All Forum Posts by: Jay Hinrichs

@Rob Cee   when hard money lending with folks you have no personal knowledge or relationship with one must use this analogy flying analogy... when I am done with my Runup at the end of the Runway and getting ready to take the run way to depart I go through a very quick last minute check and I always think OK what could kill me today if I over looked something... When I lend money I use the same principal how is this borrower going to take this money and not pay it back.. Thinking through all the ways I could end up being departed from my funds.

At the end of the day one can not totally insulate yourself from default it happens, but to mitigate it what I have done the last 8 years or so is be patient and found a nice group of folks that are now repeat clients.  Now this is not realistic If I was running a large company but for a private investor looking to invest in TD's this can be a good way to create long term relationships that are mutually beneficial

Check with the state of WA many of the loans your contemplating do not need a broker or NMLS licensure

@Aaron Norris   Just fyi I have recommended your company to many LA investors as an alternative to going half way around the country and trying to buy a cash flow rental. Not sure if you still have the 7 or 8 year buy and hold product. But I liked that product. I have meet your dad a few times at various events and I really like his presentations and especially his experiences in Texas

@Rob Cee   Its the original intent of the borrower if there is a compelling reason that the borrower had to make a change in direction and can prove that some outside event or agency created a different direction everyone one in the transaction is fine.. You can't regulate or insulate yourself from those coming into a deal with fraud on their mind.

Agree with Jeff on this point

@Jason C.   class of property like you state is in the eye of the beholder !! and very much dependent on the area of the country you work or reside in.

good exercise would be to take Detroit and put it into A B C D class by area and see if anyone can agree on that  LOL.

My lending days in Detroit was an eye opener... All PM's were armed,, Office was razor wired and bullit proof glass.. ARmed security guards checking the contractors into and out of the rehab jobs.. And when I first went there it all looked good to me on the surface.

If I look at my market in Oregon  its also laughable on the other end... We drop 30k lumber packs right off in the front yard.. No security in any manner.. Never had more than the odd neighbor steal a 2 X4... all mechanical plumbing etc etc is put in with no security. 

We don't lock the house up until its been sheet rocked.

Not that theft does not happen in my market it does but its just really rare.. And I am pretty certain in the low end rental markets if you did not secure a home all this stuff would stand a very good chance of being pilfered ..

But it sounds like your new to the game and I wish you the best... And your doing it right your buying properties you can watch like a hawk and you know your hoods that gives you the best chance of success... 

@Wendell De Guzman   thanks Wendell remember this just came up as I got a call from someone in my are Portland Or.. and he wanted to know why he could not find any 2% deals in Oregon...and he was frustrated.  Once he explained to me what this rule ( guideline was) at that point I realized its a regional thing and as stated for all intense and purposes only applies to low end rentals.

Further I postulated that if investors that are in the Know IE educated on BP and have this guideline in mind that values will remain static in those markets as the PRO"S will certainly only buy under those metric's and rents by and large are static in those particular asset class.  That was my point.

It was NOT my point to debate the definition of C and D class I can only go by my 15 year experience loaning in Detroit, Indy, Memphis, Atlanta, Birmingham, Jackson, Houston etc etc as to what C and D areas are like in MY perception.  I know what they are in CA... IE compton Watts  East Oakland  West Sacramento, STockton etc etc.

WE just don't have those kind of ares in Oregon and thats the end of that discussion. Our worse neighborhoods would be strong B in most areas that I am familiar with.. So its just perspective really.

@Dawn Anastasi @Chris Clothier @Ed L. @Ben Leybovich @Sharad M. @J Scott @Mike McKinzie 

Thank you all for a very spirited conversation regarding this topic.. great perspectives from all.

What I take from this is most of those that responded are in the bizz, IE they work it full time and it is their job.

Those that are successful in the 2% plus type properties generally buy their own deals wholesale over see rehab at best pricing, then self manage or bring the asset into a very controlled environment.   And stay right on top of them or in other words are members of the community were they invest and therefor has command and control .

And those of you who happen to live in parts of the country were these low hanging fruit can partake successfully in this business should count themselves fortunate that these assets are so readily available to you within a 30 minute drive..

I did not read anything that changed my mind that the 2% rule keeps prices from rising in any appreciable manner as value only rise's with rent increase's and rents are fairly stable in all these markets.

Lastly as to class of asset being it A B C or D that is in the eye of the beholder, my C could be your D or visa versa .....

Off to Milwaukee today then Chicago  Beer and Brats  Friday fish Fry, Deep dish pizza Miracle mile... should be a fun week on the road.

Best to all

@Jason C. 

  good honest answer on your wife going to your properties.. glad your aware.

In my C stuff over the years I would go there mid week during the day but we always were packing No way at night no way on weekends.  LOL  and no way wife by herself.

@Jason C. 

check back on this thread after 2 to 3 years of those tenants and see what your expenses are it will take a big bite out of that cash flow that cash flow is assuming they all pay rent on time and your have little or no fix it issues... As we all know those tenant bases are pretty rough on things...But if your going to do it go for it.. build up as many as you can so you can hire people to do the dirty work for you,,,, that I am sure is many peoples goal.. If you live there work it like a business it can work but it is a hard bizz no doubt and takes time and effort just like any other business.. You could also invest 100k in a coffee shop and probably make 35 to 40k a year Net.  But then you would have to deal with the employees>

@Jason C. 

  so back to the point of my post  2% or 3% or whatever kills values.. it drives the values down not up... It drives cash flow up.. But when you go to sell aren't other intuned and informed buyers going to want the same deal you got... 2 to 3% and your rents I would guess will stay static for years to come so you really don't have any equity growth.. in those areas.  But I have never been to Philly save a train ride through there from DC to NYC.. all I saw was boarded up  ( actually concreted in) tenements... It reminded me of Cairo... I was thinking man if someone just got to the states and their only impression of the states was this train ride they would not be very impressed between leaving DC and entering NY   LOL  I know there are great parts of every city  not taking a poke at yours. Just my obseravations.

@Jason C. 

  do you live in your area and do you self manage?  there is no question the older big cities of the northeast offer those deals every day of the week.. and twice on Sunday.. there is a reason for this of course as we all know.

I am fully on board with those that live in the community and want to gut it out in the lower end that it can and will be successful if you treat it as a business and stay right on top of the properties.

becomes personal preference and how busy in other walks of life you are and your risk tollarnces.. IE would you let you wife drive over to those houses in the evening to collect rent?

@Larry Turowski 

  do you manage your own properties and do you live in the community you invest in?

are your loans through national lenders or local comminty banks... I have always found it hard to get loans ( can't get anymore because I have more than 10) from local banks if I do not live within 100 miles of the property...