All Forum Posts by: Joe Davis

Hey Anthony, 

Good strategy, just want to from a lender's standpoint point out a few things.

1) Seasoning on ownership is going to get you better rates, ideally 90 days - but yes having a tenant in at market rent is going to be great. 

2) One of the hardest parts about scaling is finding enough adequate deals that can still get you the Net Cash out at the end. In my experience, it's tough unless you are throwing significant capital behind acquisitions. 

I absolutely LOVE the ambition to do 42 properties a year - and with your estimations on how the process works, I am sure you can. but THE most important aspects (besides the capital sources) is the wheelhouse/conveyor belt of solid leads to evaluate. 

Some other points to note which I am more than happy to help with - DSCR lenders do have SOME regulations that you will find it tough to navigate if you snap up the wrong property.

- Always check with the long term debt lender first if the property is deemed "rural". get them to check this for you first. 

- Many lenders have a minimum of $75k (we actually do down to $50k) but have seen numerous investors not know this, and struggle to get the cheaper houses refinanced. 

- Many lenders have a min Sqft. 

- Many lenders have a minimum value of the property (at appraisal) of $100,000 or greater (essentially, they don't want hood houses on their books if they have to take back"

Just a few things on your check sheet i would have when evaluating! Good luck man! I have seen/been a party too a number of investors scaling to these levels, it can be done but there are some similiarties i see....even on the rehab side, same product in everything - paint code, flooring, cheap granite (excess bought at discount and stored for tenant turnover)..... etc. 

Quote from @Ricardo Diaz:

I have bought to properties with money that was saved. Both have equity but I don’t want to touch it. I want to borrow hard money for down payment. And the rest regular finance. I was told that the down payment money has to be In the account sitting there. How do you get around this when I don’t want to use any money but just borrowed money.  Thanks 

You want to borrower money against the 2 assets for another down payment? or you are trying to leverage debt on them by using a DSCR loan, and essentially cashing out? Not possible to NOT use the equity but have them assist you in getting a deposit for another. You either find a short term lender who will go 1st position on them, or you go long-term debt (dscr) who is also going to go first position on them.

What are the values now of the two properties? And how much are you trying to pull out. Keep in mind, many lenders have a minimum loan amount ($50k - $75k). 

Quote from @Gabe Callaway:

Quote from @Matthew Kwan:

You can either go towards DSCR where it does not require to use your income to qualify, where it only looks at the performance based of the rental property in a metrics of ratio. Or bank statements loan where lenders would only use 12 months deposits from your bank statements an average it out to calculate the income. Both of these programs can help qualify and obtain a loan for investment properties, but the tradeoff is that these programs have slightly higher rates than conventional loans.

If you are looking for lower rates which everyone tries to, you can always consider the traditional route of conventional loan where rates are typically lower 1-1.5% but you would want to make sure if your income/credit/assets can qualify for it.

@Carlos Valencia @Albert Bui

 Thanks Matthew! Do you have specific metrics for each type of loan that are important? Or a good resource for learning more about these types of loans?

 On 1-4 you will not see much difference, but when you get 5+ experience will come into play as well as a few other variables. Many lenders also have a minimum per door (ex. $50k per door min) so it's always best to quote out and have the long-term debt quoted before you buy (if value add). Seasoning is another, but if your doing deferred maintenance it's a must to not get an additional kicker on the rate, but also be able to pull more of the cash out of the deal. 

Just a little warning on refinance, a lot of lenders will have a minimum Sqft. and a minimum amount. If your goal is to refi, just make sure lender will cover both. 

Also, not sure where this is located but at $130k its either C or D class, or rural. You will also want to ensure it isn't classified rural unless your long-term lender can verify they can work with it. 

Your offering roughly 70% on the deal, which is always good and always leaves some contingency. Also the closer you get to 70% you won't have trouble securing the short-term debt with a lot less out of pocket at the closing table. 

Quote from @Jack Phillips:

Hi all, I'm looking for suggestions for a CRM to use for my wholesaling business. Id like the CRM to have a power dialer (for calls) and the ability to send SMS texts. If you guys have any suggestions that I can take a look at, it would be much appreciated!

Thanks

For Texting check out Launch Control, Lead Sherpa, REI Reply, ROOR or Textedly - Just depends on volume and sophistication you need.

Quote from @Jack Phillips:

Quote from @Joe Davis:

Yes, Go High level is good, so is podio if you can build it or purchase pre-built off the shelf like InvestorFuse. 

Before all of these, in our wholesale business i used Pipedrive. Now solely as a lender, i actually reverted back to it in unison with our mortgage origination software. 

I love Pipedrive and it's aesthetics and how simple it is to use. Integrations work fantastic. If you ever need any advice on it let me know. 

 I'm using podio as of now. I think its working really well. I am just a beginner wholesaler so I haven't done much marketing/lead management yet. Would you recommend the power dialer on podio? Do you have any experience with it?

Thanks

 Never used the power dialer on podio. Call tools is what we used, many use MOJO

Quote from @Nathan Copley:

I am curious how people go about getting their first contract and how people go about estimating their rehab costs.  I'm new to wholesaling and wanted to get a perspective on these two aspects.  My biggest hurdle with feeling confident about obtaining my first contract or being able to market that contract to potential buyers is the lack of experience when it comes to estimating rehab costs.  Any advice or resources for beginners?  I've read a couple formulas within Jamil's "How to Wholesale Real Estate" book, but fix and flip buyers typically would prefer an estimate of costs before looking at a contract and i would like to be able to give them that to add value to potential offers.

Any tips/resources are welcome as I have just started my real estate journey.

1) Go to your local REIA meetup and meet some contractors. Get them to asssit you in the rehab costs starting out, and in turn help them get business by referring them to your buyers.
2) Look in public records who is buying in your area. If that fails throw up some bandit Signs saying "I have an investment property for sale" 
3) Join all your local social media groups, ask who's buying. The more you can personally speak to the better - you will find a few that you can build enough rapour with to give you some advice on the rehab and offer.
4) Get a realtor on your team that will allow you to have access to the MLS (or get licensed). Don't use 3rd party softwares or Zillow for your values. Learn to comp properly as investors will be grateful. 
5) Have a good hard money/refi lender on your team. We can help create term sheets to show to your borrowers and help with affordable transactional funding (if you decide to double-close). 
6) One of the cheapest ways to get deals is to call ALL the realtors in your county and see if they are working on any fixer-uppers. With good timing, you will see they have deals they can't be bothered to deal with. 
7) Test what methods of direct to seller you are passionate about (Text, Cold-Calls, PPC, Direct Mail)...Hone in and refine the crud out of your acquisition system. This is the most important, that your Cost per acquisition is far less than your average wholesale fee. 
8) follow up! so many wholesalers don't follow up with their offers, probably 90% of your deals will be on the 4th, 5th or 6th contact. 
9) Know that not every deal is a homerun. Don't force a larger fee if it's not there. Your buyer is your customer, and if you give them a good deal - with only a handful of quality buyers you won't need to keep searching for them, and can focus on lead flow rather than dispo. 

Most importantly is start talking to sellers.....a good deal will sell itself. Be conservative in your rehab and value estimation right now. You will get better at that, very very quickly. After 2 or 3 walkthroughs with the above GC and seeing his bid, you will start to make a rehab 2nd nature. 

Good Luck!

1) Your verbiage in your contract clearly states the right to assign your interest in the contract. You can use your state promulgated (advised) contract, or a simple purchase and sale agreement, would than assign it to your end buyer. You do not need transactional funding, but you will need to disclose of the assignment, and both buyer and seller will see the amount that you are making as an assignment fee. 

2) You use your state promulgated contract on the A-B & B-C - not having to disclose the assignment, and you use transactional funding to fund the first closing. We do transactional funding nationwide for 1% of the frontside fee (no other processing or hidden fees) and it really just depends on state laws, disclosures and how you are setting up your wholesale deal. 

It does not constitute fraud if you have a PAL - But it will state that in order to qualify for the loan, certain criteria will need to be met (credit, appraisal, survey) etc. 

We have wholesalers who ONLY double-close (due to local laws or they prefer the benefits) and some who only assign. It really depends on many factors what is the best for your deal & operation. 

Hey Michele, We have been doing some DSCR refinances in Arkansas and have a good few borrowers located there. We can reach out to them and see if they don't mind sending us any leads they are looking to take down themselves. Would that help?

Yes, Go High level is good, so is podio if you can build it or purchase pre-built off the shelf like InvestorFuse. 

Before all of these, in our wholesale business i used Pipedrive. Now solely as a lender, i actually reverted back to it in unison with our mortgage origination software. 

I love Pipedrive and it's aesthetics and how simple it is to use. Integrations work fantastic. If you ever need any advice on it let me know.