All Forum Posts by: Bob Woelfel

I second what @Luke G. said.  About two years ago I took my one page personal financial statement and walked into 4 different local banks without an appointment.  I asked to speak with a commercial lender.  We discussed what I was trying to do and they reviewed my statement showing where i was financially.  By the end of the day I had 2 of the 4 banks ready to start loaning me money on projects.  If was a fun and beneficial exercise to try.  I always recommend tracking where you are financially as this really helps you when searching for money.  Best of luck.

@Nick Broce...congrats on getting some cash saved up and putting yourself in a position to get started.  Hard money loans are a good option as most can close within 7-14 days once you get all the docs to them.  Rates vary depending on the experience of the borrower, cash reserves and the deal, but typical hard money rates for rehabs in KC are somewhere between 2-4 points and 11-15%.  Again, this depends on a lot of factors.  Once you have more experience and deals under your belt these will go down.

One thing to be aware of is that even in KC a 40-70k house is definitely on the lower end.  While there are some buyers for this product most of them are other investors and not homeowners, which might put a cap on what you can sell for.  Some lenders will also not want to lend on these low end flips as well.  You have enough of a cushion saved up to be looking at better neighborhoods.  Just my 2 cents.  Best of luck.

@Rob Hakes there are more, but here are my top 3

1) Personal development...I can't stress this enough.  Whether it be learning how to manage my own finances better, reading about how to improve my life or learning about real estate investing I would attribute much of my success to improving myself as a person.  I've read a number of books that have either changed my life or changed how I've looked at things, which has in turn improved my life dramatically.  Even meeting and marrying my wife.  10 years ago I wouldn't have stood a chance, but I improved myself and became a different person and therefore was able to attract someone like her into my life.  

2) A high paying job...When I first started I had a good job that allowed me to take care of the basics for me and my family while also allowing me to save and invest. With that said, I lived almost exclusively off my salary (which was about 30% of my total income) and the majority of my commission pay was reserved for investments.  I looked good on paper to banks and I was able to get financing for the deals I needed to do.

3) The market/timing/luck....Although I would like to think that I'm a smart investor, I would have to say the run up of the market has helped me drastically. I was able to BRRR a number of houses and sold my old primary residence last year, which in turn allowed us to buy a number of other investments. We have good equity and LTV in all of our properties.

I could list a number of other things, but those are the three that stick out the most.  

@Terence Brown start talking to smaller banks about commercial lending. I was able to refinance a rehab with them and have done several BRRR's using my small bank loaning to my LLC. We were able to do this without really having a 2 year history, although I did have a well paying job at the time. I was tired of rate chasing and wanted to establish a relationship with someone. The flexibility they offer has been very helpful.

@Samuel Chua Yes I believe Jay is right in that you were talking about the property going down in value?  I was not RE investing during the last downturn so take this with a grain of salt.  If you are talking about a property that you currently own then I'm not sure there is much you can do.  When properties or neighborhoods go down in value it's mainly because something happened with the overall market or there are things going on in your city or neighborhood that are negative.  More people are leaving it than moving towards it.  Perhaps the schools are getting worse.  Perhaps the neighborhood is changing and for some reason people are not taking care of their properties.  Perhaps it's become saturated with tenants/landlords and not homeowners.  There are a lot of factors and most are going to be out of your control if you already own this property.

Now, if you don't own anything yet then there are a number of things you can do to protect yourself and mitigate your risk.   Buy in markets that are desirable and where people are moving.  Buy in neighborhoods where this is happening as well.  Buy in good school districts.  Buy houses that are desirable in that you could eventually sell to a homeowner one day and not another landlord.  

To your last point about losing money....this is an investment and you have to look at it that way.  There is always a chance with an investment that you lose money.  That's why due diligence is so important.  Best of luck.

@Scott Kenna What do you mean by paying in cash but using a payment plan?  Is your relative going to owner finance you?  I guess I'm confused.  Either way, paying back 200k in 5 years means you'll have to pay 40k a year in just principal.  I'm guessing you know this, but it's not an inconsequential number.  Are you going to VRBO or AirBNB this place to cover some of the cost?  While the equity you'll have is great, those payments will be hefty.  I think we just need more detail to really offer any valid suggestions.

@Jonathan Trimboli when I first got started it was a combination of getting direct bids or knowing the prices of materials I was using and then just estimating the labor costs from there.  I spent a lot of time at HD and Lowe's to learn pricing and this really helped me.  I wasn't always accurate, but if you have enough of a cushion in the deal I never found myself in much trouble.  

@Alissa Warren I would try to fish in your own pond first. Go to local REI meetings and/or reach out to HML's in your market. Other successful investors have used them or at least know who they are. They have a reputation and are trying to protect it. Build a relationship with them. It also helps to have a deal to discuss:).

As Jay pointed out there are a TON of online lenders/brokers...some good and some bad.  The bad ones really don't care about you, your deal or you even making money.  Some are scams that prey on new investors who don't know the process and get taken for a ride, which is why I recommend going the local route.  Best of luck.

@Jay Hinrichs...good points.  That's crazy that people risk their homes, but yet can't get rid of their toys.  

Before I met my wife I dated a girl for a few years.  She worked in the car industry and each year she would buy a new car and get rid of her "old" one.  These cars were like 35k and I think she was making between 40-50k a year.  She actually moved in with me for almost a year and I was basically paying for all of our living expenses.  Within two years of me breaking it off she had filed for bankruptcy.  

@It's about choices.  The people in the podcasts have made decisions.  They've wanted something and have given up other things that don't mean as much to them so they can accomplish it.  I think most of the successful investors and those who have been on this site for awhile have a pretty good idea of who they are and where they want to go financially.  Particularly those who have been a guest on the show as they have achieved a level of success that most would aspire to.  You typically don't get there by worrying about what others think of your financial choices.  The goal is bigger than that.

My wife and I have two vehicles total and the value of those right now is probably about 10k.  I look around at others in our neighborhood and I see some houses with 150k in vehicles in the driveway.  Talk about a never ending drain on the bank account, but to each their own.

If you want to be like nearly everyone else and live this life of constant consumption then that's completely fine.  But, if you want to be different and live like most can't then you typically have to make some choices.  Typically, the more drastic those choices are the quicker you can get to that life you want.  Good luck.