All Forum Posts by: Jonathan C.

First step is of course call the owner and ask them if they want to sell- something simple like: 

'I notice you own the property at XXXX.  Are you interested in selling?';

if say no, I would respond with 'Just out of curiosity, when was the last time you saw the property?'; 

if was a long time ago, I would say- 'the property isn't in the greatest shape, and I hate to see a property deteriorating like that.  I can send you some pictures of the outside if you'd like to see it- what's your email address?'

Then find out what price they want

Re: private money- you can find hard money lenders by doing google search or from REIA meetings. It will be expensive, but if its a good deal it doesnt matter.

Purchased 3 rental properties in Arlington, VA at one time from one seller on owner financing.

Got the lead from a yellow letter- the sister, Realtor, contacted me and put me in touch with her brother who she owned properties with in a trust with one other sibling.

Negotiated with seller primarily around monthly payment amount, which seller was willing to get to a point where it was close to matching the total monthly rent that came in. Messed around with amortization, interest rate, length of balloon, and purchase price.

Ended up getting the properties for 210k each; worth about 260k each at the time; now about 290k.

Rented under market when purchased; increased rent in all 3 by $150-300/mo over following couple years

5 year balloon note; 30 year amortization; 6% interest (roughly- will have to confirm loan details)

Jon

Wholesaling is awesome because you can make money in real estate with virtually no risk and comparatively little cost.  But as Ned said, it's very difficult to find good deals and find enough good deals consistently to make a living at it, and it alone.

My current opinion on this, and my plan, is to have 4 real estate investing income streams and add 2 additional real estate income streams that are not real estate investing related.

As Ned said, the key is to NOT try to do all of them at the same time, or it's not going to work.  Master 1 (I'd suggest in this order), then move onto the next.

How I see it is this:

1- wholesaling- this the lifeblood of all real estate investing- you're finding deeply discounted properties- whether you're buy and hold, actually wholesaling, renovating yourself, scrape and new build, condo conversions, whatever, buying deeply discounted properties is critical

2- renovating and reselling- picking off the best deals to renovate and resell yourself (I do this currently), then wholesaling the rest

3- rentals- using a portion of cash from rehabbing to purchase X number of rentals a year.  I've been trying to buy at least 2 rentals a year.

4- bigger development- 'swinging for the fences' by doing a couple higher price point, much more involved construction, and possibly much higher profit development deals.  For example, right now in permit process to dig out and build new foundation underneath existing DC row house, add new top floor, and make 2, 2 floor condo units that I'll hold as rentals for approx 5 year then sell as condos

Non investing income streams:

1- property management- you'd want to partner with someone most likely to do this.  In my case I helped my brother grow his property management business- he's running that.  At some point I'll bring him into development and he'll bring me into property management. This will be important next time market tanks and may not be able to do as many deals

2- real estate brokerage- through the direct mail you do from wholesaling, and through the clients you have as a property manager who decide to sell, you start to see opportunities to list houses.  We are currently in the midst of bringing on an employee who will get her Realtor license and we will make her the point person and get a portion of the commission with us doing the rest.  We hope to have it grow from there.

I like the multiple income streams approach to smooth on the super cyclical nature of real estate.  Developers- whether building a 300 unit apartment or flipping 4 or 5 houses a year- tend to do amazing when market is hot, and get crushed when market goes down (often going out of business entirely).  This diversified income stream approach seems to make most sense.

Start with wholesaling, get that where you are consistently getting deeply discounted properties, then do your first flip.  Get to the point where you're consistently renovating 10,15,20 houses a year, then peel off a wholesale deal that makes sense for a scrape and new build, small multi family development, or whatever larger scale development makes sense, etc.

Hi Beth- thanks for reply but given the amount of houses I'm flipping and the fact I'm using a Series LLC isn't feasible to have separate bank account for each LLC, that's why I need to keep everything in the 1 operating account and 'tag' the money to the LLC.

Hey- so I'm bored even asking this question, but unfortunately this seems to be important according to the asset protection person I'm working with.

I flip 20-30 houses a year. I'm going to be doing this in a Series LLC soon. My asset protection attorney said to have one 'operating' account that pays out and receives all money, and then have the individual 'Series' hold title to the property but not actually do any transactions.

Since I will only have one operating account but will have 3,4,5,6 series at one time going, plus 4 different LLCs for rentals, tracking income and expenses from the one operating account back to like 7 or 8 LLCs is giving me a migraine just thinking about it.

Do you guys have an accounting/expense program/software/whatever that allows you to 'tag' income and expenses to a specific LLC? Do you know if Quickbooks can do it and if so what the functionality is called?

Thanks for any advice on keeping track of income and expenses for many different LLCs from one operating account.

Listsource.com or any other list provider can get this information.

Go to listsource.com, create a free account, then call their customer help line and they can walk you through exactly how to do it.

This is a list you'll need to BUY.

Free way is to search county tax records through MLS (see if you know a Realtor who will let you borrow their ID) or at the county court house for properties owned a long time- i.e. 20,25 years plus. This will not guarantee free and clear but properties owned that long are much more likely to be free and clear.

So assuming many people have the same experience as me where vast majority of lenders/underwriters are interpreting FHA 90 day flip rule end date as the date contract is signed as opposed to date contract is executed (settlement date), how are people handling this when they're done with houses sub 90 days in markets with mainly FHA buyers?

I'm in the unfortunate position on 2 houses right now of a) waiting 2-4 weeks with a vacant house and paying holding costs until 90 days are up or b) marketing before 90 days are up and indicating in agent comments on MLS (or somewhere else on listing) needs to be conventional loan, thereby limiting the pool of potential buyers and also, by definition, likely decreasing price and/or increasing days on market.

Any rehabbers selling to FHA buyers and completing projects sub 90 days- interested to hear what you're doing.

Thanks, Jon

Depends on where you are in your investment life cycle- i.e. Acquisition phase, maintenance phase, disposition phase (if I'm remembering the terms for the 3 parts of the cycle correctly).

If you're early on in career and looking to increase portfolio, should cash out and buy more with relatively high leverage (while being sure to have solid cash reserves on the side of course).

If you're middle career and looking to just maintain portfolio and don't need cash flow from properties, then focusing on building equity in existing properties by using cash flow to pay down loans make sense.

Then end career dispose of assets and the sweet equity you hopefully built up by selling outright or owner carry or whatever.

I personally would cash out and buy more with leverage, but that's someone in acquisition mode bucket talking.

I'm licensed as a Realtor in 3 states and have wholesaled about 35 deals in the last 4 years; it has not been a problem for me.  

As a wholesaler you have a contract with the seller and so you have an equitable interest (I think that's the correct term) in the property, which allows you to market the property to buyers.  That's why wholesalers can basically 'sell houses' without a Realtor license. 

Getting my Realtor license was very helpful so I have access to best information (MLS) to comp properties and establish value. I also get a lot of flipping deals off the MLS, so for me it has been crucial to have my license.

Hey- wanted to give an update here.  Over the last 3 days I contacted approx 15 lenders that were involved in the last 20 or so houses that I sold and the 7 or 8 who responded all said they could only do date property was purchased to date contract signed as the 90 day time frame.  None of them indicated they could do date purchased to date of settlement for the 90 days.  

I'm sure you're right, but @J Scott any tips for finding lenders who would use settlement date for end date instead of contract date?

Thanks everyone