All Forum Posts by: Jerry Kisasonak

Hi Joe! Most foreclosure buyers are making cash offers, which obviously puts their offer at a higher ranking than someone making an offer contingent on financing. Besides, most foreclosures won't qualify for traditional bank financing anyway. It's best to use cash - either by using a line of credit, private money or hard money to fund the deal.

As for inspections, yes, many times you will not be permitted to activate utilities when dealing with foreclosed homes. You should expect a reasonable amount of defects and price your offer accordingly. If it turns out that the plumbing is fine, you're ahead of the game.

Most of these properties have been winterized. If you look at the winterization sticker there is usually a date. If it was done prior to December you're less likely to have serious problems. Keep in mind there is no rhyme or reason to this. I've seen stickers with Feb or March on them, and there was clear signs that the plumbing had already been compromised by freezing. They "do" the winterization anyways and put the stickers on, even though the person doing it can plainly see it's too late. Also, just because the sticker is dated prior to the cold months doesn't necessarily mean you're in the clear. Not all winterizations are done correctly and there also is the possibility that the property was vacant the prior winter and the plumbing became compromised at that time. Sometimes these homes sit vacant for quite some time before the bank finally gets the legal work done and puts the property on the market.  

I was in the same situation. I just kept them in my personal name and put all the new purchases in the LLC. It would be easier bookkeeping wise to have them all together, but I don't personally believe it's worth the expense to transfer them. Like you said, it would be better to spend that money on your next acquisition. Just my opinion of course...

Interesting question for sure Beth!

Here's my 2 cents: It sounds like you're contemplating trading one job for another - from a nurse to a handyman in some capacity. This is the route I originally went with my real estate investing, only to find out years later it wasn't going to get me where I wanted to go.

Real estate is a great investment vehicle IF you approach it correctly. If you approach it as a job or as self-employment, you've basically just created another job for yourself. There's nothing wrong with that, but just see it for what it is - a self-created job. And to some degree, you're still trading time for money, which is what we want to get away from.  

Here's two books I'd highly suggest reading if you haven't already. Michael Gerber's E-Myth and Robert Kiyosaki's Cash Flow Quadrants. These two books combined could have saved me many years of grinding away in my business - years that were never going to get me where I wanted to go.

To answer your question, the skills set that help me the most is:

Learning to work in harmony with others and creating win/win arrangements. This could also be classified as a communication skill, as well as emotional intelligence.

Learning how to acquire the correct mindset to build and grow a business (goal-setting and strategizing).

Learning sales and promotion. Everything is sales. And you can't make a sale if nobody knows about it - promotion/marketing.

Learning how to be resourceful. Most of what heavy-hitter investors do is assemble the resources to bring a well-thought-out plan to fruition (think Donald Trump). As Tony Robbins says, "Resourcefulness is the ultimate resource." I've learned not to ask people questions for things that can be found out with a simple google search or by watching a 2 minute youtube video. We learn to find the answers we need when we need them, and if we can't find them or they are complicated (like legal issues) we consult with professionals.

Anyway, hope something I said here helps!

We have a group that meets once a month east of the city of Pittsburgh. (White Oak) It's free to attend. Depending on exactly where you live, this may be convenient for you. 

There's also ACRE of Pittsburgh and Josh Caldwells group - which was already mentioned. All are good groups to be a part of. 

@Jeff Greenberg

The specific question I have in mind right now is in regards to being a lead investor. Basically, since the other investors/partial owners are very busy in their given professions/occupations, we would like to contribute mostly by locating, contracting, syndicating and managing the project. From my understanding this is essentially the capacity which a lead investor holds.

So the specific questions are:

1. What is reasonable for a lead investor expect to profit percentage-wise from the deal?

2. Is this ever done with the lead investor contributing a much smaller amount of capital versus the other owners in the project?

3.  Is this ever done with the lead investing none of their own money, but getting paid purely for assembling the deal and managing it?

I realize these may seem like silly questions for someone more experienced in this arena. This sector of real estate is new to me and I'm, at this point, just trying to identify the opportunies. Any good books you could suggest on this subject?

@Matthew Smuts If you're only interested in one particular property, I'd suggest paying a title company to do a search for you prior to bidding. If you plan on being a serial sheriff sale property buyer, you may want to learn to do the title search process yourself since you'll be doing a lot of them. Either way, get the search done before bidding.

We are very heavy in SFR's, but would like to move into the apartment building space. My business partner works in medical and has quite a few contacts who would love to invest in real estate passively - not in a private lender capacity, but as part owner in a medium to large deal (I know, that's all relative!).

So, we're reaching out to the BP community looking for someone who has experience in syndicating apartment deals. Have 15 minutes for a phone conversation?

Thanks in advance! LOVE to see so many people connecting and sharing on BP!   

Good points @Chris Townley. This thread started with the topic of BUYING, and my comment was based on what I'd be looking at cap rate wise if I were buying. 

Yes, if you are selling a building and someone would buy your property at a 3 cap, by all means sell. That would be a great deal for you, but not so great for the buyer unless there was a strong value-add component to the deal. This would have to be a cash deal though because a lender wouldn't see the DSCR that they'll require.

It is correct that you can apply a cap rate to the NOI to derive a property value. But your math as to how a lower cap rate applied to a certain NOI makes the property worth more is unclear.

A cap rate implies your net rate of return had you paid all cash for the property. Therefore, the higher the cap, the higher the return.

If you own a property worth 100K and your NOI is 15K, your cap rate would be 15% (15K/100K). If the same property had a NOI of 7K, your cap would be 7% (7K/100K). What is more desirable, the 15 cap or the 7 cap?