All Forum Posts by: George Kopp

Thanks for the additional information. Yeah, I'd say at this point I need to pass. I think the only asset I could hope to go after is the home, and since it's a primary residence, it's probably very difficult to go after. I'd much rather try to find yield elsewher and preserve the friendship.

@Patrick Roberts Thank you so much for the detailed reply. That is the reason I listed those specific assets. All of them felt like assets that could be shielded. What I hadn't realized is that with this wording it's just an unsecured loan. So glad I did my due diligence.

Thanks!

@Scott Wolf That was my biggest fear. Something felt off, and now I realize that with none of my friend's assets listed, this is just an uncollaterized loan essentially backed by nothing. So I will most likely pass outright, but may ask him if he is willing to include some hard assets as part of the agreement. If I get that far, then I will seek the help of an attorney. 

It definitely is beginning to feel like more trouble than it is work though. Based on @Mya Toohey reply, I have a feeling going after a person's home in Florida is no piece of cake. Also, do I really want to pay those legal fees to pursue while having to sue a friend? Probably not.

Thank you for the info. Very much appreciated.

Mya, 

Thank you. Yeah, at this point, I’m just hoping for some general watch outs or to hear about other people’s experiences, good and bad, and any advice. I don’t even know if I want to do this, so I assumed I would leverage the forum to help me decide if I’m even interested and then consult an attorney, armed with some information to review the contract 

I guess I saw it as similar to hiring a property manager. You are much better at managing a property manager if you have manage your own properties. Similarly, I thought I would be able to have a more intelligent conversation and ask the right questions if I had some knowledge prior to my first consultation with an attorney. In my experience, having some basic knowledge going into conversations with professionals, such as attorneys or CPAs or financial advisors can help you avoid slick talkers who don’t actually know what they are talking about.

I feel badly that me wanting to do some homework prior to meeting with an attorney was so triggering for some. 

Thanks 

Ouch!! Harsh. So by your logic, no one should really ever use a forum? There are $400/hr consults who can assist with almost every topic on these boards.

Also, just for your information, I do plan to ask an attorney to review the final document but was curious at a high level if it's even worth exploring this opportunity.

Good luck to you sir. May I recommend anger management since you seem very triggered by me just trying to seek out some help in an area I'm not very familiar with.

Cheers!

I have an opportunity to invest in a real estate related opportunity, but instead of being backed by any hard assets, such as the property, the borrower has agreed to personally guarantee the loan. 

I know this individual well, but not as well as family or a very close friend. He is US based with US assets, but he does have a foreign passport. I mention in case he could move abroad and somehow shield his assets. I will list his known assets at the bottom.

Here are my two questions: If the documents I sign show him as personally guaranteeing the loan (specific language below). Does that mean that if he defaults, I can go after his assets such as his personal residence, 401K, bitcoin, etc.? He is located in Florida.

Question 2 - Is there anything specific I should make sure I include in the contract. I know there's limmited vs. unlimmited liability, etc. Do I need to list his assets? Does his SS# need to be in the contract?

And any other thoughts or watch outs would be appreciated. Please note that I am not discussing the business idea or the rate of return because I am fine with both and don't want that to be part of the discussion. The ROR justifies the risk for me. I will mention that I would be lending $50K-$100K and that there will be other lenders for a total of between 200-300K borrowed. I mention this for visibility into the amount borrowed vs the individual's personal assets.

Current language in contract: The Guarantors, known as John Smith, of Street Address, Coral Springs, FL 33071 agree to be liable and pay the Borrowed Amount, including principal and interest, in the event of the Debtor’s default. The Guarantor agrees to be personally liable under the terms and obligations of the Debtor in this Agreement.

Borrower's Known Assets: Home in Florida with 300K+ in equity, bitcoin in wallet $500K, 401K $500K+, two small businesses (equity unknown).

I hope this is enough info to get the conversation started. Apologies if this has been asked and answered. I could not find any threads, but feel free to post any that exist. Also feel free to ask me any clarifying questions.

Thanks in advance!

Your story reminds me of my start in real estate investing over 15yrs ago. I moved to a new area (St Paul, MN), bought a place that required a lot of work for 15-20% under value. I spent nights and weekends over two years doing most of the work myself, occasionally farming out a few tasks. Mind you, I was incredibly cheap. For example, I gutted the kitchen, ripped out 1950s plaster down to the studs and was too cheap to buy a dumpster. Instead I put it out in the trash over a period of six months!

And as you can see from the example before and after below, I did some great work.

Anyway, how did it work out for me? I lost 50% of the value of my investment. Why? Two things: I had a very unscrupulous realtor who put me in a bad area. She avoided the sketch streets and drove me the same way by this lake and all the nice homes. Yes. I was naive for not renting my own car and doing more research on the neighborhood. And the big reason. I purchased the home in July 2006 and sold in 2009. I don't think we are in another 2008 situation, but I also don't think we are at the bottom of the market. I do think it's a great time to find good deals, especially in NC where you are looking, but I share this story to just say go into this with all the info at hand. My advice is just go into it cautiously. Make sure you get a great deal, maybe buy half the house you originally planned to. Then do it again in two years. If you keep doing this, you will survive any dips. Real estate always goes up in the long run. That house is worth 50% more than I paid for it in 2006. I moved away and had to sell in 2009. Had I stayed in MN, rented it out, it might have been paid off now and cash flowing like crazy!

So not in any way saying not to do it. A live in flip is amazing. You aren't paying for an empty house you can't rent. You still have a place to live. Your tools are all conveniently there. I do some of my own work to this day and I can't tell you how many times I go to a rental and have to drive back home because I forgot a tool.

Best of luck whatever you decide!

Great info @Account Closed! As an investor who recently decided to just get my real estate license and be done with it, I look forward to learning from both sides of the coin.

I do believe Carlos is an agent, not an investor, and was looking to learn more about the skills investors look for so that he could make sure he has those skills in order to drum up their business. My hunch is the video you sent will be filled with great advice for him.

As an investor who decided to make the plunge and just get my license for my own direct access to the MLS, I will tell you that investors need you to be quick because good deals don't sit around. Nothing sits around these days, but even in normal times, investor-worthy deals can get snatched up quickly. A lot of agents hate working with investors because we put in lowball offers, most of which are rejected. If more than 30% of your offers are being accepted (some would say 10%) you are probably offering too much!! So be ready to write a lot of offers quickly! The payoff is that a good investor buys several properties every year as opposed to the one house the average family buys every 7-10 years. So that's the upside. And if they are a flipper, you are getting the purchase and the sale.

@Marian Huish brought up some great watch outs for you. A lot of so called investors aren't actually funded or experienced. I imagine your first prescreening calls will be very important. You probably only want to work with investors who have actually done a few deals and already work with some agents but are looking to increase their pipeline of deals, perhaps in a new market. 

I decided to get my own license because no one was as fast as I wanted them to be. Perhaps my expectations are too high. I haven't yet decided if I'm going to work with other investors myself. I wouldn't mind having my finger on the pulse but there could be a conflict of interest.

Good luck!

Definitely sounds like the issue is with the business checking account. Free business checking with no charges whatsoever for any electronic payments coming in are very easy to find. I use a great local bank, everything is free if I keep a certain balance, which I can't remember what it is anymore, but it's very low, like two or three thousand.

I use Zillow payments and Apartments.com. I need to pick one and get everyone on the same system at some point, but they are both pretty seamless, you get the funds in 5-7 days and no one pays any fees. I don't like using Zelle because some banks have limits as low as $1000, which doesn't work in this day and age. I've heard good things about Avail and have listed apartments there but haven't bothered to try the rent collection since I'm happy with Zillow and Apartments.com.

The only other thing I'll add is that if done right, you can set up all your incoming rent, auto mortgage payments, auto HOA fees if applicable and just sit back and never really need to touch your bank account. Nothing left to fret about other than the occasional maintenance issue. Property management has definitely gotten easier in the digital age.

Cheers!

Thanks everyone. This makes me feel better about doing the right thing for the longevity of the house. I'm a big believer in overengineering vs. having an emergency call I have to deal with or pay top dollar for. I just needed some reassurance that a potential buyer down the road wasn't going to look at that random stretch of PEX and wonder if there was a fail, which could signify trouble behind the walls. 

And while I also have done a mix in the past in cases where let's say a home is plumbed in copper but we are gutting the bathroom, so I'll do the entire new section in PEX (Uponor is my go to), and I know no one would ever bulk at someone updating a new bathroom with what is considered the modern alternative to copper. I was just worried that a random section in the middle of the basement of copper to PEX back to copper, or maybe to the water heater, would raise some eyebrows. 

But given the comments, I think I'm going to do it. That copper has been touching the galvanized for 20yrs. I'm really nervous about the integrity of that section and don't need a call from my tenant saying the entire basement is flooded.

Cheers!