All Forum Posts by: Jim Pellerin

I am trying to get a better understand of how using OPM works in RE financing.  Specifically, how would you determine how much an investor gets after a flip, or cash flow for rental income?  Here are two examples. I am aware there are other costs to think about, but just keeping the numbers simple for the purpose of understanding.  

1) Flip:  Say purchase price and rehab costs on a home is 300k, and you flipped for 450k.  You put a down payment of 20% (60k) and got 120k each from two investors.  So since your net profit was 150k, how much would each investor get and how much would I keep?  Or is this a horrible investment because the net profit doesn't even equal the OPM I used?  

2) Rental: Same purchase price of $300k.  Used 240k OPM split evenly between two investors.  Rental cash flow is $500/month.  How much would each investor get, how much would I keep?   

I hope this makes sense.  Really trying to understand how I would pitch these kinds of investments to potential private lenders...

Hi everyone,

Can someone kindly explain the phrase underlined below in simpler English? 

A qualified real estate professional is a taxpayer who owns at least one interest in rental real estate that:

• Performs more than 50% of their personal services in real estate trades or businesses in which they materially participate, AND
• Spends more than 750 hours of services during the tax year in real property trades or businesses in which the taxpayer materially participates.

Hello everyone!

I wanted to get your opinion on a job opportunity offered to me, as it might align with my RE investment goals but I'm not sure if I should take it. I currently work in IT as a support analyst but don't make nearly enough to fund my first small multifamily deal.
I'm considering doing wholesaling part-time, but I'm not sure if that's realistic without a solid marketing budget.
I have a sales background and was offered a job in construction/roofing sales recently. I'd have to sell and see the projects to completion, which will be a great skill to use on my own flips.
On the other hand, the IT industry has potential so leaving it doesn't seem like a good move.

Any thoughts are appreciated!

I'm starting to systematize my fledgling real estate business so that I can scale it in the coming years. Listed deals in my area almost never pencil, so I'll eventually need outbound marketing to scale. I'm debating whether to build or buy my marketing data , and I'm leaning toward build for a few reasons, but here I'll focus on the economics. Can anyone experienced with outbound list-based marketing help me better understand the economics or if there's a different/better approach or provider (I used listsource as my reference example)? I do plan to initially use a list provider for proof-of-concept, so my question is about the long-term.

Since list providers charge for usage, they seem to exhibit diseconomies of scale and I worry that will limit growth in the long-term. When pulling sample lists, the juiciest data is very expensive and leads to a cost decision between highly-targeted small list or poorly-targeted large list, each of which is likely to yield few deals. Let's say the list provider has 50 criteria - my marketing budget would fund a list with 1000 targets across 3-4 categories or 200 targets across 6-7 categories. I'd like to be able to target across all 50 criteria and also to experiment with different levels of targeting. If I build my lists in house, this would be a one-time fixed expense and my ongoing marketing costs would be limited to direct outreach costs. There is also some data I'd like to use for targeting that just isn't available at any price if outsourcing. 

Can anyone with experience doing it yourself versus outsourcing comment on these and other tradeoffs?

Hi BP fam, 

Currently, I am working in all Class C properties (duplex/tri/quad, and soon to be 24 unit MF property, also Class C). 

I hear horror stories online about people talking down Class C and saying that cap rates are gonna go up and delinquencies are going to also increase, however, we are batting 0% on bad renters and payments from our tenants. 

Other investors that I follow (albeit more advanced and well heeled that me at my stage) indicate they would ONLY buy Class B and would not touch Class C, for the above reasons.

I make most of my money buying Class C with value add (have done well - now at 63 units), and am interested in Class B, however - I'm interested to know what the BP Family think about "when" to do that.

My initial plan was to accumulate 100+ units of Class C, add the value, and then liquidate/consolidate into a better asset class.  But should I get out now? even when all my tenants are paying well?

Love to hear some thoughts on this.

Thanks!

Quote from @Andrea V.:

Why would you wholesale as a REALTOR? 

Wholesaling is the process of finding an off-market deal, locking it into a contract for a particular price, then selling that contract to another buyer for a higher price so you make a profit.

If you find the off-market deal, just list it for sale and earn the commission!

so i have been doing pretty good wholesaling i am closing deals but the spreads arent that big but i am closing an getting deals there are alot of properties where i am that are going for $5,000 as an need little to no repairs and i am in a landlords market can anyone help with how to get some financing so i can purchase these properties an fix them up like how do i get a loan just for that i have a llc and i have some deals done but not enough capital... i dont want to let these properties go. an i dont want to wholesale them either . my credit isnt that good though 659 please help with advice