All Forum Posts by: Joe Hughis

@Logan Bowers - From a marketing perspective, you don't want to anger potential clients by disrespecting their wishes but you do want to stay in their minds.  I would not remove them from your list. However, I would tailor a few specific marketing campaigns to that group, which is targeted at branding your authority and professionalism.  They may not be selling now, but chance are a percentage of them will in the next few years.  Best of luck! 

@Amit Parekh - When you are looking to finance investment properties, getting 100% financing is rare, dare I say not possible using traditional financing.  The reason behind this makes sense.  If it were your actual home, you are more inclined to keep up with the mortgage in order to preserve the roof over your head.  When a borrower has an investment property with "no skin" in the game, if they run into hard times, it is much easier for that borrower to wash their hands of it and walk away.  Yes, their credit would be affected and there may be legal ramifications, but they wouldn't be out any big money. 

When venturing into investment properties your most likely options are: taking on an equity partner (while also having skin in the game yourself), possibly utilizing private money to make up the different (although you would have to find a lender that would be willing to take the risk of being in a 2nd position and carrying the value loss risk), and of course actually using your own funds as the down payment.  

There are great reasons and rewards to venture into larger investment properties.  However, despite what some might want to claim, 100% financing on investment properties is not likely.  

@David I. -  I've seen situations where "friends" pooling money together works out well and other situations where it becomes a huge disaster.  Besides having a successful project, the common factor in whether the arrangement is successful or not are: transparent roles, leadership, legal/work responsibility, stake, costs/fees responsibility, and exit strategy.

Also, from that i would add, much like accredited investors, you don't want to take $5K or $10K from "friends" who could arguably not afford to lose that money.   

To answer your question, the level of return they should expect should be outlined as part of the stake I mentioned.  The payout can be a percentage tied to the equitable portion of their investment, or it can be a flat fee for usage, presuming a set profit margin is reached.  

As far as success stories, I personally know of a group of about 7 friends who have all been in the real estate industry for years.  They decided to pull their monies together to start a fund to purchase and rehab higher end homes and some commercial properties.  Granted, their pool of funds is in the millions (some provided much more than others), but the transparency I mentioned above has allowed them to successfully purchase properties, conduct business, and above all remain friends. 

@Earl W. - Not every deal you do will be a homerun.  In my opinion, as long as the "OK" deal you speak of still satisfies your investing criteria and allows you to sleep at night, then it would be worth taking it on.   However, don't go chasing after a deal simply because you have the funds available.  I think someone once referred to that as being an "itchy investor".  Not sure if that phrase is proper, but it was humorous.  :) 

@Gloria Grotjan - Where is the self storage located?  If it is in CA, then you may want to go to smaller community lenders and credit unions.  That is definitely not an asset class, which is in the wheelhouse of the major lenders (unless you have a healthy deposit relationship with them).  If all else fails you will likely have to utilize commercial private money.  

@Karen L.  -  The answer would really depend on what type of property you would be investing in, what is your investment strategy, and also what is your management plans for those properties.  For instance, if you were looking to get into larger commercial properties in Texas or Ohio, then it would make sense to hire a property management company to watch over your property.  Presuming the numbers work out after taxes, filings, etc., then investing in one state, both, or many others wouldn't really be an issue.  However, if you were newer to real estate investing and you were looking to get one maybe two 1-4 unit properties, the time factor of managing those out of state properties could be prohibitive in itself.  I knew of someone in the past who bought a handful of properties in Texas, but lived in California.  The numbers made sense to buy the properties, but without having a property manager look after his interest, he was forced to make multiple trips back and forth to deal with specific situations.  Yes, it made him money, but travel time and cost eventually made him sell his smaller properties and purchase a larger property where having management expenses made sense.   

@Chris Toedter - You also have to be cognizant of the fact that different buyers have different ways of evaluating a property.  A particular selling price may not make sense from your calculations and requirements but they may make sense for another buyer.  Also, there is a good amount of money out there that is chasing increasing values over sound investments.  The good news is that there are plenty of properties available. You may have to increase your search parameters, but they are out there.  I see solid deals come in daily from across the country.   

@Tony Hill - Based on what you are writing, I would strongly recommend consulting a tax adviser before you proceed.  By giving your friend pay stubs you are claiming he is your employee and you would be subject to specific rules, taxes, and regulations.  What is a "friendly" request, could end up being a cause of relationship friction down the line.  

@Account Closed - For investment properties that are 5+ units and commercial, getting a loan as an LLC is no problem at all. However, can you clarify on what type of property you are inquiring about?

Hello @Demarcus Owens.  Welcome to BP and the world of investment real estate.  :)  The best advice I can give you is to study up as much as you can about different ownership scenarios and possible even get to know another 1-4 unit property owner and talk to them about their experiences.. When you find a good property that minimizes your risks and provides you with the benefits you seek, take the dive.  Dallas is a very stable market right now and I'm sure you will do well.  Cheers!