All Forum Posts by: David Garner

First off...   congrats on getting this investment u der your belt, and the rehab completed! Well done!

I have a few questions, then I'll see if I can help.

What are the terms of the hard money loan you have? Term etc.

Can you clarify what you mean when you say there is "no lien on the mortgage"?

DG

Hey Tyler... No you don't need great credit, though being bankable certainly opens a lot more doors in terms of funding options and investment strategies. Creative financing is a huge part of real estate investing, and there are lots of options that don't require great credit. Hard money loans, private money loans and seller financing can all be used to acquire properties with less than optimal credit.

I have used private lending to acquire more than 100 houses in less than five years as a foreign national with no credit and no SSN, so it can definitely be done.

You could also look at wholesaling... no credit needed there!

All that said improving your credit will open the door to many more (and cheaper) funding sources for you, so work on that, too.

Good luck!

DG

First... great question!

For me, leading with adding value has been the cornerstone of scaling our business to 100+ doors.

Precisely how we add value depends very much on to whom we are dealing with. Everyone has different needs, so here are some examples from my own business:

For my prospective passive investors, I provide a ton of free education, articles, videos, workshops etc. This leads to new funding partners.

For existing investors that have funded deals for us, we give them a ton of timely information about our whole business. Keep them very up to date with all of our activities, as well as the market as a whole, and I make sure I am always available to speak to them personally. This has led to around 50% of new funding partners coming from referrals.

For folk that bring me off-market deals, I have helped them to sell the houses I did not want to (or could not) buy. This has led to me getting first refusal on the best deals as they come in.

For my relator, I have referred multiple investors, and her business has grown exponentially as a result. I still get first refusal on ay listing she gets that ft my buy box.

For my tenants, I carry out repairs immediately, and offer certain amount of considered flex if they have financial issues one or two months. Almost all our tenants now pay on time (in C Class neighbourhoods), and we had around 90% rent collection through covid.

I have referred other investors to my title company. They always rush through a closing if I need them to.

More than anything else, the little things like giving praise for a job well done, and thanking people for their service to our business goes way further than you might imagine in today's world.

In short, how you add value depends on what the person you are adding value for needs.

Find out what they need specifically, and do that! 

I have found the best way to find that out is simply to ask! 

Ther are about 1,000 decent HMLs nationwide. Most stick to lending locally, some are nationwide, and all have different terms. They're not hiding, but be VERY careful, there are plenty of scammers, too.

When you do find a HML prepared to lend in your market...

Check if they need a licence in that state. 

Do NOT pay upfront fees direct.

If the deal sounds too good to be true, it is!

Look for little red flags... touting for business on FB, using a gmail, no company website, ridiculously good loan terms, agreeing to lend almost instantly, sketchy communication.

Get some references.

Ideally ask for a word of mouth referral to lenders while you're networking with realtors, title companies, wholesalers, other investors, attroneys and contractors. Many of these folk will know HMLs and PMLs.

Then, on to private money... 

Again, make yourself known, network, be present, add value for others. Join groups, particupate in the conversation. Eventually, the private money will find you. In my experience, you don't go hunting for it, you attract it by being the guy or gal they want to lend to.

See if you can find a local investor to partner with in some way to add value for them, and get plugged into their network. Make a name for yourself as a decent person who does what they say and has some experience.

Asset based lending can be somewhat of a misnomer, because while the asset is the backstop for the lender, a good borrower and save a bad project just as a bad borrower can ruin a good project, and lenders know this. Of the the Ps (people, paperwork and property) they put peole first. Of course everything else has to line up too, but its definitely people first for the lenders I know.

Good luck!

DG

Good point Keenan... weighing up the amount of time vs dollars tou can afford to spend, or a mix of both, is a great place to start!

About half of what I buy is off-market. Finding deals proved to be very time consuming, and my time is more valuably spent in other parts of our business. So, we partnered with a wholesaler. So we now get first refusal on all his off-market deals at a fixed mark-up, and I help him market the ones I don't want to (or can't) buy to my network of investors.

The deal works out well because everyone is getting some value from it. I buy at least a couple of month from him, and help him sel 5 or 6 more to my network.

Nice, I like it!

Hey Andre

I have 104 OOS houses right now and growing, but boy has it been a process getting here!

I made a lot of mistakes, but mistakes are the best learning tools, right?

Precisely what you look for in your research should be dictated by your goals. For example, I buy a lot of houses other investors would balk at because we have an affordable housing program that is suitable for a particular kind of asset in a particular kind of area that doesn't always fit other investors model. That's fine, I know what my goals are, so I go looking for assets amd deals that will help me achieve those specific goals.

So, once you have a handle on the kind RE you want to buy, and your investment strategy, you can start to pin down potentially suitable areas by the stats from your desk.

I say 'potentially suitable' because desktop research will get you only so far. 

In my opinion, having won amd lost on many deals of this type, the very first thing you need to do is to start building a network in your target market.

For me, this people first approach is fundamental. I will not invest ANYWHERE without a solid, trusted network that I have spent the time, effort and energy nurturing and adding value for.

More than once I have made the mistake of following the numbers, only to get burned because I didn't have the right people on my team. 

So here's what I recommend...

1. Set your goals.

2. Formulate a desktop research process to identify potentially suitable markets that fit with your goals.

3. Start picking up the phone and speaking to people, and use the Internet to start building a network.

Join forum discussions, social media groups, LinkedIn groups, online REIA meetings.

You want investor friendly realtors, title companies, other active investors, hard and private money lenders, contractors, an insurance agent, an attorney, and if you can... a mentor with experience in that market. Maybe even a biz partner.

Seek referrals and recommendations from everyone as you go along. You'll be surprised how quickly your network with grow, and who you'll be introduced to that you might never have met.

It can be as easy as saying something like this at the end of each covversation...

"Hey, I'm actively building a network here so I can do some business, I'm looking for trustworthy and capable X Y Z, who do you recommend I speak to"

You'll instantly get plugged into exisiting networks.

4. If possible, go walk the streets yourself, and meet your network face to face. 

The thing is, an 'area' or 'market' can look great on paper, then you start speaking to people and you find out, "not that street", or "not that contrator" or "this guy is looking to partner on a deal".

In short, my experience tells me that RE is a people business. So, lead with adding the right people to your toolbox, then the deals, funding and everything else will find you.

Good luck!

DG

Hi Michael 

I've bought in 2 OOS markets, and I've used a number of data sources to compile fairly accurate rent estimates when I first entered the market...

Rentometer Pro reports.

Speaking directly to local property managers and/or Realtors.

Reviewing like for like active rental listings online

Good luck.

DG