All Forum Posts by: Cody L.

Thanks Sam Craven. I replied in your thread. Going to the woodlands is a bit of a no-go for me, but if you ever decide to have one closer to the city, you're welcome to use my office space. It can fit several people and is in the midtown area. I'm not trying to hijack any meetings you have planned but rather leave the option on the table for any future meetings.

The woodlands is way too far for me personally (I'm guilty of being an innerloop snop ;), however if you guys ever have a meet in the midtown/montrose area I'd love to attend. In fact, if you guys want to have a meet near downtown I can open my office up and volunteer the space. Plenty of room and right in heart of the city (near Montrose Blvd)

Joel -

Almost all my deals are done via non traditional financing. In part because many of the deals I do wouldn't qualify (a lot of what we buy are under performing multifamily in otherwise strong areas), and in part because I don't have the patience to deal with all the formalities of bank lending (but to be fair, I hate formalities in general. I just want to shake hands with the other party, agree to close, and go to title the next day)

I buy a lot via wraps or seller financing or a mix of the two... and any other creative way I can think of. If there is a seller willing to sell, I'll find a way to make a deal happen. There is almost always a way.

I've realized also that once you build a nice cash flow 'machine' it becomes easier and easier to buy more properties as you gain equity quick and rebuild your cash stores from rents to buy again. Often I'll sell a smaller property to cash out of it to get the equity to buy a larger property. If easier financing was there I'd almost never sell. But financing realities dictate most of my actions. Plus once you are known to be a closer, you can get better deals than most people. I've had my offer taken over others, even at a lower price, because they know I'm going to close. or I've been willing to go hard with EM (not advised by most others, but whatever :)

So maybe I'll buy a $300k apt with $60k down. PUt in $50k. Sell for $500k. Take my $150k gain plus $100k down to buy a $1m place that someone will finance (even via wrap) wtih $200k down. Put in another $50k Hold that for cash flow or fix up and sell for $1.5m. Take that $500k plus my $250k down back and buy more.

rinse wash repeat.

yes, it's easier said then done. But I've noticed that one problem first timers have is buying their first property. Yes, lots of them can't because it does take capital (or knowing someone with capital) to buy something. If you don't buy because you CANT buy, I totally understand. However I've ran into a lot of people that otherwise COULD buy something that haven't. That bugs me. I've told them "My property might not be for you, and that's fine. But PLEASE, buy SOMETHING! I'll even help you find something that's a better fit if you can tell me what you're looking for".

Lots of people will find SOMETHING about a deal to talk themselves out of buying. No property is perfect. If it is, it's priced accordingly (which then makes it not perfect due to price). My thought is there are enough "no brainer" deals that if you want to get started, there are plenty of properties to buy that'll fit it the range of what you have. I'll advise people to buy as much property as they can with their available funds (keeping enough aside depending on what work the place might need). Appreciation as a function of leverage will have a giant impact on your return on cash.

I'm not a tax guy and absolutely hate the topic, but I wouldn't think they'd have any amortization period. I always looked at them as just my cost basis into the property.

If I buy a place for $100k and had to pay $5k in other fees, I figure I paid $105k. If I later sell for $120k (and say I have $5k in costs in the sale), then I just made $10k. [(100+5) - (120-5)]

But then again, I normally do things the way they make sense to be done which is sometimes different than the way the rules say to do things so take my thoughts on the matter accordingly.

Here is a link with more info: http://www.irs.gov/publications/p527/ch02.html

Corey Dutton 9% interest only is amazing for hard money. I'll borrow that all day long ;)

What I've found is once you get into the realm of "non traditional" financing, it's all of a sudden 15% and 4 points. Traditional financing (even commercial) can be 4-5% and 0-2 points. It seems there is a huge gap between the two that doesn't justify the risk change from a traditional financed deal to one that doesn't qualify.

Example: We own a property that's worth quite a bit. We own it free and clear. We can't pull out equity via a bank. We could via a hard money lender but at maybe 50-60% LTV (meaning, their risk is basically 0). At such a low risk, it's hard to bring yourself to paying a rate that reflects a great deal of risk.

Hi guys and gals,

I'm Cody. New to the site, but like the idea of being able to try to help people that are interested in real estate. I try to tell everyone I can do get involved in real estate as I believe it's by far the best way to accumulate long term wealth. I'll apologize in advance if someone of my posts come off as "Don't over think it, just buy it!" :)

After leaving a good paying 9-5, I started doing RE investments full time. I'm very active in my area of Houston. We mostly focus on apartments and try to buy a new building at least once every other month. I've done about $15m in deals and should hit $20m before the end of Q1. We're the most active private buyer and seller of properties in this area.

If there are any buyers/sellers in the Montrose or midtown area of Houston that would like to meet up, let me know. I bought a property to serve as an office that's right in the heart of Montrose.

Corey Dutton: I'm not saying they don't have their place. And if you're looking to be flipping 100's of properties including several at a time, that's the only way. I started by doing flips using my own money and while I did well, you quickly hit the wall on how fast you can do things w/o hard money.

However, I've seen many people try to start their real estate HOLDINGS that way. Unless you want to get out fast and have a solid exit (and have experience) I would still advise against hard money, IF OTHER OPTIONS EXIST.

A friend of mine wanted to buy a place to fix up and was going to go to a local HML. After being quoted 4 points and 16% interest and a 12 month balloon, he contacted his dad who was able to get a traditional 30 year a ~4%, no points.

The EM, and the terms around it (when it's given up) are all negotiable terms just the same as the sales price.

I've gone up and down on the EM and option period in exchange for changes in sales price (meaning, I'll offer LESS sales price but a high EM that is "hard" day 1). Or if they want a higher sales price I'll do less EM that doesn't go "hard" for weeks or longer).

If you feel it's too high, tell them. A "standard" (if there is such a thing) is ~1%. So a $128k should be maybe $1,500 at most. But more important than the amount of EM is the OPTION FEE (I'd rather have a $500 option fee and no EM than $100 option fee and $10000000 EM), and the TIMING surrounding when you give up the EM

My walking around money comes from cash flow. It's like the "base salary" to a sales person. The appreciation and profit taken from a sale is like the commission and where most of the money to buy new properties come from.

I look at cash flow as a way to keep my employees paid, take my little owner draw, and pay down debit services and expenses. The equity taken out of a sale (due to appreciation) is what funds GROWTH and my ability to buy new and larger properties.

With respects to the hard money lenders out here (who do provide a needed service to people -- like payday loan companies), I'd try ANYTHING else first. Do you have any friends/family that can help you get a traditional loan? With a HML you'll still need to have your own capital invested, so maybe invest that capital with someone that can get a traditional loan.

Most hard money loans have crappy terms and should really only be used when 100% necessary. I've used them in the past when I had to in order to close a deal but even when working with people that know I'm "good for it" I've had to pay 2 points and 12% which I felt was very high (yet still good next to most hard money loans)