All Forum Posts by: Jeff Cichocki

@Adam Dylik,

Unfortunately, when reading someone else's responses, we tend to hear the tone or attitude that we perceive and not the one that was meant. I really didn't have a tone or attitude in my head as I wrote that to you. And I really am not trying to beat you up which is why the comment right after that says I'm trying to help you. I'm sorry if you read things in my writing that offended you. It was not my intention.

Getting a better deal is all about the negotiation. Your questions insinuate that you are assuming that the additional collateral is important to your lender. In actuality, it may or may not mean anything to the person your dealing with. It may just be icing on the cake. The only way to know is to ask them. 

As I said above... 

Negotiation is not the art of you getting the best/cheapest rates for the loan. Really good negotiation is finding out what the other person wants and giving it to them in a way that still works for you.

If you want a better rate, ask the person you're talking to what they would need/want in order to give you the deal you seek. If the deal doesn't work for both parties, it's a dead negotiation. If you don't need to pledge the additional collateral, then don't; if you do, you do it. But, there isn't anyone other than the person you are trying to do business with that can truly answer your question. The best we can do is point out things to try or things to consider.

The best answer I can give you is to have to go talk to them. The two guys who want you to put something together understand negotiating better than you. They want you to make the first move so that they can catch you with too high of an offer or put you on your heels so you'll falter and give up more than you intended. It's a very common tactic and difficult to get around.

I honestly hope you can figure it out.

Good luck.

@Nick Longstreet,

Just a thought... When you go to your local REIA's and Meetup groups to network, keep your ear open to partnering opportunities. They can show up a lot of different ways. For example...

1. You could buy into someone else's deal for a piece of the profit.

2. You could be a lender in a project. You have the right to go look at your investment which will give you some experience while you watch.

3. You could partner on a deal.

4. You could buy Sub2.

5. You could master lease a property and then sub-lease it out to tenants for extra cash flow.

6. You could offer to work for a piece of the upside.

7. You could be a bird dog to get some cash.

As you can see there are lots of ways to start with absolutely no money.

Good luck!

@Christa S Rickard,

I'm sure you already know this, but I thought I would mention it anyway...

Any way that you can buy a property outside of your Solo, you can buy inside your Solo. That means, you can lease, lease option, straight option, seller finance (buy or sell), master lease, land contract, etc... There are no limits to the type of transaction you do as long as it's not on the prohibited list (which is primarily don't do business with you parents, grandparents, kids grandkids or in any way that you would personally benefit from the deal outside your solo.

Good luck!

@Dave E.,

There are only three people that I know of that specifically teach a land trust class. They are Dyches Boddiford (known as the professor in his circle), Jack Shea and Bill Bronchick (real estate attorney). I am not affiliated with any of them. 

I have taken Dyches class a couple of times now. It has nothing to do with how to use a LT to defraud banks. It is a bit of a technical class. But, it's not overly complicated. I highly recommend his class when he offers it. You can find him at assets101.com. 

I have not taken a class from Bill Bronchick. At some point I will as I like to get different perspectives on things. I have purchased several of his courses. You can find him at bronchick.com

I have not taken a class from Jack Shea. I am planning to. He's a very interesting character. You can find him at jackshearealestate.com.

If you don't want to go somewhere to take a class or it isn't offered on your timeline, there is a course out there that I bought that I think is pretty good. It's actually broken down into two courses (basic & advanced). The courses are from Randy Hughes. I'm not friends with him, but I have met and spent some time talking to him at an event we both attended. He's a pretty sharp guy too. You can find his stuff at landtrustsmadesimple.com.

There is also an attorney out of Florida that has a few books out on the topic. They are very good. His name is Mark Warden. He is affiliated/works with Jack Shea a lot. They are good friends. I have not met either of these guys, but I have bought their books and courses online. Very good material.

Regardless of who you get your information from, you will find that they all have similarities and differences in how they structure and use them. I've tried to blend the best of their varying perspectives together to make up the trusts we use for the houses we buy.

Good luck!

@Zach Kuhns,

There are lots of different kinds of mentors out there. Your question specifically said life and not real estate. So, where do you find life mentors?

1. Local REIA's and Meetups.

2. Referrals from friends, family, church, etc.

3. Your church.

4. Local business networking groups like BNI.

5. Google (hard to know who's a good fit for you though). Takes some research and time.

My business partner in I are members of two different masterminds. One we run and we are the students. The one we are students in, we pay to belong to. Many people will say not to do it because they are expensive or a rip off. Don't knock them if you haven't tried them. I can personally attest to doubling our business last year because of the paid mentorship/mastermind group. It's been both a boon to our business and our personal lives. We have changed the way we look at business completely. We changed our business to serve us instead of us being slaves to our business. Makes a huge difference in you life once you make the switch.

Good luck. I hope this helps.

@George Skidis,

Dang! What a great breakdown. I see all kinds of ridiculous answers to trust questions here on BP. Most take the fact that someone said so as being the gospel truth and the law of the land.

Great job. Most investors need to go take a class on how LT's work and how to use them properly. And, how not to use them in fraudulent manners.

Appreciate your insight!

@Jonathan Pacilio,

Here's a couple of ideat to explore...

1. Lender

2. Equity partner (especially on sub2's and seller finance deals that need a smaller amount of money for rehab).

3. Lender with an equity kicker on the back end.

4. Convert from a standard SDIRA to a Solo 401k. Then, buy assets and borrow (leverage) money inside the Solo against the asset you acquire. Solo's don't generally get hit with UBIT from an active business. Assets can be anything from real estate to life insurance (yes, LI is allowed in a Solo).

5. Lender Who wraps another lender to make exhobinent yields (think north of 200%).

Anyway, those are just few off the top of my head.

Good luck.

@Jameson Sullivan,

Generally speaking, keeping your income low for taxes is more beneficial than keeping it high to get a loan. A good lender will look at the tax returns you provide and make adjustments for your paper losses (depreciation, etc.). Paper losses are bogus and hide your real income. Good lenders know that. There's more to a tax records request than just verifying your AGI.

If the lender your working with doesn't take this into account, you need a new lender not a new tax professional.

Just my 2.5 cents worth.

Good luck!

@Nick Cooper,

Everyone else's comments are correct. There's really not much benefit financially to paying cash and then refinancing. It very well may end up costing you more.

But, here's a question no one else has asked... What if you can't refinance the way you think you can? If you go to refinance and there is no loan in place, it's a cash-out refi. The rules are very different in those scenarios. There are seasoning requirements, liquid asset requirements, cash flow requirements, credit score requirements, etc. 

Here's a few questions about your parent... What if something in your life changes before you get to refi? How will that affect your parents? How long are your parents willing to lend you the money? Do they need it back by a certain time? What if you don't meet that timeline?

Borrowing from family & friends is great. But few actually think about the consequences of what will happen if/when something goes wrong. I've yet to meet an investor who will answer more than 0 to the following question...

How many investors (including yourself) do you know of or have heard of that have gone out, negotiated what they believe to be the deal of a lifetime, get it under contract, escrow open, deposits made, contractors lined up and chomping at the bit to get started and drool running down their chins who went home to tell their significant other that they can't wait to lose a ton of money in that deal?

The question is a very real question (albeit a bit sarcastic). Borrowers/investors rarely ever ask themselves any questions remotely close to this. Why, because every single one of us thinks that every deal we want to by is a good deal. That's why we want to buy it. Except, things happen. Deals go bad. Deals have hiccups. Unexpected things happen all the time.

So... the real question is... Do your parents understand the real risks or are they just offering to help because you are their kid?

Before you make a decision as to which way to go, you should have a deep meaningful financial discussion with them about the risks. If they still agree to do the deal with you, then go for whatever works best financially for both you and them.

Good luck!

@Christa S Rickard,

Absolutely no rules against you buying the property in your Solo and having the property with a loan against it.

The only thing I would caution is to buy the property in an llc that your solo owns. The reason being one of liability. If you own properties directly in any retirement account, if you get sued and lose, they have direct access to your account. Not a good thing. Use normal asset protection strategies with good insurance and you should be fine.

Good luck!