All Forum Posts by: Darrell Lee

We're selling all our properties in California and with my share, I'm investing in New England states. I'm like a kid in a candy store with $100 in my pocket.

I bought a 10,000 s.f. historic commercial building for $33k. I just signed a contract to buy a super fixer 4,000 s.f. Victorian house for $5k plus pay the back taxes and unpaid bills so total about $15k. It was assessed at $190k. If this house was restored and next door to my home in Hollywood, CA it would go for $2.5-3 million.

I have 5 properties under contract. Banks seem to be unable to close on time... I'm buying one house that I regret buying... At $38k, I think I overpaid by about $10k but if I complete the purchase and rehab, I'll probably make $10-20k... but it is too much work for the time/energy involved for me as there's so many other better deals out there now. I will probably renovate and rent it out and sell next year. My goal is to make at least $40k per house should I choose to flip, but my goal is to buy and hold or BRRR. My plan is to acquire 4-5 properties a month for 2 more months and then devote the time renovating and renting or selling them depending on case by case basis. I will hold properties that I think have good appreciation potential and sell the ones that are not as desireable. I want to sell several this year so that I will show a healthy taxable income so that I can get loans as I have to pay cash right now. I've been buying mostly REO fixers so loans are not even possible anyway. I haven't made any seller financing deals thus far. Don't like the rates of the hard money loans...

I have to keep reminding myself that I have enough properties under contract now that I should be extremely picky and just try to hit home runs rather than just trying to get to 1st base.

Owning a mortgage brokerage company is not necessarily a good goal. A small mortgage company will easily have an overhead of $10-20k per month... For it to be profitable, you have to go big and your overhead can become 5-10 times  more!

I owned both a real estate (40 agents) and mortgage (6 agents) brokerage and it was a struggle as it seemed both companies were never both profitable at the same time. $45k/month overhead... Hated it!

The mortgage brokerage business can be highly profitable for the agents. Be happy to give 50% to the company... most have no idea how expensive it is to own/operate a mortgage or real estate company.

My advice is get your license, work in the mortgage biz and see if you like it. It is easier and faster to start earning an income compared to realty brokerage. I'd recommend going to first work at a bank. You'll learn by trial by fire. I worked at Countrywide for 5 months writing an average of 100 loans per month... The management were idiots and they ruined a good company. I'd only write good loans that made sense and I'd get reprimanded for low production. The managers and top producers didn't care about the borrowers or the company... the managers just wanted to generate fees and the top producers the same.

I looked at their loans and just knew a large percentage of those loans would go bad and they were bad for the lender and the borrower. But management didn't care. A discussion for another day.

Thanks folks. I will purchase the insurance, the tipping point was that if no TI, they'd give a quitclaim deed vs a warranty deed w/TI.

If I were in your position, I'd be feeling uncomfortable with all the leverage. What if a couple of properties with loans go vacant? Can you handle the negative CF?

Is the Mexico property appreciating? If not, I'd peel that one off and pay down your LOC on your personal residence.

Generally, I want to own properties that have appreciation potential as positive cash flow on leveraged properties is usually not too much. You say they are positive cash flow, but really... if you add in the cost of repairs/maintenance you spent... they are negative cash flow...

I'd evaluate the portfolio and keep properties that have the most appreciation potential and sell properties that aren't appreciating. If there's taxable gain, 1031 exchange them into properties that you feel have better appreciation potential or if you can find some below market deals with appreciation potential would be all the better.

Without a RE license, you cannot legally charge/collect a fee.

You need to act like a principal and get the lowest price on the property... if the sellers will sell for $5k and you can get $15k, get the $5k deal signed, with a right of assignment. Forget trying to get the owner a higher price and narrow your profit.

Sounds like you want to be a dual agent... stop! You might get yourself in trouble.

Just be a cutthroat mofo buyer and try to make as much on each deal as possible.

That said, sounds like you'd like to be an RE agent and collect fees. You might have found a niche that few agents work so maybe getting a license could work out nicely for you. But keep your goals clear. If you want to get the highest price and best terms for the sellers, you need a license and a listing.

I have a meeting with an ADA inspector to look at the building to give me recommendations. It appears that I will need to have a single tenant for the entire building,  or at the very least one tenant to lease the 1st and second floors otherwise the compliance issues would be too onerous to be practical... i.e. if separate tenants for each floor, a 3rd floor office tenant would need an elevator installed at a min cost of $80k if it was even possible.

A challenge being that he is disabled.

Congrats! Details please when you feel comfortable about sharing.

Well, $10k is a lot different that $550. You being local gives you an advantage.

Yes, I'm very careful to note the buyer's premium when I bid, it also calcs the buyers premium before you submit your bid so you will know if you will have to pay a buyer's premium.

When buying a property from sites such as Auction.com, Hubzu, etc. there's no negotiation allowed. You just sign where they tell you...

So... Do you really read the entire contract?