All Forum Posts by: Jay Hinrichs

@Johnson H.  I think your dead on about how the wealthy look at things vis a vi returns.

one of my bizz partners over the years loved to suck stockbrokers into this conversation.

Stock broker :   How are your investments.

Bizz Partner:  I am in double tax free muni's

Stock Broker:  Well return on those are low you could do much better.

Bizz Patner:  Well the return is fine if your like me and you have enough of them.

IE he has 8 figures and his tax free cash flow is more than that what most investors starting out and looking at that magic goal of 10k a month passive income ( or rental income which is anything but passive as we know) His double tax free's return him more than that DAILY

So yes as folks get truly wealthy they look for Safety then return... those starting out or in the middle of their careers are the one's looking for the homeruns.

And one might ask where this Bizz partner made his money.. Simple he owned a Garbage company and sold it to waste management in the day...Cashed in put it all in double tax free muni's...

There is no winning the cash flow mid west debate and the SF Bay area appreciation game.

Unless you have lots of cash and credit so you can buy 20 to 50 homes in the MId west and manage them like a hawk,,, One or two homes in SF will out perform those in the long run over time... Everyone wants to live on the peninsula... Not everyone wants to live in KC or Indy... JOBS JOBS JOBS and more JOBS  buying power smart people.. it all happens there.... Were else could a painter make a million bucks painting a mural at company headquarters than at Google.. Not going to happen at Angies list in INDY.

The problem most investors get when they think they need to buy a rental or two and they venture out of state.. Is that so many of them end up making little or no cash flow because they just don't understand how dog gone tough those rental markets are.. And if they bought through a marketing company they paid far more than real value they can never sell without a big loss.. I know I  have been there done that.

If you go mid west or east coast you need to find the wholesaler yourself.. and get the true deal.. not a west coast marketer like we see here on BP...

And if CA is too expensive look at Vegas and PHX.. closer and better plays in my mind.

Again personal bias

All I know is I owned 4 primary residence in the SF bay area from 1979 to 2001.. and I enjoyed when I sold each of them individually over 7 figure profit in total .. No way I could have done that in the mid west.. Only in the very top echelon markets of the big cities no way one could do that in any of the So called cash flow markets.

living in the area you can probably buy off of MLS which will give you a better deal than from someone who has had to buy the property for you, and has incurred holding costs to bring the property to you,, and or has to use some one like Ali Hipster who they have to pay a commission to to introduce you to the TK person. I believe you can buy on your own and then contact the better management companies ( one being Memphis Invest) and just have them manage the property for you... Put a little elbow grease into the acquisition and you will probably save some hard earned money in the process.

quick review of their site I have the following observations

1. pro forma  does not include maintenance and vacancy ( I understand they give a one year rent guarantee  and or you may buy vacancy insurance). Also when you turn a unit over with a new renter there is always 500 to 2000 or more in work that needs to be done. Plus a leasing fee...

2. Rental guarantee's usually Imply a fairly large mark up from true cost ( need to pay that rent guarantee from someplace.

3. Stock looks like any of the inner city upper mid west NE  C stock.. Highly doubt there would ever be appreciation in these.

4. they are using none of their own money in any of the process other than the guarantees and those funds come from the investor in the purchase of the property. So they use your money to buy and your money to rehab... Lots can go wrong with this equation. You may want to ask them to  provide you with a home that is already rehabbed inspected and tenanted.  Most likely the buy and build out process works fine but if something goes wrong in the middle of it. your quite vulnerable to loss in this scenario.

5. they are marketing over seas  and those investors are not as intuned as most US investors about what a good deal is what a good neighborhood is etc etc.

ARV does not mean anything on this high of priced home... As the buyer pool is small , And the value is only what some person that has the means will pay for it.

now I am assuming its in Missouri someplace... Not in LA or Bay Area or Chicago NYC were those numbers are common place.

be careful would be the best advice I could give it could be just a big white elephant. and any remodeling done on a house of that scale will cost hundreds of thousands to do it right.

YOu may just want to tie it up and flip it for a fee make a quick 50k or so... Pretty ambitious for your first one out of the gate. 

a lot of picks been broken in Rochester by foreign and out of area investors.  Heed Engelo's advice if your not from the area or close by.  Many other areas of the country were you would be much safer in my opinion.

@?  the little nuances one learns in the foreclosure bizz... states with redemption rights are very tricky... in Oregon the rights sunset after 6 months.. so many investors if they don't have the rights ( ie can't find the person who lost the house) Or does not want to pay someone who bought the redemption rights and is holding them hostage.. they just wait out the 6 months and go about their bizz... In Oregon you can kick out who ever is living there unless the federal law regarding arms length leases comes to play.. And you can stabilize and secure the home.. But any improvements are at your risk.. the redeeming party just owes you your cash plus in our state 9% and any VERIFIABLE expenses you paid to protect the asset.

@Katharine Chartrand 

  This buying of redemention rights is rampant here In Oregon.. those that buy the rights usually have no interest in the house.. they hold the rights hostage so you will pay them money for those rights.. I bet this person paid less than a grand for the rights. and will want 10k from you... State of Oregon is coming down on those folks that do this... As you need to be a licensed foreclosure consultant to buy pre foreclosure properties.  Same in WA and CA.  Not sure NM. If the court does not approve the sale the redemption rights are moot and the buyer of the rights wasted their time and money.

Highly unlikely that the investor who bought the rights wants the house... Other wise they would have bought it at the auction and would have told you they owned them so you would not waste your time and money bidding.. that's the other play these redemption buyers play.

@Jennifer Fernéz 

  are you SURE this is a good part of town ????  looks like a crack house in a ghetto !!.

I suspect the purchase price is OK and probably too high.. the rehab will end up running you right up to what it would be worth most likely...

You may want to look at buildings that are already rehabbed and tenanted.. this looks like one huge money pit to me....

I bet the current owner bought it for tax's or maybe paid 2 to 5k for it.. that's why he will Owner finance with 50% down he gets all his money back in the down.. But that's ridiculous who needs owner financing on this deal. I guess if your just going to try to flip it.

I have seen foreigners pay 100k or more for these exact type of properties with the promises of rehab that never was done... One in Youngstown OHIO just like this was a subject of a nationwide TV show in Austrialia the out of area investor got burnt to a crisp.

I would concur with others for a first time project this one seems way to involved and just by looking at the pics its only  a shell everything will need to be replaced.

Good luck

12k purchase price for a 5 unit and  ( best area of town) seem not to go together..

does not make much sense to me.. If this was in a ghetto then I could believe the PP

be careful