All Forum Posts by: Brad B.

I started out driving mostly foreign cars, but I now seem to gravitate to fords. I have an 07 Taurus with 130k and a 2010 fusion. Both run great. I almost bought a BMW right before I settled on the fusion, but something about plunking down $40k on a car just didn't sit right.

It's not a car, but I also have an 83 Harley FLT for putting around.

I would say that my profile is semi-complete and it's done that way deliberately for the time being.

I am currently investigating and trying to learn as much as I can - so I'm just dipping my toes in the water. My 2 year goal is to be involved full-time. Until that time though I'm involved in another venture to pay the bills. Since I haven't taken substantial affirmative steps in this new direction, I'm making somewhat of an attempt to fly under the radar on my intentions until I feel I have to notify my partners. Not that there's anything dishonest or sneaky, I just want to keep my own counsel on my decisions for the time being and not cause problems unnecessarily.

I fully see the value of disclosure and openness with regards to profiles. I think it's essential to being part of a community and really doing proper networking. Sometimes though, we all have our reasons for doing the things we do. Personally, I'm not ready to be that official yet, but when I am, I'll have no qualms about it.

I think this is an interesting issue and I'm glad to see it addressed in this forum.

The first thing I would say is that BP should probably not act as the verifying agent. Taking money and issuing a verified-by certification based on BP management evaluation for someone's profile is asking for trouble. I think a few litigators just wet themselves in excitement thinking about it.

If I owned BP, I would keep as far out of the mix as possible except to provide a central directory. I would look to act simply as a broker or a trusted middle man. Take the money to cover a background / identity check and then pass that off to a reputable vendor. If everything comes back good, then issue the avatar or whatever device to show the person is reasonably believed to be who they say they are.

This model does offer up quite an opportunity for enhanced checks. See if the vendor is willing to do a simple check for some low amount covered within the price of a pro account membership. That would be a good entry level. If a member wants a more thorough validation, say if they were doing more deals via the site, then offer an enhanced background through the vendor. It may be a good marketing expense for the member.

The big thing is to not have BP make the final determination on who is trustworthy and who isn't. Base the data on the analysis of a company specially designed to absorb the risks associated.

My day job doesn't specifically do backgrounds, but I deal with it quite a bit. Generally, we see basic checks being done reasonably - a couple hundred dollars - which if you could negotiate a volume deal with a vendor, you could probably negotiate that price down to something manageable for a membership upsell. A good due-diligence check for someone in an important position normally runs a few thousand, which again could be negotiated as an upsell.

After that we start seeing big dollars. A corporate board member investigation could run into the $100k+ range depending on the company. Your typical top secret bg investigation would be somewhere in that range as well. My rambling point is that even at those top levels, no one can be 100%. It becomes about acceptable risk.

I would hate to see BP go away because someone trusted someone else in a deal gone bad because of a determination made solely by BP management and the lawyers came out to play. I think the idea is great, as long as it's executed correctly.

Some things to keep in mind. Not only is it important to worry about data confidentiality, but you also want to address availability and integrity in your overall security plans.

Using an encryption product is a great method of maintaining the confidentiality of your data. (i.e., making sure only necessary stakeholders can access it) However, it's important to properly use encryption as well. Although I could write a paper on this matter, you want to handle the basic protections. Your encryption is only as good as the algorithm used combined with the tokens you use to decrypt or access the data the container holds. Generally, for a windows desktop user, I lean towards either PGP Desktop or a TrueCrypt container. Truecrypt is free and very, very secure when used properly. PGP is very good as well, but costs money. Ideally, with what ever solution you use, make sure you are protecting it with a very strong password. Not something guessable such as a word. Passphrases work best since they are sufficiently long, contain enough characters of different values, and are easily memorable (so that you don't write it down). A good pass phrase would be something like, "The rain in Spain falls gently on the plain!"

Additionally, you want to ensure you can always access your data when you need to. That's the availability portion. Once you have an encrypted container - make sure you back it up someplace. Ideally, you want a distinct of a backup location as possible or realistic given your circumstances. You also want to make sure your backup copy works. I've been in many situations where people trusted their backups only to find they didn't work when they needed them most. It was false security. Testing your backups falls into the category of Data Integrity.

If you do all of that, then you have some measure of data security. But it should be practical based on your specific situation. There are many online services that you can use for storage and other things without resorting to buying special hardware. Since your data is strongly encrypted, it shouldn't be an issue about unauthorized users having access.

Another thing to note, since you are keeping personally identifiable information (PII), it would serve you well to familiarize yourself with your state's laws concerning inadvertent disclosure (hacking). It happens to a lot of businesses and some states have more stringent rules than others concerning who needs to be notified and when as well as what are the ramifications for non-compliance. It's better to have that information in order while you are thinking about data security than after an incident takes place.

Interesting post. I think it exemplifies certain key aspects of this whole ecosystem.

First, you hit the nail on the head by addressing value posed by the immense information resources and mass sharing being done. This does allow the consumer more choice and intelligence prior to ever making a phone call. This most definitely puts pressure on the existing business model of brokers and agents.

Second, as Mitch asks, where is the benefit for the investor?

I see it this way...

In reference to the first point, most of the new technology being developed and marketed is aimed for mass appeal - the consumer. They target bringing the most eyeballs as possible and then provide a referral service or other services to the professionals that would most benefit. This is ok, and seems to be adequately working for the most part - although I would love to see real metrics on conversions brought through major website's referrals. To me, it doesn't feel like it's new or unique in terms of a product offering that leverages the power of this vast information resource, just another means of dressing up an existing business model to give it legs for a little while longer.

Regarding my second point, I think there's a huge potential for the real estate investor. The challenge is two-fold - how to more efficiently acquire, maintain, and manage the investment; and then how to get maximum returns on that investment. This means that information sharing could be used very effectively to streamline and introduce efficiencies into back-end operations. It could also be used to reach better, more qualified buyers of our product.

I think there's a definite opening for directing both of these seemingly divergent segments into something the updates the whole start to finish process to make it a mutual win for both the consumer and investor. It's going to take some time though to work through the technology challenges, legal challenges, and the personal bias challenges from the "old guard" who want to do the same things the way they always have done them.

Based on what I've seen, my guess is that we're still 3-5 years out on anything truly novel in this market, but it looks like some bright minds are starting to put real thought and effort into making headway into solving these challenges. I personally look forward to watching and participating.

@J Scott - That's probably my biggest source of fear on this particular place. What's visible isn't horrible and hasn't scared me away; it's what's not. Unfortunately, without pulling down plaster, it's hard to tell. When I did the last walkthrough, the basement was dry and very solid with no signs of major issues. The floors were solid with no signs of rot or other bad things going on. The roof was just torn off and redone about 3 years ago. But it's always the stuff you don't know about.

On the flip side, I'm trying to be pragmatic about it as well. This being my first, there's a chance I will hate everything to do with it. In which case, even if I double over my estimate and invest $20k on rehab, I'll hopefully be able to recoup some or all of what I owe on the note in the event I decide to get out. I'll be out a chunk of change but I'll have a lesson learned in what not to do under my belt.

Luckily, I haven't done anything yet as I'm still putting all my ducks in a row, so I have opportunity to revise and readjust accordingly.

This brings up another question. Everyone has pretty much told me my estimate is too low on $10,000 to update 1000sq ft. Is there a rule of thumb that you guys tend to use to provide a benchmark average? Knowing this is rental grade (i.e., not running hard wood floors and granite coutertops, etc.).

Thanks

@Mark - Thanks for the response. This is my first investment of this type, but I have the benefit of having been on the periphery of construction and contracting for most of my life. I'm not even remotely that guy, but luckily I have some good and knowledgeable friends and family to guide me.

That said, I'm in the process of reworking my budgets and estimates now. 10k seemed to work for me, but if experienced people are saying it's too low, then I'm going to do the due diligence.

@Jon - The bath is mostly cosmetic. The fixtures are older, but still very serviceable. The biggest problem is that someone thought it was a good idea to make it hospital green on the walls. The kitchen has some older cabinets but they are still strong and good after a strip and repaint. The biggest thing I'm seeing is a new counter top.

It has a newer (5 years or so) stove, new hot water tank, newer washer and dryer in the deal.

Thanks for the reply Jon.

I'm looking to get into the single family for about $27k with an out of pocket of $5k plus closing costs.

I think rehab is a term I mis-used. Basically I'm looking at new electric service with new boxes, switches, baseboards and smoke detectors (quoted $1500, counting on $2000), fix some of the walls and windows, open up some odd wall choices (non-load bearing), and so some cosmetic work. In a later phase, the plan is to do further upgrades to cover some ugly. The exterior is solid, but plain and ugly.

The triple is holding firm at about $47k. Rents are at or around the $400 per unit mark.

I'm not real wild about the triple but I didn't want my own prejudices in the way of determining the best deal given the basic situation. I've tried to go into this looking at properties in terms of potential and cash, but the triple kind of overwhelmed me in thinking about what it needs.

Thanks for confirming what I think I already knew.

Thats the tough part about starting out. With this much cash on the line, I don't want to make a huge misstep this early. I think if I had some experience under my belt, the triple wouldn't bother me as much, but right now there's just too much stuff I don't know to jump into something like that as deal number 1.

Since the beginning of the year I've been moving forward with trying to get into this. I've looked at targeting my focus on a long term buy and hold rental strategy. So I contacted a broker I've done other business with who also has some rentals of her own. I started looking at a few places with her that have been on the market for quite a while. I have two prospects that are priced in a decent range for what they are and have potential seller financing.

First, is a small 1000 sq ft single family built in the mid 1800s. It's been vacant for a couple years and in desperate need of updates. In fact, it's going to be close to a complete rehab in order to bring it up to a livable state - not to mention up to code. I've estimated it will be around 8000 - 10000 for updates. Anticipated retal income, as it currently stands is approximately $700 in this market - per my broker. After renovations and updates, we figure it will be between $800 and $850 depending on the finished product. It's currently 2 bed / 1 bath.

The second one is a turn of the century 3 unit residence that's currently fully rented and generating around $1200 / month. It needs some major help. Foundation, plumbing, electrical, heating, etc. as well as some cosmetic updates. Based on my estimates from a cursory walkthrough, I would budget no less than $20000 to stabilize and update. I would figure on removing at least two of the tenants in order to fix the back two apartments (month-2-month with no lease, so shouldn't be an issue).

So, I'm jumping in, but I'm hesitant to bite off more than I can chew the first time out. I'm leaning towards the first house since even though there's a lot of potential work, it's a little more straight forward due to it a) currently being vacant and b) being very simple in its construction. The multi-family place seems like a nightmare to me, but it's rented and currently generating income. With investment it could generate more, I'm sure and also bring in a better quality of tenant.

I understand there have been very few details here, but given the two deals, which seems better on its face? Is it smarter to go with the multi-family due to the potential for more income even at a higher acquisition cost for purchase plus rehab, or is the single family a better starter?

Thanks

Thanks everyone for the words of encouragement. It's going to be a learning process, but from what I've seen, this site appears to have some very knowledgeable and experienced people who are willing to share what they know. As a newbie, it's good to know.

I'm scared and nervous about what I don't know yet, but I'm looking forward to the adventure and where this endeavor will take me.