All Forum Posts by: Brad Cornell

@Brian G., thanks for the advice! When you say a state-specific PA, is that something you can get for free?  Also, in calling the title company, what info should I be looking for from them after explaining the deal?

Hey BP!

So I have a verbal agreement on a 25 unit portfolio and I need to get it under contract.  My question is this: is it best practice to have an attorney draft one up for me or is it better to be represented by a Realtor even though its off market and there are currently no Realtors involved.  I'd love to have a PA that I can modify the terms of but obviously want it to be legally sound.  What is normal for contracts when working off market deals?

Thanks all!

@jeremy 

@Jeremy Hostetler this definitely something that I myself and I'm sure many others have dealt with. The way I see it there are two main reasons for it 1) you need to fire your realtor. That our you need to have a hard conversation with him/her about your goals and expectations, especially when the market is this hot and competitive. Remember that they work for you and not the other way around. 2) There just isn't much inventory right now which has driven up competition. I just had a property yesterday that popped up on the MLS and I looked at it almost immediately, sure enough it was already under contract. Why you may ask? Because the listing agent pre-sold it before putting it on the MLS.

With all that said, I want to emphasize the importance of having a really good agent and communicating clearly with them what your goals and expectations are.  Secondly, the importance of personal brand and networking is king in today's market.  If people know you, what you're looking for, and the like you, you'll get the deals.

For clarity, I'm looking for to do 2-16 unit deals with these people currently.  Apartment buildings will come later after I gain more experience and build confidence with these relationships.

@Mauricio Rauld thanks for the insight and clarification. So with all that said, my follow up question is how "Active" do investors need to be.  I'm not trying to skip over the law, but just trying to gain clarity.  If I bring in 1-2 investors, is them having decision making power, being kept informed of activities, and participating in a annual or bi-annual meeting enough?  There would probably be much more of the aforementioned during any renovation and then once the property is stabilized everything would be reduced.

@Amy Wan I really appreciate what you said about registering with the SEC is only for public companies.  That makes a lot more sense!

@Theo Hicks @Mauricio Rauld how difficult is it to go through RegD or 506B process?  Time, cost?

Hey All!

My wife and I became RE investors last June when we bought a 4-unit that we are house hacking. Since then I’ve been hunting for more deals like a mad man and educating myself through books, BP, and meetups.  We’re now walking down the path of working with investors to do more and bigger deals. We’ve built a decent size network of investors and have about 500K available to work with at the moment with more available once we prove the concept. We’ve learned a ton moving this direction but I seem to be hitting a few roadblocks that I was hoping you all could help me with. 

Here's the scenario- I have four investors that I have previous relationships with, some friends and some family.  They see that I'm doing well with small multi-family investing and have said "if you find a good deal let me know and I'd love to invest."  They are looking for 3-7 year commitments and want ownership stake in the properties.  I would be the deal provider and manage the day to day operations and any rehab as well as tenant management while they would basically just inject cash.  We're looking to mostly do small to medium sized multi's for now.

The question is this, do I need to file with the SEC or is there a way to legitimately do it without the deal being a security?  I've heard several different thoughts and ideas about this entire thing, I've ready "Raising Private Capital by Matt Faircloth," scoured the forms and watched a lot of YouTube videos, but haven't gotten very far.  I'm hoping you amazing people can shed some light with your experience.

Hey @Bobby Esposito!

That sounds like an excellent opportunity! Great work on making that connection and having the ambition to do something about it.

I can't help you out with location but what I can say is that the LLC will be determined by how you finance the deal. If you go the traditional 25% down then you can form an LLC and buy it within the LLC right away from my understanding. I'm guessing you're not going to be owner occupying this property so you probably won't be able to take advantage of NE first time home buyer low-down-payment programs.

As for insurance my guess would be about $100 a month.

it's very easy to have the tenants pay the utilities on a single-family home. You just have them call the utility company and transfer the utilities over to them for the duration of their lease.

I would start hunting for deals as soon as possible if I was you. You could wait until April but the only problem with that is you may not be able to find a deal in time. So start looking now and see what you can find! depending on the seller you may be able to set a later closing date.

Hope some of that helps!

@Ronnie Terry no problem man, that's what we're all here form.

I use the BP calculators.  The $39/month I pay to be a pro member is worth it to me.  If you don't want to pay that then the next best thing is to study the BP calculator and build your own in Excel.  I tried doing this and decided it was worth paying the $39/month for how much I use it.  As is preached on BP, you need to analyze deals and a LOT of them.  This way you will know a deal when it comes along.

Hey @Noah Farley! I will agree with @Jordan Moorhead in that househacking is about the best thing ever.

My wife and I just bought a fourplex in June and it's undoubtedly the best financial move we've ever made, so I definitely encourage you in taking that step to get started and I'm confident that basically everyone on BP would do the same.  There can be some fear involved in making this leap, but if you've done your homework, find a good deal, and vet the crap out of our tenants, it'll change your life.

My biggest advice is to make sure you're buying a cash flowing deal.  DO NOT buy something that you will lose money on every month once the entire thing is rented.

If you have specific questions feel free to ask as everything is very fresh for me right now.

Hey @Matthew G Roy welcome to the BP world!

So I agree entirely with @Christopher Phillips in that you need to figure out who actually owns the property.  Also, it will probably be hard to get the owner to hold a note that is subprime, meaning a lower interest rate than a bank would probably offer.

My other concern is that you say you can get a 35% return the the first year when it is 25% above market value.  Not sure what this deal looks like but that sounds a little fishy to me.  If it was that good of a deal then why isn't it sold already?  If it's that good then why not just pay them the list price?

Hey @Ronnie Terry, its cool to hear that you're wanting to start investing so young.  That's amazing because the impact that will have on your future is exponential compared to starting at 35.

All of this advice has been amazing and I think to summarize you need to do the following in this order.

1. Stabilize income/decrease expenses so you can increase your savings rate

2. Look for ways to generate additional income through a "side hustle" or by killing it at your job

3. Fix your credit score.  There is a LOT of amazing info out there to help you do this with small credit lines and credit cards.  Paying down debt isn't the only way to increase your credit score.  Download Credit Karma on your phone and keep an eye on it.  It will also give you suggestions to improve your score.

4. Educate, educate, educate. You have to begin educating yourself on the topic and really understand how real estate investing (REI) works. If you don't know what's available or possible you won't know what to do, what to focus on, or where to go with your investment strategy. Hang out on the BP forms, listen to the podcast, ready books. Great books to start with: Rich Dad Poor Dad-Robert Kiyosaki, How To Invest In Real Estate-Brandon Turner Josh Dorkin. If you need more resources just read all of BP's books, they're all amazing.

5. Practice analyzing deals.  This is key, but you need to educate yourself on how to do this first.  Once you know how and what to look for just start analyzing a little bit every day.  This will ensure that when the time comes to buy your first property you will know a good deal when you see it.

6. Build your network. This is probably the biggest thing of everything and should start today. Get together with other investors via REI meetups. You can find these on BP or on meetup.com. Ask the BP forms about investor friendly realtors in your area and take them to lunch.

7.  House Hack: this is in my opinion the most powerful way to start your investment career, especially if your young.

Hope all of this helps!