All Forum Posts by: Eric James

It seems to me you want to put that capital to work long term and start to learn the real estate investing business. Gain experience and knowledge while not losing capital.

$100K will be a down payment for a $400,000 property give or take. And if you can generate $10,000’a year cash flow on a $100,000 investment, you will be doing really well.

Instead of trying to find the BEST market (assuming one exists and I don’t think it does), I would invest in a market easily accessible to you where you can keep an eye on things.

One final thought, as I assume you are a first time investor, looking to invest out of area in “a risky high cash flow deal” sets the stage for you to be ripped off by a fast talker. The con artists will be on the look out for newbie investors like you.

Someone will present you a deal that looks great on paper but will fail miserably. Don’t be seduced by wonderful looking returns and sweet sounding promises, it is likely to be fool’s gold.

Put that capital to work and double your money every 5 to 7 years in solid strong investments.

The finish line of the race for you isn’t 2 years from now it’s 15 to 20 years from now.

Line drive base hots not strikeouts swinging for the grand slam.

Just advice from an old guy who has been investing 45 years. The fable of the tortoise and hare might be informative.

Good luck on your investment.

Arn

VERY solid advice, Arn! Especially the part about people taking advantage of a young investor willing to take a big risk. You're making yourself an easy target and there are a lot of unscrupulous people out there so please be careful and (speaking like the mom that I am) hold your cards a little closer to your vest. Your question is very broad so it's impossible to answer well. You're clear you want cash flow now. You've got some possible markets picked out. You'll need to figure out what strategy or strategies you want to use and whether or not you want to self manage remotely as these will factor in greatly into your underwriting. And beware of properties that are super cheap and promise high cash flow. Usually, those "super cheap" properties become money pits, especially if you don't spend the money to fix them up correctly or if they're just in a bad neighborhood that will attract tenants that thrash the place. High turnovers with a lot of repairs will eat up any cash flow you projected on paper.

at this stage I would encourage him to put the cash in a brokerage account paying 5% like T bills and keep searching and as well I would also advise to househack first before buying low end looks great on paper rentals find a nice duplex buy it live in one side rent the other rinse repeat.

And take the time to read the hundreds of threads on other people's experiences trying to do what you want to do.

0 Votes

And then there are the flea infestations and used syringes hidden among the trash.

2 Votes

Toledo, Ohio

Make sure you know all the nuances in your state. I've seen people buy at tax sale here in TX thinking they can just turn around and immediately flip them. Only to be surprised that they couldn't get title insurance for a couple years (even though the redemption period is only 6 months).

4 Votes

Quote from @Jay Hinrichs:

Quote from @Jason L.:

Quote from @Darius Ogloza:

I like to reason from the point of the worst case scenario. Assume you co-sign and your partner loses the proceeds of the loan in Vegas. You will lose your collateral/land ($1 million). What happens after that will depends on which of you has more reachable assets or, in case neither of you do, the bankruptcy law.

It seems to me that by co-signing AND securing the loan, you are taking on a double portion of risk. A fairer allocation of risk here would entail your partner signing for the loan and your providing the collateral. In this way, you are each out $1 million in liability in the event the loan is not repaid.

As to what this means in terms of equity split, reasonable minds can differ. I would insist at a minimum on a 66%/33% profit split if I were asked to cosign and secure the loan.

Thank you @Darius Ogloza, I realize that factoring risk into the profit split is a bit subjective. Any thoughts on how you'd split profit in the case where the is land used as collateral without co-signing (if that's even possible with lenders)? Again assuming my partner is handling everything else?

Just thought I would jump in here quickly since I do quite a bit of this.. If your putting up the land and getting the your right back to square one your hiring a GC to build it whatever fee and profit split is really up to you guys to determine/negotiate. Builder has no liability to your equity and no liability to the construction loan. Just need a good GC contract that you can enforce if they dont perform.. pretty simple at that point and frankly much safer for you not to give the GC any formal ownership at all.. I would NEVER EVER do that .. Did it one time cost me.

How did giving a GC an ownership stake come back to bite you?

0 Votes

San Francisco, California

Over the last 5 years I've seen a lot of people do something similar. A wave of new people getting into real estate, maybe fueled by low interest rates. Many first times try flipping a house or buy their first rental, only to have it be a huge flop.

1 Vote

Cape Coral, Florida

Quote from @Jay Hinrichs:

Quote from @James Wise:

Quote from @Jay Hinrichs:

Quote from @James Wise:

Quote from @Jay Hinrichs:

Quote from @Account Closed:

Quote from @Jay Hinrichs:

@Chris Seveney:

Quote from @Account Closed:

Quote from @Jay Hinrichs:

Quote from @Mike Terry:

Quote from @V.G Jason:

It's just advertising at it's core. It's a REI site and it's going to be pushed at any expense.

I mean ****, you don't see much better on the forums. There's threads daily about the nonsensical things people do to be a "REI" at the expense of their actual stress, daily lives, and families well being. There's turnkey providers with predatory 2-year balloon options on houses, one's with 50 1-3 post people show up to support them. Have you dealt with agents on this forum? Horrible and slimy, for the most part. It's just the core of this place, you need to filter through the ******** to really see the best of it. There are great people here and great sources, though.

Thank you for your response. I know there is lots of good on this site and in the various podcasts. I am just disappointed in the tone of the site. Like everything, the degree of sales vs good advice is nuance. It is clear to me that it has swung too far and the overall platform is only a shadow of its' former self.

There is no question that the reins have been taken off the mods when it comes to self Promotion
Just look at the Sub to guys virtually every post now is a picture of a spread sheet of one of their deals and of course you to could have a deal like that if you pay them 15k to teach you :) Not saying the training is not worth 15k very well could be.. but that kind of posts one after another would have never flown a few years back.

Cool huh. Think of it this way, some people learn by hearing, some people learn by reading, some people learn by visual, spreadsheets. I think you understand Subject To but the other 2,000,000 people on this site do not. They need help to understand.

Do people read the loooonnnnggggg posts that people write? Not often.

If you can sum it up in a picture, a spreadsheet and communicate all of that information, why not do it?

And if someone can spend $15k one time and thereby save $80k mutiple times, why is that a problem? If the savings aren't there, the spreadsheet shows it, Just for an example. ;-)

I get what your saying my point is post like you guys do over and over again in years past would never have been tolerated you would have been admonished by the mods. I know when I first started and did not realize you could not self promote I got my hand slapped a few times. Thats why you dont see me posting on the open forums about my deals were we double our money in a year cash on cash.. or the one I did in Washington state this week were we turned 60k into 115k in 25 days . And its not wholesaling :) And the point of the original post was how the podcasts have changed and for sure the folks running it back then promoted BP not their personal agendas. But yet again you are able to do a nice self promote off of my mention so your welcome LOL

@Jay Hinrichs: @Chris Seveney:

I am not disputing either of you, but you both make it very clear that you lend money or have funds for investment, which presumably you charge points and interest and are self serving. You don't lend money for free. You do large projects they may be interested in investing in and you welcome people to talk to you about it. I have no problem with that. In fact I think it's a good thing.

In fact, shouldn't a place like Bigger Pockets offer resources to investors and the only practical way is to mention what you've done and what you do.

A forum that talks only about analysis paralysis gets boring pretty quickly. People come here for inspiration, help and new ideas. And Bigger Pockets is wise to loosen the reins a little bit.

Frankly, I think because of the previous restrictions, a lot of users simply left for Facebook where I find at least 23 active sites promoting real estate investing with deals included. I like Bigger Pockets and am loyal to it. But to keep the interest of those coming here, it's important to grow with the times.

Most visitors and lurkers are new to real estate, that means they don't have the experience and confidence you and I have. You lend to experienced, sophisticated investors, you make that abundantly clear, I train the new. Everybody that is experienced was once new. It's just really easy for some to forget what it took to get here.

The best tax advice, 1031 exchange, estate planning and asset protection I've encountered is right here on Bigger Pockets. Many talented professionals that answer questions. It's obvious what they do for a living, but I welcome them and I've learned a lot from them. They charge for their services, imagine that. Would you prefer to join a "communty" to learn about real estate taxes and get half of what you need and pay half price or would you take a complicated tax return to a professional and get proper advice?

One minor difference and maybe its a major difference with Chris and I we give information freely we dont charge 15k to teach people how to invest in our deals or our note fund .. So most on this site that are lenders or whatever are not trainers charging you guys are one of the few..
Now I maybe should reconsider.. you know like the guy who charges 10k and you have split first 500k with him and he will finance your deals. WE finance peoples deals and dont charge anything and just get paid for the Use of the money like any other investor.. thats the difference that I see as it relates to sharing information on BP>

I agree though this hiding around the fact and the subliminal messaging that was really prevalent in years past.. Lets just get on with it.. I do deals flippers and foreclosure buyers.. I build new homes and sometimes will have investor in my deals etc etc.. But when talking on the threads and trying to give back its hard to weave that into every post.

The moderation in years past was ridiculous and really counter productive to conversation. Like it's a real estate website, everyone is here to learn about deals, do deals, or pitch deals. How is anyone able to have a conversation about real estate if their post gets removed if they make any mention of the kinds of deals they can do, or want to do lol. Like you are all here for deals, but nobody is allowed to talk about deals.

By far the worst was, I am looking for an Investor Agent or Property Manager in X market....The only people who would reply would be Investor Agents and Property Managers who were not allowed to mention that they were Investor Agents and Property Mangers lol, reading it was like watching a dolphin dribble a basketball lol.....I'm glad they created the Classifieds and started letting everyone post to them, solved this nonsensical problem really quick.

Jim,

It seems to me since this site is really working on monetizing itself as it should, as it relates to self promotion seems to me they could have a different level of membership that would allow for more freedom on advertisement on the open forum .. then just putting your name and such on your sig line. Not sure how that would work.. But I have to think the service providers who rely on transactional real estate deals for their income IE RE agents MLO PM the agents in Columbus OHIO :) etc this would this would be a very inexpensive form of advertising that they would pay an add on for. As opposed to paying for banner adds etc.. I dont know what they charge to be listed as lender or an agent.. I have to think there is a charge for that separate of the membership.

Although I will say corporate it appears to me is spending money just like a remax would on national advertising I am starting to see them on U tube and on my car radio. I think mainly for lenders etc.

And if you have to pay this will cut down on the spam and fake lenders that troll sites like this ???

Oh bro, you just dropped a Columbus keyword alert..........It's over now. Those dudes are gonna have an army here in about 20 min.

As for monetization, I like the idea and I wonder if the new BP ownership will implement it. I've made mention of that model to old ownership multiple times back in the day when I was a moderator here. I've been told by a trusted source that they bought BP from Josh Dorkin for $44 Million so I'd imagine they are looking for every possible way to get an ROI on such a massive investment.

Well, people think they get rich buying rentals.. the real wealth is creating a company that can be sold !! Good for Mr. Dorkin its people like him who had vision and determination and then reap the benefits.. the next one they really need to do is compete with the training companies kind of like they are doing now.. But for a more realistic price and then bring in Guest Trainers from around the country and who the memberships knows likes and trusts instead of paid actors like the trainers do.

@Scott Trench BP could kills it with that model.. As you know I have been at the back of the room Vendor for some of the tops trainers in the US.. And the amount of money they charge which is huge but to get those butts in the seats they spend at least 50% of the fee in marketing funnels. BP would not have to do that. Their marketing of the class would darn near be free the only real overhead would be event space and the Guest trainers comp and travel.. But just think you bring in a J scott you bring in A Brian burke and many other top tier reputational BP members to teach a subject ( of course that is if those folks will do it that's the question.. However the by product of that is these guest trainers would also now create a business relationship with all these students and could at least soft market them to advertise in their deals.. I mean there has to be a solid 25 to 50 folks that you could tag for this.. Again just Brainstorming here while I have my coffee !! I know BP con does this to an extent. However its not really class room training and getting into the nuts and bolts its as much a social event as anything.

That sounds like a great idea. I'm just afraid it's a lot easier and more profitable selling people get rich with real estate with no money down. Telling people they can buy with no $ using "creative financing" and do wholesaling

0 Votes

Cape Coral, Florida

When lenders won't lend to you it's because of high risk in your situation. The answer isn't to find a way to borrow anyway. It's to reduce the risk. That is, make more income or pay off some of your debt. You can finance after that.

0 Votes

Legalities depend on the letter of the law. What you are doing may or may not be allowed. Get a lawyer to give you an opinion and if what you are doing should be allowed have the lawyer write a response.

1 Vote

Austin, Texas

What I mostly have is trash to haul away. Sometimes a few holes in drywall and little bit of painting. Do it all myself. My wife cleans them up. If I paid someone maybe $200-300.

1 Vote

Chicago, Illinois

Quote from @Jake Harrington:

I've been stalking these forums for a while now and y'all are so helpful. Thought I would put out my first post :)

For background, I'm a new investor in the Houston area doing research before my first flip. It looks live ARV will be around 275k-300k.

My question is, when starting out is hard money the way to go? It seems like most investors start out this way.

But based off the books I've been reading, such as J. Scott's book, hard money isn't always recommended and it's better to go with a portfolio investor such as smaller banks, or partnering with other investors, or of course seller financing.

Jumping into hard money as a new investor seems insanely risky. I suppose I'm looking for any advice on how you found an alternative to hard money.

Or on the flip side (see what I did there?), what made you feel secure taking the leap with hard money and going after that first flip.

Partnering with an investor or doing seller financing would be ideal, but I'm still growing my network by cold calling other investors and real estate agents and attending local events. Trying to build out that dream team of contractors and subs as well.

A mentor would also be super helpful, but like I said, still building out that network.

As far as my personal situation, I have a good credit score, a decent amount of savings (200k cash) and a little more than that in investment accounts along with some equity in my current home, a mortgage, and car payments.

Any advice would be greatly appreciated.

I'm a few hours north of Houston and have done flips with small local bank financing. Some have even financed rehab as well as purchase. Interest rates were reasonable, though they will be higher now than a few years ago, but still probably lower than HML.

2 Votes

Houston, Texas

All Forum Posts by: Eric James

Eric James has started 22 posts and replied 2235 times.

Post: looking to invest out of state, I keep going back and forth with a bunch of states

Post: Everyone wants to buy a foreclosure until they get to see inside the property

Post: Why are Tax Liens and Tax Deeds documented evil on this website

Post: Determining Profit Share for Spec Home - Risk vs Capital/Other Contribution

Post: Lehigh Acres - Renttoretirement (RTR) projections were a scam

Post: Did I hear David Greene correctly this morning? Cash out 1.5MM retirement fund?

Post: How to get funding for 2nd rental property

Post: Deed restrictions that could restrict property use as a Short Term Rental

Post: What’s your average turn cost for your Class C rentals?

Post: Is hard money recommended for your first flip?