All Forum Posts by: Christopher Brainard

All joking aside, you should disclose it.

While I personally don't believe in paranormal activity, there are many people who do. The last thing your friend needs is the tenant to find out from his neighbor that the house is "haunted". People chase ambulances all the time - even the haunted ones!

Bottom line for me: If you know it, disclose it. There is no reason to take on any risk that can be easily avoided. Based on my past experience, the disclosure forms I've seen require all conditions which could affect the property's value. If a home is perceived to be haunted (even if we both know that it isn't), that would negatively affect the value.

-Christopher

@Larmon Cummings Jr

While I don't agree with how Jay has presented his argument to you, I believe the points he is trying to make are valid concerns for your business future and you may wish to give them some thought. 

I used to be a licensed realtor in Texas, but decided to forgo my license after moving, as I felt it was almost a hindrance to my rehab/investment activities. I don't know how that will play out for you, but it seems like you take an active role with your seller (which is good), but you may also be seen as providing representation for the seller (which is bad), and that could lead to a possible perceived conflict of interest. Additionally, I did not like having to disclose that I was a Licensed Salesperson on every deal, as some people felt that I was using my knowledge to take advantage of them.

As for the name, although I don't think NAR has a lock down on "Realty", however, one of your customers may assume you are a "Realtor", which is a subset of licensed salespersons. Additionally, when you do find a broker to hang your license, if you want your business to provide any real estate services, he would have to sponsor your business (which is usually more expensive than just hanging your license, since he has additional liability). Also, the majority of Realtors are touchy about this issue (Jay's response). Sometimes an ounce of prevention is worth a pound of cure.

It is unfortunate that you lost this deal, but knowing your closing costs and who will be paying for them is very important and should be spelled out in your contract. I would recommend that when you contact the seller next, I would offer to pay for all the closing costs out of your portion of the profits. While I don't know your specific area, it has been my experience that this should be between $1000 and $2000 on a $65k deal. If you are unsure what the costs may be, you should be able to get an approximate value from your lawyer or escrow company before you get the actual settlement statement or reference previous deals.

And there is nothing wrong with Wholesaling as a whole, but its a rough sell to sellers and buyers alike. There will be rough deals and rejection, but keep your head up and move on to the next. Everyone wants the best price and when they see what you make it black and white, greed sets in. That's just human nature...

-Christopher

Of course, I've purchased my first two properties cash, but if I continue to do that, I can only purchase 6 - 7 units. There is nothing wrong with that, but if I can obtain financing, I can make my money go a lot further.

Owner financing is a good point. I'll have to discuss that with my realtor and see if that could be used as a viable means to purchase property in the area. 

Thanks for all the feedback.

It sounds like a local lender is going to be the key for what I want to do - if anyone has any suggestions for the Las Vegas Area, feel free to send them.  I'll also take a look at the investment clubs in the area, there seem to be a few.

The Stated Income sounds like a good alternative, but the properties I'm looking at are below the 100k minimum. Credit isn't an issue, my middle score is 773, so I don't think that will deter anyone from lending to me.

As far as changing professions goes, I knew it wasn't optimal when I did it, but I wasn't able to commit sufficient time to complete the house I was working on otherwise. I gave up my six figure a year job in January of last year to work on the property.  I completed the rehab mid last month and sold the property in 5 days, which yielded a $260k payday. I would hope that I can find a reasonable bank that can see where that was a good idea ;)

-Christopher

Thanks - Hard Money isn't an option for rental properties. Too many points and interest rates are far too high. I'm interested in making myself money, not someone else. The two years of tax returns do not apply, because of my 'profession change'.

I'm looking into local people right now to see what is available. So far no real luck.

So, to give a little back story, my wife and I are moving to Las Vegas from California and I've decided to expand my real estate investment from rehabbing properties to rental units. Over the last 10 years, I've done 6 rehabs and managed to stash away about $500k in seed money for my investment company.

So far I've formed a LLC here in Nevada and purchased my first two properties for $130k total (paid cash). I've completed fixing up the first and have it rented for $750/month and will have the second done this month and should also rent for $750/month. I'm looking to purchase my 3rd property soon, so I figured I'd visit my bank (Bank of America) and see about financing so I could leverage the capital I have and make it go further. I was basically laughed at. They won't provide a loan to any business that doesn't have 250k+ in revenue and at least a two year history. They won't give me a personal loan because I'm self employed regardless of credit score or assets. Ok, guess I need to change banks. I reached out to the SBA, as the SBA504 loan would work perfectly, but they don't provide this type of loan for real estate investment. I spoke to the guy at the SBA and basically he said he would talk to some local banks in the area to see if anyone was interested but they just don't deal with real estate investment anymore.

Now, I know the Las Vegas Real Estate market was crushed and still has only recovered by about half. I get that, but what to do? I can continue to purchase a few additional properties and a personal residence, but by the end of the year I assume my investment seed money will be exhausted. Does anyone have any suggestions on how to keep this train rolling? Ideally, I'd like to purchase a condo for $65000 - $70000 a month, fix it up, then rent it out, and then repeat. For me, I think this is the best way to build my portfolio.

-Christopher