All Forum Posts by: Jay Hinrichs

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#3 All Forums ContributorPosted December 21, 2024 18:27

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Lake Oswego OR Summerlin, NV
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Quote from @Terra Padgett:

its funny how this changes with time and the market on BP if you asked this question 5 to 7 years ago you get drowned out with the cash flow is the ONLY thing and appreciation is for gamblers my self I have always been about making appreciation games in RE.. by either value add building a new product or buying foreclosure and flipping or lending money and getting instant 12% plus returns . ON the more risk type product we do land speculation and Land entitlements but the returns blow most any cash flow at the the same dollar amount out of the water.. But you do risk losing money.. One land speculation I bought 4 acres in sonoma County CA ( wine country) in 96 for 27k it was unbuildable at the time ( could not get a septic system on it) Well city grew to us The Graton Casino comes in right across the street and we sold a few years ago for over 2 mil to a land assemblage investment company. So I dont know ZERO cash flow for what 25 plus years pay 300.00 a year in prop tax. so spent what less than 10k to own it then cash out and 1031.. Or what could I have bought for cash flow for 27k back then. Well nothing on the west coast.. ??? I have another one were I optioned 120 acres that just got brought into long term planning for chips act. paid 5 million for it and spend 10k a month negative.. Once its approved it will be worth about 100 million. and the 10k a month is all principal there is no interest carry.. so been it it 15 years already.. So I dont know good investment maybe.. cooks off in the next 5 years we make some pretty serious dough.. Probably could have done about as good with cash flow RE.. but U cant buy 5 mil cash flow prop with nothing down like we did and have a zero interest carry.. So its really all depends right.

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Pittsburgh, Pennsylvania

Post: How do you do Seller Financing/Sub2 and comply with Dodd Frank/Safe Act ?

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#3 All Forums ContributorPosted December 21, 2024 17:28

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Lake Oswego OR Summerlin, NV
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Quote from @Eric N.:

P.S. I missed one particular detail from what Scott was discussing. When he sells he doesn't finance 100% of the purchase. He collects cash down payment and finances the rest. That's how he gets positive cash flow. If we use example above (bought the house for $40K and sold for $80K, roughly this is how it would work (excluding closing costs, paid in cash):

Purchase price of property: $40,000
PML to purchase the property: $50,000 at 6% APR
Difference ($10,000) deposited to his account.
Property sold for $80,000.
$10,000 cash deposit collected from buyer.
$70,000 financed as a 30 yr mortgage with 7% interest.

Monthly payment to repay $50K PML in 5 years: $966.64
Monthly payments collected on 30 yr loan of $70K @7%: $465.71
$20,000 in the bank account after transaction closed.

I am still not sure how he gets positive cash flow while repaying 5 year loan back, unless he charges buyer in excess of 17% for 30 yr fixed loan and pays very low interest to PML lender. But these are the numbers I came up with when looking at 40K to 80K scenario. Perhaps he runs negative cash flow while repaying the purchase loan or there is something I missed so my math didn't add up properly.

yup the numbers dont work.. you cant get 6% private money unless its a relative thats not market or close to real.. Although you can sell on contract for 7 to 9% or a little higher that is real. you are also going to have defaults.. How do you buy a property one day for 40k put nothing into it and sell it for 80 the next day.. some one is getting screwed :) I get the math I get wrapping the notes my family had a company call CA Wrap we did hundreds of them .. now they were on vacant land as we were in the land bizz and this is much more aligned to the land business than buying homes and selling to owner occs.. Anyway.. carry on I am sure you will figure out what works..

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Rehabbing & House Flipping

Post: Locating Gap Funders?

Philadelphia, Pennsylvania

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#3 All Forums ContributorPosted December 21, 2024 11:25

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Lake Oswego OR Summerlin, NV
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very easy to answer this.. Gap funding or junior position funding is highly risky.

your team has no real money in the deal.. PG's are worthless those that have PGs that are worth anything dont need gap funding they have the cash.

this is a play for folks you know well .. not for internet facebook BP etc.. people that do this do it because they know you like you trust you and think your a good operator.

Public has to many other choices that are much safer bet.. its not always about ROI with those with money.. And I can tell you u there will be some that read 20% and all that does to them is scream risk.

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Post: How do you do Seller Financing/Sub2 and comply with Dodd Frank/Safe Act ?

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#3 All Forums ContributorPosted December 21, 2024 10:50

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Quote from @Eric N.:

Quote from @Jay Hinrichs:

You should look him up, he talks about owning hundreds of cash flowing notes/properties. And, if you were able to generate $500/mo cash flow as Scott suggests, his method would not replace your income: if you could do only 3 properties a year that would net $1500/mo cash flow and it would take you 10 years to scale it to $15000/mo. His whole selling point is teaching people how to generate enough passive income to quit their jobs. While I don't want to focus on doing this as my main source of income (I still mainly want to do fix & flips and contract assignments), I wouldn't mind trying it, just to see if it's something that could work for me.

ya well every guru talks about quitting your job which frankly for most is the absolute worse thing you can do very few people really live solely on rental income unless they were high wage earners and basically set. Its all sell the dream .. I have personally owned over 200 cash flow rentals and sold them as it simply was not worth it.. Now notes I like that and thats what we do we make a living lending money to flippers and land speculators etc. but Its a business is not passive and you Need MILLIONS in cash to make any real money at this.. But I know you have to start somewhere..

But just think of the reality first you have to find someone who will sell you a sub to NOT EASY and then you have to find someone who will buy it owner contract Easier..

Anyway wish you the the best at hopefully the cost of this course is just funny money to you.. Dont spend your hard earned money that should be going to buy assets for a class..
I have been a back end vendor at Rich DaD Montelongo Vertucci etc.. I made my money lending them money to sTudents to buy property.. The gurus made way more LIKE millions charging 30 to 40k to come to the event and just talk about how to do it.. Was there education sure. But in all my years at these events I would say MAYBE 10% of the folks actually did anything with it long term..

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Post: How do you do Seller Financing/Sub2 and comply with Dodd Frank/Safe Act ?

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#3 All Forums ContributorPosted December 21, 2024 10:16

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Lake Oswego OR Summerlin, NV
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Quote from @Eric N.:

Quote from @Jay Hinrichs:

Hundreds of people may violate the law here and there, but one person can't violate it for years with impunity, running webinars and recruiting students. We know millions of people violate the laws and some 2 million folks are imprisoned at any given time, but we don't see someone well known and prominent nationwide, who runs Youtube shows for years, recruiting students, teaching and showing them how to break into and rob a house when owners are away. Such person would be indicted and arrested even in LA, California under Gov Newsom. So, I am sure there must be a way to do this legally as Scott does. I just don't want to commit and sign up for his classes before I try it and see it as a good fit for me.

well I guess most of his students simply stop at 3 a year there is not many people that will do 3 or more in a year but thousands doing 1 or 2..

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Syndications & Passive Real Estate Investing

Post: Anyone has invested with Open door capital? How was your experience?

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#3 All Forums ContributorPosted December 21, 2024 10:14

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Lake Oswego OR Summerlin, NV
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Quote from @Dan Rowley:

Quote from @Chris Seveney:

Quote from @Jay Hinrichs:

Quote from @Evan Polaski:

@Hyun Supul, without diving too far into this, and the devil is always in the details, when I see this, I can't help but assume this whole offering is a way to for them to raise pref equity for their own deals, but wait, that won't look too good, so let's layer in some private credit, too.

It says it will lend money AND invest pref equity into MF deals owned by Disrupt and Open Door Capital.

Questions to ask: what allocation is going to loans versus pref equity in their own deals? Why do their deals need capital infused, and are those reasons due to poor management or things that were truly out of their control and/or could not have been foreseen at acquisition?

On the loans side, who is the lender JV? What is their book of business? Is this lender going to sending money back, as second mortgages to ODC/Disrupt deals?

@Chris Seveney, I can only imagine two things here:
1. They are lending to people who are so desperate they will pay 16+% for the loan. Which in itself gives me major pause, because these rescue capital loans almost never work out.

2. They aren't making money on the loans and the true business driver is the pref equity raise for their own deals. It allows them to keep those afloat and can collect fees on that side by retaining ownership of the deal.

OH gosh I just read this and this is what led a company I worked for in the 80s into a massive BK loaning between partnerships.. Not sure about this I hope they can pull it out.

Do not quote me on this but I think someone told me the new fund was a debt fund (along with some other asset classes) and a percentage of the money raised was to invest in their other funds (ie. instead of capital calls). This is what I heard third hand, so not sure if it is true but i believe the person got this from the PPM which was noting where the monies were going.

I know the "survive till 25" crowd was banking on interest rates going down to the 4's or low 5's next year and that was going to save these deals. If that is the case, I unfortunately do not see that happen.

What do others think?

Chris, Agreed & I see a VERY low probability that interest rates will be in 4s or 5s in 2025, so those deals with variable rate debt will likely continue to bleed.

no chance rates will be in the 4s potentiall higher or mid 5s though.. we just locked in a 6% so getting close.

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Rehabbing & House Flipping

Post: Wanna be a surgeon? Dissect this deal with me.

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#3 All Forums ContributorPosted December 21, 2024 10:11

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Lake Oswego OR Summerlin, NV
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Quote from @Timothy Franklin:

@Trevor FinnI would agree with your breakdown, but why overlook a potential to run the 91k subject-to with a targeted 6 month hold for flip or 18 month refinance? Unless the seller has to be immediately out of the mortgage I see sub-to as an excellent cost reduction strategy.

just reading between the lines.. but if the bank says they will take 91k for it sounds like the mortgage is in default so a sub to might not be possible.

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Fort Lauderdale, Florida

Post: How do you do Seller Financing/Sub2 and comply with Dodd Frank/Safe Act ?

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#3 All Forums ContributorPosted December 21, 2024 10:03

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Lake Oswego OR Summerlin, NV
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Quote from @Eric N.:

Quote from @Jay Hinrichs:

Quote from @Eric N.:

Quote from @Chris Seveney:

Thank you, Chris. It would be great if @Dan Deppen also chimed in. I know a lot of investors do this, they acquire properties and then sell them under their terms, acting as a bank financing a purchase. I thought at first it was as simple as drawing a contract, recording deeds and notes. So, I started researching the subject. And the first thing that came up when Googling the subject was Dodd and Frank, which requires RMLO if you originate more than 3 loans per year to a real estate buyer who will be residing in the property (Dodd Frank does not apply to commercial transactions, rental properties/duplexes and etc. among others).

I know successful people who did this for a decade or decades. They are not MLO's. Some are not even licensed realtors. It's unthinkable to imagine that they have been running their business grossly violating Dodd Frank, simply because someone would have lodged a complain and they would be shut down by now. So, there must be a way to do this properly, as they must be doing it. Question is: how?

Do I have to hire licensed, bonded RMLO to do all paperwork, originate the loan on my behalf?

Banks hire underwriters because they won't lend more to purchase the property that it is worth. Bank doesn't own the property, someone else does. So Bank, when writing a loan, must ensure that property's worth is greater than the loan extended, so if and when borrower defaults they can foreclose on the property, auction it off and get back the money lent. Do I still have to underwrite the property if I own it and can decide on my own how much I want the buyer to repay me over the course of the loan?

FDCPA controls debt collection and makes sure that buyers of defaulted debt don't threaten borrowers with violence , phone calls in the middle of the night and non-existent jail sentences for failure to repay. Would it apply to a lender who was collecting a debt owed to itself before it fell into default?

I hope someone in Sub2 community who financed purchases of the homes they sold could share in few bullet points how they accomplished it, while staying compliant with Dodd Frank and Safe Acts.

these rules came in Post Dodd Frank so yes many of us did this for decades BEFORE Dodd Frank changed it all. Plus keep in mind folks I am sure do it every day and just violate DF rules.

There is a guy named Scott Jelinek who does it. He runs webinars. There are infinite number of attorneys hungry to sue anyone on behalf of disgruntled consumers and there are hundreds of DA's who look for low hanging fruits and easy to prosecute cases. I find it hard to believe that this guy is grossly violating DF and still gets away with it, while running nationwide webinars and adding students to his team. Are you sure his method is to defy and violate DF?

I have no idea .. Just know the reality.. Just like on the West coast pre foreclosures are highly regulated but folks violate those laws all the time.. And just look at wholesaling its become regulated yet gurus still tell their students its totally legal the way they teach when it simply is not.. I mean you KNOW the laws.. If you want to violate them thats your call. but since your asking sounds like you want to follow the laws which I support and would recommend. I have not done many owner occ seller carrys in the last 10 years plenty of non owner occ.. the one i have is going into foreclosure :) And we did it totally to the law so I have no worry about someone coming back on us.

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Post: How do you do Seller Financing/Sub2 and comply with Dodd Frank/Safe Act ?

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#3 All Forums ContributorPosted December 21, 2024 09:02

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Lake Oswego OR Summerlin, NV
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Quote from @Eric N.:

Quote from @Chris Seveney:

these rules came in Post Dodd Frank so yes many of us did this for decades BEFORE Dodd Frank changed it all. Plus keep in mind folks I am sure do it every day and just violate DF rules.

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