All Forum Posts by: James NA

1) building one’s own marketing…. Is for most of us…. A…HUGE …investment…. So paying REASONABLY…

for THEIR …. work in finding deals … can be part of a mature business plan.

BUT….

2) Remember to look at a deal from front to back ( buy to sell),,,, AND from back to front….

EXIT STRATEGIES…. F…I…R….S…T….

..exit strategies… 

a) FLIP….I’m investing $200k in risk ( loan) plus $30k out of pocket… if I can’t get a 30% return.. I will pass.
( the LARGER the risk/ loan/cash/ time… the LARGER I require in likely return.)

b) RENTAL …same INITIAL investment… at the end… property value ( ARV)..MUST be great enough to
1) refi…
2) All cash out is back..
3) Cash flows positive enough to build ( any situation) 6 month cash backup.
4) Property MUST have enough equity so that if I needed to sell TODAY… I won’t lose cash.

The above requirements “ appear” to be unrealistic ( todays market) … ONLY because
a) non mature / non savvy “ investors are climbing over each other to out bid on over priced “RETAIL” properties being marketed as “ wholesale deals”
b) the Gurus and Real Estate Investor Associations are NOT doing their NUMBER ONE JOB… which SHOULD be…

To..” KEEP POUNDING THE BIBLE OD ..BUY…LOW…. THENNNN SELL HIGH”
they are allowing by their silence … “ Buy high and HOPE to sell higher”

“ investing “ / risking $200k with $30 k out of pocket…and 4 - 6 months of time ( and now money out of play) to end up with a “ zero equity…. $100 cash flowing… “ DEAL???….” …no maybe I will make a profit as the house appreciates”..

That might work for high tolerance risk takers in a hot market …

So back to step one…
DEALS COME TO ME…. sure after time and cash invested

So I am ok with paying for a whole sale paper flip…. BUT ONLY at a price that satisfies the above limitations.

The answer is ( to me) is simple.

Go to your local REIAs… stand up and keep asking the same question TO THE LEADERS…“ How is this deal a deal?”

How is this deal a deal

How is this deal a deal

Would YOU buy this deal

How is this a deal

DEAR WHOLE SALE FLIPPERS…. I HAVE CASH

I …CAN…CLOSE …AS …SOON AS THE TITLE WORK AND TITLE INSURANCE IS READY…

I NEED…. 30% equity

I welcome you to PARTNER WITH ME…. on high risk deals… my numbers are set… you get x percent of the windfall.

Pie in the sky?… not for long

Thanks….I moved in to a new town in 2006… and I immediately joined the local REIAs…

And the communication / email process of one had me baffled…. 
although there was a “ bulletin board” ..all comments were delayed a day or two before getting posted… I asked “ why the delay” and it was explained that all posts are vetted to make sure that they complied…blablabla…

I called bull… by saying that …in my previous REIAs if you ran afoul of the rules there was a warning and a three strikes and you're out system… but a sometimes deals a very time sensitive… getting the flip out to the whole group SWIFTLY was very important…. I went on to say… ( in our open live meeting forum) that one of my buddies from my previous REIA said that a one or two day vetting delay would be a perfect way for insiders to get the timing advantage on the deals…. There was bluster and red faces and claims of insult…. And in the next few months many of the board members changed and the bulletin board was revamped.

I although I am still interested in making good friends and partners…. I am old enough to have no interest in politics, half truths and partial friends… if I set fire to a bridge BEFORE I cross is…. Either it is strong to remain standing… or it isn’t…Either way…. I’m ok. 
that current REIA uses Face Book for their messaging system. But I am a devote ANTI Facebook person.

My industry insists that I avoid social media and many of my peers have proven to me why. In another open forum someone attempted to defend their Facebook platform by stating that it was private and completely secure…

Standing in front of 100+ people I said that.. “ I truly believe that you truly believe that”… but you all see the extreme financial disadvantage I hold refusing to use the REIAs communication system. Can you imaging that I chose this willingly.?…. And would you please imagine what the social media giants do with your “ secure “ information.

I burned bridges that day.

I do recognize the outrageous good timing good luck and good fortune … and right place…
but when I got very busy investing…

I could BUY a property for $15,000 to $25,000 put another $15,000 or $20,000 into a full rehab… be ALL IN ….for under $50,000 and then sell retail the house for $75,000 or $80,000…. Or refi cash out 100%… so I would have ZERO out of pocket… and then rent for $800-$1000… gross… after mortgage and hold backs I was STILL netting $400/ month.with zero out of pocket… And the debt was $50,000.

Now…. A $200,000 rehab buy is $30,000 out of pocket down payment… plus rehab costs…. Total investment is $250,000… refi cash this one out and your mortgage is $1500/ month… oh that’s right try and FIND a 100% cash out refi on a rental property…. Oops… you’re still out $20,000

Rent it at $1800… minus mortgage and holdback for repairs,vacancies etc…. And

For a $250,000 debt/ LIABILITY…. the cash flow is zero… and you’re still put $ 20,000

And the Gurus are selling these as a way to make money in 10 years when they appreciate.

SOMEBODY BUILD A REAL DEAL BASED ON TODAYS NUMBERS… Use all of the tools available.

And build a REAL DEAL THAT SHOWS STRONG CASH FLOW WITH ZERO OUT OF POCKET ( or build what you can)

I realize that I jumped in with both feet…. But the Emperor is Stark Naked

 Thank you.. great response

I learned and evolved in a different real estate universe.
The rules we were taught and lived by… were the SAME rules that ALL of the REIAs  and ALL of the Mentors espoused.

1) DONT BUY A PROPERTY THAT HAS LESS THAN 25% equity.

Now….. no one says  that ?…  but then they aren’t whole sale deals… they’re RETAIL deals ..SO WHY BUY FROM A WHOLE SALER?

2) DONT use future potential appreciation as a basis for appreciation… unless you ALSO factor in future potential DE-preciation..

3) You're not buying a rental property, you ARE buying a Cash Flowing Business …. And if the business doesn’t CASH FLOW.. you bought a pig with lip stick.

4) NEVER take YOUR cash out of YOUR pocket unless you KNOW that you’re going to get it all back in under three years. …as in the ONLY time you put out $20,000 or $30,000 or any cash, to buy and fix up is if you KNOW, that you can sell or refinance ( with a cash out return)  and get all of your cash back. Putting out $30,000 in Downpayment and rehab money for a rental that cash flows $200/ month after all REAL costs and holdbacks… is a fools errand

5) in the military when referring to their weapons and their battle plans they say… “ two equals one and one equals none” this means that if they don’t have TWO WAYS to protect themselves then they aren’t really prepared to do battle. TWO EXIT STRATEGIES… proven strategies… or you’re not a professional investor… you’re just gambling with your family’s money.

Almost ALL of the “ deals” I have been pitched in my region of Florida are built to assure that the wholesale gets rich… period. 

There’s a property listed on this website right now in Florida …3 br/2bath. $250,000 , $1500/ month rent… “vacant at closing”

Please ..would SOMEONE show us the math …… how …in…the…WORLD….. Is this an “ investment”…? It’s not even a RETAIL DEAL.

The sooner we start all calling out the bad deals… the sooner the sellers will get back in line… or go away .

If I get ejected from this site…..  whatever…. If this is what this site calls a “ deal”…. I won’t be missing out on anything.

I learned and evolved in a different real estate universe.
The rules we were taught and lived by… were the SAME rules that ALL of the REIAs  and ALL of the Mentors espoused.

1) DONT BUY A PROPERTY THAT HAS LESS THAN 25% equity.

Now….. no one is saying that ?…  but then they aren’t whole sale deals… they’re RETAIL. SO WHY BUY FROM A WHOLE SALER?

2) DONT use future potential appreciation as a basis for appreciation… unless you ALSO factor in future potential DEpreciation.

3) You're not buying a rental property, you ARE buying a Cash Flowing Business …. And if the business doesn’t CASH FLOW.. you bought a pig with lip stick.

4) NEVER take YOUR cash out of YOUR pocket unless you KNOW that you’re going to get it all back in under three years. …as in the ONLY time you put out $20,000 to buy and fix up is if you KNOW, that you can sell or refinance ( with a cash out return) 

5) in the military when referring to their weapons and their battle plans they say… “ two equals one and one equals none” this means that is the don’t have TWO WAYS to protect themselves then they aren’t really prepared to do battle. TWO EXIT STRATEGIES… proven strategies… or you’re not a professional investor… you’re just gambling with your family’s money.

Almost ALL of the “ deals” I have been pitched in my region of Florida are built to assure that the wholesale gets rich… period. 

There’s a property listed on this website right now in Florida …3 br/2bath. $250,000 , $1500/ month rent… “vacant at closing”

Please ..would SOMEONE show us the math …… how …in…the…WORLD….. Is this an “ investment”…? It’s not even a RETAIL DEAL.

The sooner we start all calling out the bad deals… the sooner the sellers will get back in line… or go away .

If I get ejected from this site…..  whatever…. If this is what this site calls a “ deal”…. I won’t be missing out on anything.

The answer is so easy….. 

two steps….

1) NO !!!
2) Next 

The seller is trying to see what he can get away with. 
we need Nancy Reagan as a mentor….JUST…SAY…NO 
Some idiot might say yes…. Please don’t let it be you.

PROOF…. would you be SO PROUD of getting that deal that your would come back here and post/ brag that you got it?

no?

there’s a clue ,!,!!!

In then” old days”, I could buy a house for $25,000, put $30,000 in to it ( all in ) and then give it away this weekend at $80,000 or sell it and close in 6 weeks for $100,000.

In other words….

For risking less than the equivalent of one years income …
Buy and flip a property SOLD …CASH IN MY BANK….in less than three months…
And DOUBLE my investment / or triple my cash out position.

AND…. have multiple exits…. Flip for killer cash, rents for killer flow, refi for zero out of pocket but still with equity.

What is a a hard pass for me.?

I don’t mean to be rude but NONE of the opportunities I am offered now are HALF what the deals used to be.
The relative risks are twice as high and the returns are half

And the equities are now ZERO at closing and 20%-30% AFTER repairs.

What are the exit strategies on these deals?
Months of work for 10% return after risking a year or two worth of salary?

Again I don’t mean to be rude…. BUT ALLLLLL … of these deals are a hard pass…. NONE of these deal have attractive equity and have too few exit plans…... Unless BK is also one of your planned options.

If you have 2 million to go all in…. Sure…. You can flow $80,000/ year…. But you are also risking losing it all.
If you have great credit and a little cash… you might be able to create $60k cash flow. BUT WITH ZERO EQUITY and if the bottom falls out… you….will…. File …BK.

Very respectfully.
Truly I don’t mean to be the buzz kill… but we know that my numbers are true.…MOSTLY BECAUSE wholesale prices have doubled… which is MOSTLY due to TWO factors… 1) wholesalers MAXING out their profits and continually pushing their prices higher…. And…2j new buyers entering the market and thinking that the outrageous wholesales prices are normal/reasonable/ typical.. ( just like when realtor fees were 6%, the buyer ALWAYS PAID “ these fees” and the seller paid “ THESE FEES”… all of that was true… until it wasn’t…. . which turns the focus back to experienced buyers…. If WE would say…”NO…AND THIS IS WHY…” then little by little the pressure for wholesalers to back down…. Would push prices down … 30%…..????… maybe not…. 15%? All day.