All Forum Posts by: David Lopez

I am currently starting to put some offers in to flip properties in the Sarasota, FL area and am looking for some good contractor leads. I can do most work myself but that is not my end goal and I want to begin starting relationships and getting quotes from local contractors on the projects I am going after. Any help the BP community can offer is greatly appreciated to avoid mediocre workmanship.

Thanks,

David

I appreciate your response @Steve Olafson but don't really feel that not offering a preferred return is like not having confidence in your deal. REI is not a risk free business and market changes can't always be predicted but that is what you are doing with a preferred return. I get how it can be a big plus for the investors but I don't see the upside for your time investment to predict a guaranteed 5 year trend in any market. I feel that a reasonable sponsor/investor split is fair without the guaranteed return percentage.

On the flip side at a certain point I can see larger investors and more seasoned lenders would have certain expectations and preferred returns may be a requirement.  These guys are usually playing in much bigger business deals and already make a certain average percentage over time. 

I think it is a case where there is no right or wrong answer across the board and each deal has to be viewed by its merits, returns, and how much is being lent compared to your own investment both time and money in the project. But I can see your argument and Michael's, depending on the situation, being the right choice.

Thanks for getting me to think deeper on this subject,

Dave

@Steve Olafsonthanks for the response. In the interview Michael Blank was against preferred returns because of the negative implication on off years with a stacking liability if the property did not make the total return you promised. Have you ever had any issues with preferred return offers in your deals?

I just finished listening to Brandon Turner's interview with Michael Blank on investing with other peoples money. If you have not listened to this it is a great interview and very informative.

I feel confident in my ability to raise money and have some investors currently allowing me to get in to a big deal sooner than later. The first question I have for the community is what is a good rate of return to offer in the current market for investors? Is there a standard average to follow like the stock market etc...?

My second question is how do you structure your hold and sell time period. Clearly as long as the property is making money my wish is to hold it for 10 plus years but investors may want their money back sooner if they are older than me or for various other reasons. Do you put in verbiage that deals with market fluctuation in case the sell period comes up and the market is on a downswing so you want to hold it longer?

Any tips would be greatly appreciated.

David

I don't trust zestimates and would never take that to the bank when figuring out a cost for a homes after repair value but I do use those sites for recent sold comps. Curious if any other members feel differently. I do this to find a good offer number and then send the information through an agent. I don't think it would be smart to send every evaluation through an agent since it is a lot of work for no reason on most properties. But clearly the best is to get your license and have direct access to the MLS.

Welcome Chris. Make sure you take advantage of all the literature and the webinars @Brandon Turner gives. Not only are they informative you can get a great idea on how going pro can help your journey in investing. good luck!

It will be a nice change from the snow that does not seem to want to stop in the northeast. Thanks for the welcome message.

Jordan,

You need to do your homework on the property and other lien holders who you could become liable too as you suspect. The county clerks office usually has this information online and/or in person. It varies for each location. When looking at these records you need to find out who else is owed money and how much when factoring your numbers on what you are willing to offer. This is what a title company does when you purchase a property but the cost to pay a bonded title company would get large fast if you tried to do that for each property you thought was a good deal. I would call the county clerks office in the location of the property and ask them how you can get this information. They are usually very nice in helping you get started. You also need to consider other things that won't be available at the county clerks office. Is the property occupied? What is the current shape the home is in (usually only an exterior inspection is allowed)? Utility bills owed? HOA payments and late fees? Etc... Books on the subject and a local REIA meeting to meet people who are versed in the local requirements and processes is also a huge help.

thanks again!

Just want to also clarify that using equity in your current home is great to purchase other properties but remember that it shouldn't add a burden you can't handle or you run the risk of losing both. Use the BP calculator and include vacancy rates, costs for PM, unexpected fixes which might be costly since you would have to hire contractors, and the unexpected issues of just not being close. Good luck.