... And still have $100K on hand, just in case.

There's no right or wrong answer, unless you fly blindly into any given deal.

I'm interested in future postings on the subject.

Just my two pesos,

Big Henry