All Forum Posts by: Brad Piper

Thanks Luke! What sort of interest rates should I expect? I'm looking primarily in CA, AZ, CO, and FL.

I have a handful of long-term rentals, but I am hunting hard to get my first short-term rental. I am looking for a lender that will do an asset-based loan on a STR at an interest rate near/under 4%. I can put up to 30% down, but obviously as little down as possible would be ideal.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $260,127
Cash invested: $2,500

This is a house in a B+ neighborhood in super desirable area. It is an older property on a big lot, and the location alone gives it a ton of value (great local shops/restaurants/schools etc.). This was a wholesale deal that I got in late 2020.

What made you interested in investing in this type of deal?

Long-term rentals is my game plan.

How did you find this deal and how did you negotiate it?

I was sent this from a local wholesaler. I went to a group showing and had the highest bid.

How did you finance this deal?

Line of credit that is collateralized by other assets.

How did you add value to the deal?

Despite its age, the house was in good shape and it just needed some basic cosmetics. I had a contractor come in and do some basic cosmetic updates.

What was the outcome?

I bought the house about 5 months ago, and I'm currently refinancing it for almost $40k more than what I bought it for.

Lessons learned? Challenges?

I learned that it is possible to get a good deal from wholesalers, but it is very difficult. I also learned that during negotiations with the wholesaler you have to watch out as they will try to bait you into paying more. Minutes before I was told I had the highest bid, the wholesaler asked me if I was willing to go any higher than my original bid...it was obvious that there wasn't another higher bid, but that they were trying to see if I would increase my bid at all if I felt pressured.

 Oh so you're actually closing on the homes and then re-selling them? I don't know anything about the Cincinatti market, but with all the financing charges and transaction costs I have to imagine that's pretty hard to make money on. Depending on the size of the loan, you might be able to get these extremely short-term bridge loans from private bankers, but otherwise you'd have to use hard money lenders (unless you can find some private money). I'm in Texas and private money/hard money tend to be in the 8%-12% range. I talked to one banker that was willing to do 6%, but they wanted a minimum debt of $1M, which is hard to do unless you have a relatively big operation. 

Here's my advice - if you identify a house that you want to buy, close, and then re-sell without doing any work...just wholesale it! You'll save yourself time, make your money faster, and you'll make more money because you aren't paying transaction costs and extra financing/holding costs. 

Update for anyone still looking for info on Astroflipping: I tried Astroflipping last year, and it was a really bad decision. The course is for the most part as-advertised, there is categorized content and assignments that you're supposed to work through, and there are opportunities to get on live calls with Josiah, who runs the show. There were a few big problems for me:

1) When they give you the sales pitch, they make it sound extremely easy and they reference how many deals they do, as well as random people around the country that are crushing it and doing tons of deals. The harsh reality is that everything they are mentioning is an exception/outlier. Wholesaling is immensely difficult. It takes a lot of time to get into wholesaling, and spending that time doesn't guarantee any sort of success. When I was in the facebook group, at least 90% of the people were posting about not knowing what to do next/not having any success. The Astroflipping team will sell this course to ANYONE - even people who are not suited for it or have no experience in real estate/contracts/negotiations etc. As long as you say "I'm interested in real estate," then they'll say "this course is for you." I am a realtor and a real estate investor, and I went through the course and even tried to implement some things, and I quickly found out it is not worth the time...unless you are prepared to literally make it your business and priority - it's next to impossible to build up operations that are successful. 

2. They get you on the hook by telling you it's a month-to-month deal and that you can cancel any time. That is clearly something they do frequently, because just in this forum alone there are a handful of people who said they had a month-to-month subscription. While they do (as far as I know) honor the cancellation even if you haven't paid for all of the months - they give you a very hard time about it (more to come on that below). After I said I wanted to cancel, I was on a series of phone calls with different people who were confused and did this whole routine that "that isn't normally how we do things, that's not how it is supposed to be set up, our employee should not have said that to you." I believe they do this to get you on the hook and have people pay for a few months that would have never signed up for the full program, and then once you are 1-2 months in they pressure you in to staying.

3. This is my biggest problem with them - they owe me $1,000. I am still tangled up trying to get some money back from them. In a very long story short - I told them they wanted to cancel, but they had billed me for an extra month, but they set the billing to auto-bill well before your current month has expired. This started in June of 2020, and they billed me $1,000. They refused to refund me the $1000 saying that it was too late, but once I disputed the charge with my bank, Astroflipping came back to me saying that they would refund me if I dropped the charge...it's too bad that my discussion with them wasn't enough to be decent and refund me. They ended up lying to me, because I dropped the disputed charge just as they asked, but they never refunded me. I have the emails proving that they said they would refund me, and it has not happened. This started about 7 MONTHS AGO and they still owe me $1000. If I contact them now, they just say there's a problem with the banks and that there's nothing they can do about it. 

4. All of the things mentioned above as preface, the last thing I'll say is that this is a wholesaling company. Wholesaling is perfectly legal, but wholesaling is built upon a less-than-honest foundation. The entire business of wholesaling requires misdirection, pursuing people who are struggling in life, pursuing widows with recent deaths in the family, and trying to rip people off and get properties very cheap etc. Many times throughout the Astroflipping content, they have scripts that suggest something different from what the intention is - this happens to mislead a seller and hope to get a seller's property under contract for far less than it is worth - that is after all a requirement for a good wholesaling deal. I know all of this is legal and part of a free market capitalistic economy, but I think it speaks to the character of the company. This company is willing to screw over a grandma/widow, this company is willing to screw over me while I just want my money back, why wouldn't they screw over you too?

As mentioned before - I'm a Realtor and a real estate investor. I'm well studied in business with a background in accounting, and I'm well studied in real estate business niches like wholesaling. I feel like I'm in a uniquely strong spot to comment on this company as I watched countless people in the facebook group fail, and not even have the first clue what they were doing. Even with my experience - I had no success, and ended up not trying any more so I could focus on other things that are more fruitful. I heavily recommend against paying all this money for a company like this. If you want to wholesale, that's awesome and good luck, but just look it up on youtube.

@Joseph Schweizer thank you! I'll reach out to you directly. I read through the forum you shared and definitely would love to hear more about your experience and the resources you like to use.

I am a Realtor in Dallas and can use the MLS locally, but I'm wondering what people use as good resources to evaluate out-of-town properties? I am interested in doing some turnkey investments, but I'm not sure what the best resources are for due diligence. Specifically - being able to validate the monthly rent amount given by the TK company. On the MLS I can run a residential lease report for recently leased properties, but I'm not sure how to do that on any other website. All other additional thoughts and advice on out-of-town investing is also welcome!

I think this is absolutely one way to do it, but I'll be devil's advocate just for the sake of discussion and provide two main reasons why I choose not to do it this way.

1. This is HARD. Tracking down all of these documents takes a lot of time, effort and communication, and then once you have the documents, you actually have to read them, interpret them, and figure out how they apply to your situation and your applicant's situation. When there are already tools that do this for you, to me it's a lot more efficient to let those tools go to work for me.

2. If you do it this way it's going to take a lot of time, and that can be a detriment to you and your business. If you're taking a few days to track down and call work bosses, get check stubs, get bank statements, get brokerage statements etc. that causes a lot of ripple effects: your applicant gets antsy, your applicant won't love that some random landlord is getting all of this sensitive info (everyone would rather send those things to an established company), in the meantime you might have other applicants and now you're not sure how to handle that, you end up losing an applicant because they had to send sensitive info to someone they don't know and they went multiple days without hearing back.

I appreciate the grind of doing it oneself, but in my opinion there are great resources to use that mitigate a lot of the aforementioned risk. 
 

At this point I think I'm really just piggy-backing on a lot of what has already been said, but I believe the very first step for your friend before anything else - is identifying what his investment goals are long term. Real estate is hard, but super doable, but it takes a lot of time and know-how to make a good investment, regardless of the investing strategy you're using in real estate. If he wants to get into real estate investing then he should hop onto biggerpockets.com and read for about 6 months! If he doesn't think he wants to get into real estate investing - I would go so far as to say DON'T put your money in investment real estate. That isn't because I don't believe in it, I have some properties myself, but really because the opportunity cost is so high. He can take that 150K and turn it into $2.5 - $3 million (conservatively) in 40 years without literally lifting a finger...just put it in your everyday quality funds in the market and be done with it. 

At the end of the day - the investment of his money should reflect how he wants to format the investment of his time. If that's is for sure in real estate - go for it. If it isn't - that's fine too, it's not worth the headaches to try to build a real estate portfolio if you aren't passionate about it!

Similar to what @Nathan Zierer said, I would HEAVILY recommend getting a job either with a flipping company, wholesaling company, or a real estate brokerage. I believe getting your real estate license and working for a brokerage is your best opportunity for a few reasons:

1. Getting your license is relatively cheap and fast (assuming you go through the material quickly), it's great education, and it allows you to do things in real estate that non-license holders cannot do.

2. Every brokerage needs more agents. Good brokerages/teams are constantly trying to recruit new agents because an agent costs a brokerage almost nothing, but when that agent has a deal, the brokerage gets a cut of the commission.

3. Good brokerages/teams have too much work, and new agents get to capitalize on the work that older/experienced/successful agents have already done. They have more work than they know what to do with, so they will give you leads and split the commission with you...and then you get paid, you get experience, and you get to start building relationships with clients.

4. The foundational education is huge in real estate. Even if you eventually want to flip/wholesale houses, or build up a rental portfolio etc. becoming a realtor and working in a brokerage will teach you how to do very important things like navigate contracts, build relationships with lenders/title/insurance, contract negotiation, running comps on houses, running other numbers/metrics on houses. 

5. If you get in with a good brokerage/team - you'll make enough to quit your minimum wage job pretty fast.