All Forum Posts by: Jonathan Blum

@Brian Adams - Thanks for the details and advice.  I've listened to your podcast and am really inspired by the work you're doing.

I do everything I can to keep my investors happy.  These relationships are a cornerstone of my business.  They like to be paid on time and clear communication keeps the relationships worry free.  It also keeps the money coming back to me every time I have a new opportunity for them.  A few are retired agents and I keep them updated with project photos so they can relive their "glory days" of gutting old houses and creating equity.

There is a lot of talk on BP about how to raise private funds and the pros have it right:  the first deal is the hardest!  But if you find good deals, the money will follow and come more easily with each subsequent deal.

Good luck with this project and all that will follow!

@Brian Adams - I had a few questions about the private investors. I have worked with five different investors and now funded eight cash deals on SFH and MFH. Looking to get into bigger complexes and apartments.

1)  I am wondering about the time frame on raising that kind of capital.  My private investors usually want to get their money earning interest as quickly as possible.  I imagine when you are negotiating with 30 investors, timing is a challenge.  Do you start paying interest to anyone to "hold" their money before the deal closes, or do you begin paying on day one of borrowing?  If you don't pay anyone to hold their money while the deal works itself out, how do you keep folks around for 2-3 months?  Why don't they go find different investments?

2)  When you share a deal with many investors, does each get different terms? or is everyone on the same plan?  If different, how do you parse that out when you decide to sell?  I'm sure it's all in how you write it, but I don't know how you balance everyone's needs.

3)  Do your investors know each other?  Is there some disclosure of each other's information?

Congrats on a huge deal!  All that you have done is quite impressive.  Success well earned! 

Refinished hardwood floor command higher rental prices in my units.  People like them, and high end renters will pay more because they feel nicer.  I think they really give places the "wow' factor, which is increasingly important in competitive markets.  Only caveat is if you want to rent to tenants with pets.  I don't do dogs over 20lbs because they trash floors.  Otherwise I think the hardwoods are a no-brainer.

I own a dozen rentals.  I have installed full ikea kitchens and bathrooms in five of my places.  I find these cabinets attractive, durable and easy to put together once you have done one.  All of the Ikea cabinets (in kitchens, bathrooms, ect...) build exactly the same way, so once you have assembled some of their products, its easy to do anything else.  My tenants love the look and they make the places feel much nicer than cheap stuff from Home Depot.

If you are going to hire a pro, they can do nicer, but it will cost more.  If you're going to do it yourself, I don't think you'll be able to do much better than Ikea unless you have some super carpenter skills.  They even sell trim kits and molding to fit and make things look pro.

I own 22 units and send my tenants holiday cards with small ($10-20) gift cards annually, usually to Starbucks or a local bakery.  Have done this for many years.  I write it off as an advertising expense.  The tenants really appreciate it and it means a lot around holiday time when they may be stressed for money.  I appreciate them paying their rent every month year-round.  It feels good to give something back.  Interestingly, in seven years of owning rental properties I've never had a single eviction, non-payment or place trashed.  Might be good luck, or treating people well.  I'll keep hoping for good luck and treating others the way I'd like to be treated.

What is the opportunity cost of that money?  If you could use that money to make more money, and that would accelerate paying off the student loans, do that.  If you can't use your money to make more money, or not make more than its costing you, keep doing what you're doing.  Its all about crunching the numbers.  

When I was in college, I actually got student loans (3.9%) to cover my "cost of living" and used that money to pay off private financing (8%) from a Real Estate investment which was a higher interest rate.  I'm still paying these student loans, and will keep them until I can borrow money at a lower rate than 3.9% to pay them off.

@Mike Dunn - Great story.  Thanks for sharing.  A few questions:

1)  Did you or you FIL serve as the GC? or did you hire a builder?

2)  Who handled city permits/ codes compliance/ ect..?

3)  How did you arrange the "draws" with your hard money lender?  Did they give you all the money up front or did you hire some kind of escrow to monitor the progress?  If you hired this, how much did it cost?  What did you mean by "money draws took too long"?  Do you mean they wouldn't distribute the funds?

I'm looking at my first new construction this fall on a lot I own.  Thanks for the story and answering my questions!

@Eric Olsen - Are you having any more success?  Land a deal yet?

I think its awesome you're out talking to neighbors and doing your own research.  I always think its great to talk to the neighbors and see what they say.  I once learned from a neighbor that the previous owners walked away from a rehab because of serious foundation problems that wouldn't have been apparent, but would have broken the bank if I had bought it.

Keep pounding the pavement.  You'll land a deal if you keep up the hard work!

Finish school but keep your finger on the REI pulse. Get to know your local market. Look at what's for sale and see what is and isn't moving. Network with local professionals. Tell them you're finishing school to build your foundation so you'll be a better equipped investor and professional. Good investors will respect you for what you are doing and be more interested in working with you down the road. Keep hustling!