All Forum Posts by: Mitch Coluzzi

@Spencer Liddic @Douglas Orr

Congrats on your successes!    I am in a similar boat (27 at the moment) with 50+ doors (including a handful of commercial investments).  I took the full time plunge at the end of 2014/beginning of 2015 and have found that scale moves at a much faster clip rate when you dedicate 100% to it.  I horizontally expanded across the local market which has created a large degree of synergy.  To help spin the plates, my father relocated to the area and helped to get a construction company off the ground.  In addition, I opened a full-time real estate brokerage with a handful of quality agents (primarily investment focused).  

Overall, going full-time "investor" has been a grossly rewarding emotional, mental, and financial experience and glad I went full time when I did although it was intimidating at first...   I can honestly say, I do not work anymore... I just do something I love, that pays rather well.

After discussing with several local investors, it was clear there was a great group of local individuals interested in making something happen in the Real Estate World of Investing. Yet... there are limited resources (dare I say no) outlets for ACTUAL, down to earth, learning and networking WITHOUT the agenda focused, membership fee based, overwhelming-pressure-of-making-a-sale overtones.

This group was established to NETWORK AND SUPPORT LEARNING, whether you are reading your first book, flipping part time, or a full-time professional; come grab a few drinks; chat, ask questions, exchange contact information, etc.

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This meetup is reoccurring every third-Thursday of the month and has been going strong for almost two years!   Please follow us on MeetUp for future dates, times, and locations.

https://www.meetup.com/DSM-Real-Estate-Investing-M...

Great point, hadn't considered really looking outside of our area but absolutely open to the idea. Any suggestions?

First and foremost, 25 days is plenty of time to close a deal with financing... I have seen FHA deals in under 30 with experienced lenders, agents, and a motivated buyer. Be very, very careful inheriting tenants, property management is a different set of headaches. Wholesaling is hit or miss (experience wise). Hopefully he knows usable repair folks from the rehabs he has done.

CAUTION: Landlords do not typically give away equity, they normally have a better grasp of market rates and values. My suggestion is come at this grossly skeptical, ask a bunch of why questions until you are satisfied. I would start by attempting to understand seller motivation: if the rents make sense/cover the note and the ARV is 50k, why is the landlord selling at such a reduced price? It's relatively easy to find a 10-12%% cost property manager and ride the equity. If you uncover that answer, it may shed some light on the investment (maybe it's good info and it satisfies my skeptical approach)

I have found the biggest three seller motivations (with landlords) are:

1) Tenants are subpar and current owner is tired of managing (in this, you're inheriting headaches, eviction, and much higher repair costs than you expect). 

2)  An estate took over and just wants to get it gone (in which case there is probably a back balance owed that needs to be flushed out along with a general lack of property knowledge). 

3)  My personal favorite: the Owner bought via tax sale deed (and therefore does not want to be a landlord, just wants his investment + reasonable return).

If everything checks out, it sounds like a great deal bud.  Just make sure you cover your bases.  I believe partnerships are generally skewed towards the money-man... might want to negotiate with him a bit.

Heya Mark - I have been seeking the same in the DSM area (currently utilize a long time associate out of Chicagoland but he's retiring!!!!). Anyways, I am interviewing the Vroman Group, LLP located in West Des Moines after having them recommended from several local resources. I'll keep you posted but may be worth checking out independently.

I am one of those guys that skipped the partner piece because I do not trust them (them being anyone), so my opinion might be biased but... to me giving up over half the equity seems insane!  It's your money, his deal.  Unless it's a sure thing (and I have yet to see one of those) and he is an experienced contractor putting up a lot of sweat/time to do the rehab, your money should be worth SIGNIFICANTLY more for the risk you are tossing at it.  Again, in my opinion...

How seasoned is this wholesaler / agent? Does he have any property management experience? Why is he offering you 40% instead of turning to a bank / hard money lender at 5-12% APR plus a few points? How much do you need for rehab? What's the ARV? What bank is going to lend you on this and what are the terms? Who are you defining expenses and who keeps track? Any rules in place on contractors / vendors? What safe-guards do you have? And most importantly... do you trust this guy with $32k against your primary residence?

Don't blindly assume you will be able to pull the $32k back out of it... Generally, you can find a bank willing to loan 70% of ARV OR 90% of hard cost (purchase + rehab, no holdings) which begs the question of... why isn't he doing that?

From a protect-yourself standpoint, you need to seek legal counsel on this one but here is my non-legal opinion. At minimum, an LLC with a basic operating agreement needs to be in place along with lease terms defined + mutually agreed upon up-front. Outline all property management fees / expenses and who will handle + how things will get repaired.

Welcome to BP!  You're in the right spot.  There are several local resources available to help out with answering questions as well.  There are a few MeetUps that occur monthly in the DSM area specifically around investors and networking.  Certificates / Inspection are neccessary in most areas around DSM metro, but there are easier and harder spots.  I will PM you a few local resources.  Congrats on finding BP!

We utilize electric exclusively in our rental properties. Maintenance wise, less issues and easier to repair (component swap). Safety, no open flames or risk of gas leaks. Swap out on units is easier also, just a plug no fittings to fiddle with (ie: anyone with a dolly can handle). We took it one step further and swapped all of our multifamily to electric air handlers as well. There is NO risk of gas leaks and... city inspectors aren't grumpy when a tenant piles cloths in front of the "furnace" (because there is no open flame). Most importantly... electric is a tenant expense whereas gas is generally a landlord expense (especially on conversion units).

EEK! Hard loss. Cash and hard money loans are fundamentally different though. With cash transactions, the earnest is typically excessively more than hard money deals. All the contingencies in the world waived, it comes down to "what's at risk." For the buyer, it is generally limited to the earnest. For the seller, time and lost potential on that time are large factors. So, consider the differences: 1) you had the ability to close quickly but contract had a further close date. Cash offer alternative was shorter then yours (as written) AND likely could also close sooner then advetised as well. 2) The commitment on the line: earnest was likely different (cash generally more). 3) Inspection contigency... enough said 4) Last but not least, cash is an independent decision, it's verifiable and available. Regardless of waiving contigencies, hard money has another decision maker before it inevitably gets funded. Depending on the property and holding costs, $5000 may not be that much money. A 10% chance of not closing vs a 2% chance of not closing is a logical decision for some folks.

Are the dependents over the age of 18? We put all occupants of legal age on the lease for the reason of additional parties to encumber if needed. Anyone below the 18, is NOT on the lease because frankly, we cannot go after them for anything. Eviction wise, having / not having won't should not be a big deal. Our server delivers notice to "all other occupants known and unknown in possession of premises" while on site. I find it very unlikely a school is requiring the dependents to be on the lease... but we have had schools contact us to see if students lived at the claimed address. In certain areas, a 100 block means good school vs bad so people "fib"