All Forum Posts by: Dean Attali

I'm looking to acquire a few rental properties around the ~$150k price range, and recently I've touched based with a very popular turnkey company. The deals they sent me looked good initially because they advertised ~15% ROI over the first year, which sounded amazing!

But when I looked into the numbers, I noticed that the actual COC return was below 5%. They added "Appreciation" and "Equity Accrued" to the spreadsheet, that together bring up the number to 15%. This is not in an expensive or crazy appreciating market (such as FL, YC, California), it's in the midwest, so appreciation is not really a huge metric I'm after.

In many of the podcasts and webinars, I've learned that Brandon's and others' philosophy is to aim for 10+% COC, and that does seem to make sense to me. What do you generally look for in a rental property in non-luxury markets - just COC, or should I accept this turnkey company's analysis that the real return is much higher than just the cash return?

I'm looking for a property manager for a SFH that I have because I'm out of state. Most companies I found manage 100+ doors and have a whole team, but I also found a couple smaller "companies" which are really just realtors who manage a few houses for a few clients. These smaller ones seemed to be a lot more enthusiastic and hard working and I really liked them, and they're also much cheaper.

If I have a multifamily building or many doors to manage I'd definitely go with a proper company, but I'm wondering if for just one simple home that's needed? Do you have any experience with small vs big teams, or any opinions on this issue?

That would be a good idea but I'm from out of state so it wouldn't make as much sense for me. I do need someone on the ground to show it and manage it. 

Hi all,

I have a SFH in Olathe, KS and am looking for a property manager. I have one but I'm very unhappy with them (unresponsive, don't seem to have my best interests in mind, don't try very hard to to get property rented, don't try to shop for best contractors, just overall lazy). I'd love to get recommendations!

Thanks for the inputs everyone, and thank you for not taking my questions seriously, as I'm sure for anyone slightly more experienced these questions may have looked a bit silly :) I've gotten more than what I expected to learn from this post, it seems that I didn't even properly differentiate private vs hard money! Thanks everyone

@Chris Mason so you're suggesting that allowing him to borrow 100% of the funds he needs is a terrible idea :) Why is that? Why should it matter to me if he takes 80% or 100% of the money from me, if I get the return anyway after the year? Is it just a security measure in the event that he doesn't pay me back, so I can claim the property without having put 100% of its value down?

I've been talking to someone I know who did a few flips over the past few years, and he mentioned he's always looking for people to fund his flips. I have some cash I want to invest so we talked about how I could potentially be his lender for a flip.

I've been researching what typical hard money lending terms are so that I would have a better idea of what to ask/expect from our arrangement.

I have 3 questions about this:

1. Why is it standard practice to charge origination fees/points upfront on the loan? It seems counter productive to me, because the whole point of me lending him money is because he needs the capital to purchase a house and rehab it, so why would I say "here's 100k, but first give me 3k"? For example, if the terms are 10% interest and 3 points (assuming 1 year), why not just say the interest is 13%? I may be misunderstanding how the points work, but more importantly I don't understand why they're needed.

2. Similarly, why is the loan usually between 70%-90% of the home value, why not 100%? The way I see it, the reason he needs my money is because he doesn't have his own to invest in the project, so why is it so common to say "you do need to put in X%"?

3. This doesn't relate to the title of the post, but I was wondering if there are any specific terms that are a good idea to include when lending for a flip. For example, some term that somehow increases/guarantees my return? I was also wondering if, when talking about a flip loan, the LTV value is using the value of the house+rehab in the calculation.

I'd be happy to receive any sort of feedback on these topics. Thanks!

@Wayne Brooks I did not understand the technical details of what he says the problem is, so I won't try to say things that are probably wrong :) He said there's a hole in the line, but that he still isn't able to see everything and it could still be much worse.

I completely understand that this can happen. But my point is that his employee (the inspector) should not have guaranteed to me that he can fix it for some specific amount, it feels almost like a bait n switch because now I have the house and have to pay the full amount. I don't know what I could have done differently - I asked explicitly if that's the final cost no matter what he finds and he did say yes, I have proof of that, it's a bit worrysome that I cannot rely on what a professional tells me.

@Kyle J. I told myself ahead of time that whatever the inspection report comes back with, I had up to 5k in total to spend on the house. If it as more than 5k, I wouldn't buy. The small repairs and reflooring are about $1500 so with this $3000 I was at the max of what I was comfortable with. I figured 3k is not little, but it's not a huge amount, it's ok if that's the final price (which is why I tried making sure it *is* the final price!).

Lesson learned, do get multiple bids for *everything*. But it doesn't help me for my current situation.

Hi all,

I'm very new to real estate investing - just joined BP in June and closed on my first rental property yesterday. It's a great SFH in an A area (Olathe, KS), inspection report came back very clean, everything looked great. I was very excited.

The only problem that we found was that during the sewer inspection, the guy said he ran into some problem with the main line where the camera got stuck but he didn't know exactly what the issue is. He gave me a bid for $3000 to fix it. This seemed very steep for me, almost made me not buy the house, but I decided that if everything else is great and I just have to spend this $3000,  then sure. The quote he gave me in writing did say this was an estimate, but to me $3000 seemed like a large sum of money and I wasn't going to be comfortable if that was not the maximum cost. So I called him up and asked him very explicitly if this $3000 quote is just an estimate or if that's the final cost. He said very clearly that he does not know the exact issue because he could not see it, but this $3000 will be the final cost to get in there and fix whatever he sees. As a lay person who knows nothing about plumbing, that sounded reasonable; he did an inspection, saw he had an issue, and said he would fix whatever issue it was for X amount. He said multiple times that this is the price and it will not go up.

Using this information, knowing I'll have to pay $3000 and have a rental-ready unit before October, I decided to go ahead with the purchase.

Fast forward to today, his boss (the company owner) shows up, and says that after cleaning the sewer line a bit, he's able to see there's a lot more problems than what they previously thought. It's going to be a much larger and more expensive job, maybe 2 or 3 or 4 times the original cost.

I strongly believe that he should honour the price his employee told me. I do have a recording of the phone call we had, so I have proof of him saying $3000 was the final price. The owner's claim is that his employee could not promise me that price because he did not know what the problem was at the time. I do understand where he's coming from, but that's on them, not me (or so I see it). I think the problem stems from his employee overpromising something he could not deliver. I went ahead with the purchase of the home largely because he told me $3000 would be the amount I would pay to fix the plumbing issues, otherwise I would not have bought it. Now I have the house and he's telling me it's going to cost a lot more. I don't think there was any malicious intent here, but it seems reasonable to me that it should be up to him to honour what he said rather than me paying for his mistake.

I want to resolve this ASAP because I want the house to be ready for October because otherwise I will lose October rent, and also the rental market will cool down and will be harder to find a tenant at the price I want. So I'm a bit pressed for time.

To be honest, I would be ok with a compromise too, such as a discount on the required work, but the guy has been very hostile and angry and yelling at me and not showing any remorse or understanding my perspective. I don't want him to do any work for me because of how disrespectful and unprofessional he is. I'm sure other plumbers will also tell me it's a big costly problem (I'm getting bids tomorrow), so my problem is not specifically with him giving me a high quote, it's the fact that I have a house with a lot more repairs on my hands than what I was led to believe and I think the plumber who did the inspection and overpromised should have to pay for his time, not me.

Does anyone have any advice on what course of action I should take? Perhaps I'm being unreasonable and I'm the one who's in the wrong here, I'd appreciate any feedback or similar experiences.

Everyone keeps saying that the first investments usually end up being bad investments and you learn from mistakes, so I suppose this was bound to happen because a smooth sailing first buy is just too good to be true :)