All Forum Posts by: Jimmy Chou

@Julian Le 

First of all, love your awesome first post and welcome to BP.

Second, screw your fellow co-workers that's instructing you to slow down. Your ambition is what's going to separate you from them. As one seasoned investor in my community always says... You can't steal in slow motion! I'm also a firm believer of your "achieve as much as I can while I am still able" philosophy.

Here's my two cents on your situation...

While your goals and plans are very sound on the credentials you want to get, perhaps you might want to think more about what you want to accomplish with those credentials. What are your financial goals? What are you trying to build into your empire? What are the components you want to be hands on with? What can you outsource? Who should you be networking with now? Who will you need in your team?

Just coming out of the school may have you stuck in the "study mode". However, plenty of investors would tell you that they don't need an MBA, CPA, RE License to accomplish what they need to do. Don't get me wrong though, I don't mean they're going to hurt you either. In fact, having a great job can be helpful when you go to lenders to get the first few loans toward investing. My point is, there are things you can also be doing right now without those credentials to get your feet wet. If investing is what you set out to do after the 6 year study plan, why not start now? Since there aren't much going on at the investing side yet, I would take that 66K job and try to get your feet wet with real estate while you do the things you set out to accomplish.

Good luck with everything, I'd love to stay connected.

I want to agree with @Rick Pozos here. I would not burn any bridges myself. I believe there's nothing more important than my credibility; borrowing and pay back history is one of the best way to showcase that. Perhaps that's the wrong question to be asking in the first place. How about... Which one has the more flexible term so if you have to hold it longer it won't hurt as much? Should you "borrow from Peter to pay Paul" first to make sure all three debts are serviced? Which one would be the easiest to lend from again once you paid them back? If you hold on to all the debt, would that allow you to do another deal or two? How long will that take and will those deals then help you pay them all off?

I have to deal with this question myself if my current flip project goes south. By the end of the project I will have about 40K in credit card debt, 50K in private debt from my boss at my day job, and 30K from B.O.M. (Bank of Mom). If this were to happen to me I would pay off my boss and the credit card debt first, then setup a payment plan for B.O.M.. Here's the reasons, B.O.M is the most flexible in term, I can easily pitch an extension if I really need it. Credit cards are the highest in cost, therefore will just be digging me in a bigger hole if I leave it there. The boss is a very potential lender for my future deals, so even if I have to borrow from another source to pay him back, it's the right thing to do. 

My choices would be different if the bank loan was my home loan at a low percentage though. I would keep that debt and service it for as long as I can since the banks don't lend out cheap money as easy as they use to.

Bottom line is, I'll find a way to make things work without jeopardizing my borrowing history. That way when I'm pitching future lenders, I can honestly tell them..."Hey, even if things gets tough on my end, your money is safe!"

@Cory Gardner, @Account Closed

Project BP sounds pretty awesome!
How can we get in on the action?

When it comes down to private money from your warm market, it all depends on how well they trust your character. I do awesome work for my boss and he knows I'm good with managing projects. Proving myself to be an essential asset to his company in the last 4 years also didn't hurt. So even though I had no previous experience with real estate, he was willing to give me a 50k line of credit with 0% interest to use toward investing. This has gotta be a rare case though. My boss happen to also have great character and genuinely want me to be successful. 22% sounds greedy, but I'm sure there are deals you can make it work. On the other hand, if your competition is using much cheaper money (hard money at 12%~18%, private at 6~8%), how do you plan to stay competitive? Your offer will always be higher than the others and therefore limiting the types of deals you can do. An easier thing to do would be to keep talking to more people and seek out more potential lenders. Plenty of people out there got their money locked inside a 401k or IRA losing money this year. Position yourself in the negotiation as investor creating a win-win, not as someone desperate to take any loan offered.

I spoke with them a few months ago and almost signed up. My biggest concern is that their loan terms are always set at 5 months, and if you need to extend beyond that, you'll need to pay an extra point each month. In other words, your cost of money pretty much doubles after the 5 months term. This might work for some paint and carpet condo rehab deals. However, if you need extensive rehab work or if your market is not fast moving, then you put yourself at big risk using their loans. I end up not signing up because I don't think 5-month term fits what I need. Anyone actually used their service before? I would love to hear some feedback as well in case I get smaller projects that fits the loan product.

@Wayne Brooks  Thanks for your thoughts, it's nice to know my thought process is in the similar direction.

@Jd Martin  I actually offered to wholesale the deal right back around to buyer#2 if he's interested. He sounded like he's had enough of this deal though, so he might just walk away from this. (Fingers Crossed)

@Jay Hinrichs Thanks for your feedback. My exit strategy is to fix & flip. Purchase 15K, Repair 15K and ARV 70K, I'd say it's a decent profit for a deal this size. If it doesn't sell I'm just going to move in there and sit on the equity. However, I'm not sure if the seller would be so cooperative and deed it to me after the other two higher offers dangled in front of her. I'll keep everyone posted if any progress. Love your comment on the fraud issue...lol

Hi Everyone,

I got a 1BD/1BA condo in Downers Grove, Illinois under contract for 15K on 11/4/2015. I put inspection deadline on the 18th and closing date of 25th. (Yippee! My first deal) 

A few days after the contract was signed, the seller expressed that she wants to back out of the contract. I managed to talk her out of that idea at the time. About a week into the contract, she said that she has another offer from the past which reappeared and that is significantly higher and she needs to back out of the deal. While I was trying to explain to her we're under contract and I have to protect my investor's interest, she literally "ran" away while yelling "you can sue me but don't chase me". I tried to reach out to her since but she has been avoiding me.

Frankly, I had already mourned the deal and was ready to move on. A few days ago at a local REIA meeting, I learned from a fellow investor that I can get my contract recorded at the county to protect my interest since I spent so much time and effort on this deal. So I went ahead and got that done today (11/25).

While recording my contract, I learned from the county there's another contract also recorded. Buyer #2 has it under contract for 22K. It's accepted 1 day after mine and is set to close on 11/30. I looked up the buyer and it's another investor in the area so I gave him a call. He told me that he already had to deal with another buyer who also had this under contract. Buyer #3 apparently has it at an even higher number and accepted at a later date. Buyer #2 & 3's attorney had already spoke and agreed Buyer #3 will back out since Buyer#2 signed the contract first. I believe (and hope) I got the contract with the earliest acceptance date. 

As this is my first deal, I'm not quite sure where I stand.
1. Do I have the right to buy it since my offer was accepted first? Or does Buyer #2 have the right since he recorded his contract at the county before me?
2. Would Buyer #2 be able to close now that my contract is also recorded?
3. Is the seller committing fraud by signing all these contracts at the same time?
4. Any similar experiences / comments / suggestions would be highly appreciated.

I tried to save a few bucks and didn't get an attorney from the get-go on this deal. I understand at this point I ought to be talking to one if I still want proceed with this. Just want to hear any thoughts from the BP community first.

Absolutely! Many wholesaler would be willing to give you a cut for bringing a buyer and get the deal done. You don't need a brokerage license to send information on deals to your contacts. Do keep in mind some wholesalers may present you with junk deals they can't move themselves, so it's your job to do your homework and make sure you don't get a reputation in your market of being someone that's always pitching bad deals.

I agree with Wayne, there seems to be a lot of risk. Your option to buy doesn't mean anything if the property gets foreclosed on. Have you looked into structuring the entry as a "subject to"?

That's correct Vishal, I'll see you around :)