All Forum Posts by: Brenda Wright

Hi BP Community,

We are working on a deal, and I wanted to reach out to see if anyone does a Participating Mortgage on certain deals. Where a portion of the rental income (percentage of involvement) in addition to the regular mortgage payment is paid to the lender. I know other banks do that, but I wanted to know if anyone in the BP community does this and if they can reach out to me asap.

An Example:

Property: $5,000,000

Cash-Flow: $500,000

Down payment (on 25%) = 1,250,000

We put down = $500,000 = 40%

You put down = $750,000 = 60%

The cash-flow is slit with 60% going to you + the Mortgage payments.

I look forward to hearing from you.

Thanks,

Brenda

Hi Jai, we're happy to help :) We have a list of properties we send to all our Investors/Developers in Brooklyn, New York on a daily basis. Here it is: http://www.myrenovations.com/agents-developers/

This list is ridiculous! 

The 4 main concerns as an investor should NOT be the 4 listed, but...

a) What is the eviction policy (is it landlord friendly)? New York/California 6 years, Kansas 24  hours.

b) Does it have many prisons, government or military salaries that don't affect economic trends?

c) What is the +/- appreciation in the last 50 years? Buy stable, not something that appreciating and depreciates often.

d) How high is unemployment? Who cares about median salaries, it's more important to know: Are People Working!

Sorry for being so direct it just frustrates me to see fake lists that are in most cases created to increase a Sellers (or Agents) possibilities in certain areas.

This is how I break it down:

Cash-Flow 1st, then Appreciation if/when 2nd.

Why? I will explain:

If you buy a property for $100,000, and you get $500 a month in net cash-flow.

For me to sell it, I would need to have the appreciation to be AT LEAST 5 TIMES the yearly net cash-flow.

So if you are making $6,000 a year, then that would be $30,000.

So you are looking for someone to buy it for AT LEAST $130,000.

Why 5 times and not less/more?

You will spend months finding a new property, paying the closing fees, and reinvesting to buy another property and all this for maybe $5-8,000 worth. You just did a lateral moved! Helped someone else more, but didn’t appreciate your principal investment, which is your money and portfolio. So as an investor, you need to gain more out of a deal, you need to grow not stay in the same situation.

Hi Michael, 

The 6% is actually 3% (minus 1% management fee annually, 1% disposition and 1% acquisition fee). 

So my opinion: $3,000 is so small when rehabbers (in your network) are searching for any kind of loan amount below 15% from hard money lenders. 

Plus you still own the property is something goes wrong (if you're in first position).

Invest in yourself and things you can control.

It happens to us (here in Brooklyn, New York) all the time. Simply say these magical words: "Okay officer, which sign and where is it exactly located, I will take it off immediately!" Then go and remove that one sign. If he persists than say, you contracted these students to do it (which you should, and never be the person putting them up) and explain they got carried away. You still have 49 signs working for you.

My 10 Points:

1. Thinking … “Oh, I don’t need help on this.” No lone ranger here.

2. Understanding that your Purchase Price = Gives you your starting point to everything, INCLUDING your margin of mistakes.

3. Completely misjudging cash-flow (there should be a minimum of 30 expenses).

4. Calculating ARV's on the highest sales vs the lowest sales.

5. Thinking “I’ll get rich quick on this deal.”

6. Thinking the financing costs won’t affect your cash-flow.

7. Planning for a quick flip vs a worst-case scenario.

8. Putting off Insurances until you start the job.

9. You work WITH the GC not OVER him.

10. [There isn’t a point. You shouldn’t expect everything to be like everyone told you.]

April, sorry for sounding a little harsh, but this is coming from a caring spot. Now if becoming successful was just those very very few things you did, then everyone would be successful. 

Understand that the principle holds that 10,000 hours of "deliberate practice" are needed to become world-class in any field. Read Malcolm Gladwell "Outliners." 

So you have a buyers list, but no leads. Do me a favor: STOP sending money and start putting in the hours.

Action: Find all the properties that sold this year in your target market and that were bought in ALL CASH deals. Why All Cash? Cause they are usually Real Estate Investors and wealthier people who can afford to help you. Now, do 100 calls a day for 6 months straight and ask the following question:

"What can I do to help you, so that one day you will think of helping me sell one of your deals?"

It's that simple, put in the hours. Money is only for awareness campaigns, you need everyone to know what you want.

Btw, this will cost you NOTHING and provide you will all the results you need, it's just 99% of people would rather complain and do nothing about it.

*Tip: If you are still questioning the 100 calls a day for 6 months straight, then you already failed at being successful in your craft.

There are 4 legs that are needed to set this table:

a) Management company (Example: Many reviews = Many customers. They will always be bad, just read them all and see how fast they respond.)

b) Landlord friendly locations. (Example: How fast is their eviction process?)

c) Cash-Flow over the 1% rule. (Example: 100k property = Rent should be over $1,000 a month.)

d) Market neutral (Example: Military Bases, Has many prisons etc... where peoples salaries are constant and unchanged regardless of the market.)

Bonus: How far from the closest Starbucks/Wholefood/Fast-Food is the property? They all spend A LOT of money to figure out traffic trends. Stick to their analytics.

Read/Listen to 1 book:

The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It, by Michael E. Gerber.

Learn to SCALE not work more hours.