All Forum Posts by: Don Konipol

Let me be clear on where I stand._

People who come to BP solely to post a promotional piece citing the advantages of the service or product they’re selling are dangerous to anyone not experienced in real estate and finance who may believe the “ad”.                          
It’s still an “ad” even if the poster calls it a “discussion” and even if they do not directly mention their ‘services” in the initial post (they hope someone “bites” and so they can mention on in follow up posts).                                                     

The danger is especially acute when the poster offering the service has very little experience and is new to this service.  It is further dangerous when the poster offers misinformation, half truths and outright lies in their post.  

This OP, as I pointed out in my previous post, “doubles|down” on the lie that 
(1) personal assets are not at risk  - they absolutely are as the OP admits, albeit with some non sensible justification about specific assets not being pledged

(2) protects personal credit - as already stated the personal guarantee necessary will affect the credit card holders credit capacity , and as such find its way to their credit report, and hence affect credit scoring. 

(3) is lower risk - this may be the biggest lie of all.  Financing a property with a loan that in 6 months charges interest of 19.8 - 24% is beyond risky - it’s suicidal.  Unless the property is sold or refinanced, a large negative cash flow is all but guaranteed.  

Can credit cards be used in certain situations with a reasonable chance of success? DEFINITELY, early in my career I did so myself. However those circumstances are limited to investors with the ability to refinance when the promotional rates terminate, or those who have a sale of the property in place. 

And IF you desire a business credit card, all you have to do is do a Google search, and APPLY for the ones offering the most advantageous deals.  No need to pay this clown 10 - 15%, for his non existent “consulting” services (by someone with 60 days experience). 

Quote from @Virgil Moore:

Quote from @Don Konipol:

@Virgil Moore

“ It allows investors to access $50K–$250K in 0% interest funding—without putting personal assets at risk’

Are you implying that the recipient of the credit cards are not PERSONALLY liable for the debt incurred? 

Good question. To clarify, when you PG a business credit card, you are personally liable for the debt if the business defaults. However, this does not mean your personal assets are automatically at risk like they would be with a secured loan or personally guaranteed term loan. Business credit cards are unsecured debt, meaning the issuer can report non-payment to your personal credit and pursue collection efforts, but they don’t have direct claims to personal assets unless legal action is taken and a judgment is issued.

The key distinction is that while a PG means personal liability for repayment, it’s not the same as putting up personal assets as collateral. That’s why structuring credit correctly and managing risk is so important.

Unfortunately, your conclusions are incorrect.
With a business credit card, EXACTLY the same as a personal card, your personal assets ARE at risk.  In neither case are you pledging personal assets as collateral.  In fact, it would be extremely rare for an individual to pledge specific personal assets as collateral, unless it was for a collateralized loan, i.e. a loan specifically tied to a specific asset, such as a painting, diamonds, or a mortgage in real property. Your argument is disingenuous; at attempt to justify a false narrative. 

This leads to your second false statement “ protects your personal credit”.  The fact that the credit card holder is personally signing and responsible for the debt means it MUST be revealed in any loan situation, such as a loan application, employment application if required, personal financial statement, as a liability.  As such it WILL affect future credit capacity, and eventually find it way onto the card holders credit report and lower their credit score. 

The above are FACTS, you have knowingly (Probably), or unknowingly provided false information to sell your ‘SERVICES’.  Further, there are other items of misinformation in your post.  Your lead in “If you’re in real estate, you know the #1 obstacle isn’t finding deals—it’s getting the capital to close them.” is, as everyone with experience in real property knows, patently false.  Money is a LOT easier than deals.  Newbies always think they found a great deal.  Closer analysis shows the deal mediocre, at best.  Their analysis is, due to lack of knowledge and experience, lacking in criteria. 

Let’s dwell deeper into your posts 

“Private lending can be great for larger deals, but savvy investors use business credit first because it’s the fastest, cheapest way to fund deals—without relying on other people’s money.”

really?  Savvy investors DON’T use business credit cards, or ANY credit cards first; they utilize low interest rate long term mortgage loans.  
‘Without relying on other peoples money? - credit card advances ARE “other people’s money”!

”It’s all about using the right strategy to structure the funding in a way that keeps risk low and maximizes returns.”

using credit cards that after a grace period charge interest rates from 19.8 - 24% isn’t a low risk strategy; it the HIGHEST risk strategy I can think of of! It MINIMIZES returns, not maximizes them . 

”The 10% fee I charge is not just for the funding—it covers a comprehensive approach to ensure you’re using the capital effectively and efficiently, without the traditional restrictions of hard money or the hassle of dealing with multiple lenders. It’s about long-term growth and minimizing risk, not just the upfront cost. “

THATS quite a claim.  Sounds like you provide a thorough analysis for each individual that wants to pay you to help them obtain business credit cards.  You must advise a large majority of those to forgo getting the cards since they wouldn’t be utilizing the capital effectively and efficiently.  So tell us, what percentage of these people you provide consulting for do you advise NOT to apply for the cards? 

”I understand your perspective, but I’m simply here to educate people on the benefits of credit card stacking as a viable financing option, not to solicit business. There’s a difference between sharing valuable information and actively promoting services, which I haven’t done in this conversation”

BS detector is going off full blast.  NOBODY buys your artificial distinction.  When you provide a bias, promotional post full of lies, half truths and intentionally misleading information, you are promoting your services, even if you don’t end with “EAT AT JOES’.  

btw, how long have you been in the business of trying to 
secure” credit cards for people?  My guess is 30 - 60 days 

@Virgil Moore

“ It allows investors to access $50K–$250K in 0% interest funding—without putting personal assets at risk’

Are you implying that the recipient of the credit cards are not PERSONALLY liable for the debt incurred? 

Quote from @Michael Wang:

Hi everyone, I'm a land investor with experience in flipping residential land, including infill lots and rural vacant land, with market values ranging from $40,000 to $200,000 in NC and TN. All of my transactions have been cash sales. Lately, I've been thinking about to creating a note portfolio to build a six-figure "passive income".

Are there any specific criteria for selecting states for note investing?

I've been thinking about the difference between judicial and non-judicial foreclosure states. Non-judicial foreclosure states have a faster foreclosure process, which means I can recover my investment more quickly if a borrower defaults on payments. But some states have both judicial and Non-judicial foreclosures, and I guess I will need to narrow down to specific counties. 

I'd like to create my notes as well as buying some performing notes done the road using investors' money.

What's your thoughts on picking up a specific state or county for notes investment?

Thanks

Michael

My experience is that’s it’s less risky and more profitable to restrict investment to an area you’re expert in.  At some point, if scaling, you run out of “deal flow” that meets your geographical, risk and return related criteria.  At this point you need to decide if you will (1) limit your investment amount or (2) lower or change your criteria/standards or (3) expand geographically. 

in 2014 after 13 years of Texas “only” note investments we expanded to other non judicial foreclosure states.  In 2019 we went “nationwide”.  

Quote from @Jaren Woeppel:

Hey, BP

Would love your perspective and any possible help on our current situation. We have a 4-unit multi-family property under contract. We had lender financing and a great insurance quote. The appraisal came back poor, and the sellers have offered seller financing terms. We would like to move forward with the seller financing terms, but then we just heard back from the insurance company that they would not offer the insurance if it is seller financed. I did not know that an insurance company cares who holds the note, so this is new to me. 

Has anyone out there had a similar experience and found a good solution or what the next step should be? The next quote we received from a different carrier was 3.5x higher than the previous quote, only change being seller financing. 

This is in Florida (FL) by the way. Thanks!

Is there an underlying mortgage that is not being paid off?  In other words is this a wrap around being proposed? 

you state that the appraisal “came back poor”.  Does that mean that the appraised VALUE was less than you and the seller were expecting?  If so, how much less than the purchase price? Have you thoroughly reviewed the appraisal as to ascertain the methodology utilized by the appraiser?  

what specifically do you believe the appraiser did or didn’t do that caused an incorrect valuation?  Were the comps utilized not adjusted properly?  Were the comps located in an area of lesser valuation? 4 units are considered residential, not multifamily which is 5 + units, and commercial.  Was the appraiser a state licensed residential appraiser or did the appraiser also hold a designation from the Appraisal Institute (MAI or SRA).  

in other words how sure are you that your valuation is correct and the appraiser’s is wrong? 


I’d be extremely careful before paying more than an appraised valuation, and would certainly require a second appraisal before I did.  Further, at this point I would require the seller to pay for a second appraisal before I moved forward. 

Getting back to the insurance issue, have you contacted the sellers insurance company for a quote? 

There’s a BIG difference between a partnership where one party is what used to be the “general partner” (now usually “manager” or “managing member”) and the other parties are what used to be “limited” partners ( now “non managing members”), and a true “partnership” with both (or more) parties ACTIVE in the management and decision making.  

The former is, in my mind, not really a partnership - it’s more like investing in a public company where your sole voice is voting once a year for the board of directors.  The latter is what we are really referring to when we say partnership.  If you’ve been involved in both, you’ll understand the difference. 

Quote from @Cody L.:

I'm an exception.  I live in Ca, and have ~2,000 units in Texas.

(though to be fair, I was living in Texas when I started building the portfolio and got to about 500 units + a solid team before I moved)

I sold Cody property in Houston many years ago, and while he wasn’t LIVING in Texas at the time his knowledge of the Texas real estate market was at least as great as mine.   Maybe KNOWING your target market is more important than BEING THERE?  

Quote from @Logan Stamps:

Quote from @Don Konipol:

Quote from @Logan Stamps:

Hello BiggerPockets Community,

I hope this message finds you well. My name is Logan Stamps, and I am new to the world of real estate investing, specifically virtual wholesaling. I've been immersing myself in various resources to understand the fundamentals and best practices.

One area where I find myself seeking guidance is in building a network remotely. Establishing connections with motivated sellers, reliable buyers, and industry professionals is crucial for success in this field. Given that I'm operating from Bend, OR, I would greatly appreciate any advice or strategies you might have on identifying and connecting with motivated sellers in target markets, building a list of cash buyers interested in virtual wholesale deals, utilizing digital tools and platforms to facilitate virtual transactions, and navigating legal considerations and ensuring compliance across different states.

Additionally, if there are any common pitfalls that beginners should be aware of, I would be grateful for your insights.

Thank you for taking the time to read my post. I look forward to learning from your experiences and becoming an active member of this community.

Best regards,

Logan S. Stamps

Logan you’re NOT going to want to hear this -

wholesaling real properties is like any other business - it requires knowledge and CAPITAL.  The promotional “come ons” you find on YouTube, books, so called “testimonials” etc just plain isn’t true.

The chance of an inexperienced flipper with little or no capital successfully completing a wholesale deal or deals is about 2%.  The chance of having earned more than minimum wage is about .001%. Worse, “wholesaling” teaches little about INVESTING, and what it does teach is mostly incorrect. 

I know more than a few wholesalers who run successful businesses.  The MINIMUM any of them spent monthly on marketing is $5,000, with the average being over $10,000.  They additionally employ virtual assistants, cold callers, negotiators, and inspectors.  

Unlike 20 years ago the part time wholesaler doing “driving for dollars” can no longer be successful.  There are too many knowledgeable and well capitalized competitors; sellers have access to timely and increasingly accurate valuations, discount brokers exist for sellers with lower price properties, and “ibuyers’ make immediate offers at higher than wholesale pricing.  

More than anything else wholesaling is a commission sales job.  Since in many jurisdictions you are now required to hold a real estate agent/broker license to wholesale, why not just work as a licensed real estate agent if this is what you want to do? 

Hi Don,

Thank you so much for your thoughtful response. I really appreciate you taking the time to share your insights.

You mentioned that less than 1% of wholesalers make minimum wage, which definitely gave me something to think about. If you don’t mind, I’d love to ask you a couple more questions. I’ve always had a “work hard to beat the odds” mindset, and I’m wondering if, given those statistics, you think it would still be wise to pursue virtual wholesaling on the side.

Also, if you were starting from scratch and looking to become a successful person, what steps would you take? I’d love to hear your advice on how to approach that journey.

As for becoming a licensed realtor, the reason I haven’t pursued it yet is that I’m still figuring out how to best navigate that path. Any advice or direction you could offer would be greatly appreciated.

Thank you again for your time and for sharing your valuable insights. I truly appreciate it!

Best regards,

 Obtaining a real estate brokers/salespersons license will assure that you learn at a minimum the basic foundation principles of real estate, real estate law and real estate finance.  

Signing up with a real estate brokerage that provides training will further enhance your knowledge and skills.  I would recommend a broker that concentrates on investment use rather than residential owner occupants. 

I started contributing to BP in 2009.  99% of the people identifying themselves as wholesalers are long gone.  Many, through ego and or misplaced desire to be regarded as successful, fabricated their successes.  I remember one sad case in particular of an individual who claimed great success through a two year period, providing somewhat unspecified reporting of individual “flips” and the money made on each.  Many were shocked when after two years he not only admitted that all his success was a fabrication, but that he had NEVER successfully completed a deal!.  Further, he went on to blame the posters on BP for not helping him out! 

Look, most of the “gurus” seen on YouTube and selling $20k - 40k mentorship’s are NOT  successful real estate investors; they are ACTORS who are fronting for a number of marketing companies operating out of Las Vegas and Salt Lake City.  A background check of these individuals often reveals prior bankruptcies and lawsuits from people they’ve previously dealt with. We who have been engaged full time participants in real estate for 10, 20, or 50 years know how absolutely ridiculous their claims are; but they seem to resonate with a large number of people without the knowledge to render an informed evaluation.  

Everyone make money (does well) in a bull market. Let’s see how they do when a market like 2008-9 rolls around again. 

A park with POH, as opposed to a park mostly tenant owned homes, are two distinct different operating methods.

The POH models, with just a few exceptions, are akin to very low income housing. The tenant owns nothing, can and will leave on a minutes notice, and can do big damage to the POH.

The tenant owned homes on the other hand is somewhere between a condo and middle income housing.  The tenant owns the home, which is cost.y to relocate, and provides security for the fulfillment of the rental agreement.  It’s “clean”, much better tenant pool, and much more predictable income stream.  

The reason parks get involved with POH are because of low demand usually because the MHP is at the low end of the spectrum and lack amenities, good roads, attractive landscaping, decent facilities, reliable hookups, etc. and so can’t attract people who own homes. So, they end with the low end of tenants - those that can’t afford even a class c apartment.  

Some investors make a living improving parks and turning the POH model into a tenant owned model over 5 years or so.  But to do this cost a hefty capital investment in infrastructure, amenities, marketing, employees, etc.