All Forum Posts by: Jonathan Makovsky

Welcome @David Senna

Welcome @Carlos Querido!

@Caleb Bullard that's a tough one to answer. Probably the same amount of money it takes to get into any business. You can get into it with pure hustle, or you can spending billions (or more) buying property. 

I am going to guess that you're fairly new (nothing wrong with that - we all started at some point), but I would advise you start reading on BP and listen to the BP podcasts it will give you some of the fundamentals.

Best of luck!

Are you paying interest on the full amount from day 1? Or will you be paying interest on the future principal drawn as you draw the funds?

If it's the former, then I would recommend getting the entire amount into an escrow account right away. (Side note: If your lender is comfortable sending the money right to you, then go ahead with it that way. My personal preference to to set-up our business the way we would want it to be done with any investor so our operations are in place.)

If it's the latter, then don't draw it all at once because then you'll be paying extra for the principal you've drawn on that you don't need at the moment.

@Philip Velleux I echo what @Jennifer Lee said about calling the town's P&Z (Planning and Zoning) to find out what's allowed.

One of the colleges that we are looking to invest is right on the border of a few towns. One of the towns allow three unrelated parties and another town allows four unrelated parties (the thid town I didn't even call to find out because it's prohibitively expensive to get into).

It would be best to speak to other investors in the area to find out what is the students' preferences. In the area where we are - and in the town that four is legal - four students renting is fairly common.

@James Masotti

Great questions:

1) Yes, I would ABSOLUTELY record the loan. You must always protect your investors interest to the fullest. They are trusting you with a significant amount of money and yes, it will cost you some money to record [and release] the loan. But setting up your business correctly ensures your investor that you have their best interest in mind AND shows other investors that you run your business the right way.

2a) We have the money transferred to our attorney's escrow account before funding the property and before the loan is recorded.

2b) Yes, I pay the investors for the wire fee. Most of our investors have said not to worry about the $15 - $30, but I like them to feel that they are getting the most out of the deal and I think it creates goodwill.

2c) Ask your lender what they prefer. Some of our private lenders want a wire, some want a check mailed to them.

3) You will release the mortgage from the town records. Our attorney drafts our release and files it with the town.

Hope this helps.

This will not help find your answer, but will likely give you a good laugh :)

https://www.youtube.com/watch?v=4IRB0sxw-YU

@Christa P.

As far as the returns, I think it's a very good questions, but such a personal one that you need to ask yourself and your partner.

(Please see post below addressing the question of the amount of return: https://www.biggerpockets.com/forums/88/topics/269...)

What returns are YOU happy with? Personally, I would advise that you do not look to what @Brandon Turner is making, he is a pro and at it for a long time. Those returns may or may not be available in your area and he might have solid operations in place that allow him to achieve those returns, which a newbie might not be able to get. 

But most importantly are you comfortable making 9%? I would think if the other option is to put it in the bank at 1% and you are okay with the money being tied up in an illiquid asset like real estate, then it sounds like a decent option, PLUS you get the benefits of legit REI experience. My personal opinion is if you can (really) hit 9% on your first rental deal and gain that experience that is awesome and I would definitely go for it!

As to whether or not you should invest in two deals, again it's a personal one: 

• Do you have other money in reserves if you need to tap into them shall a major expense come up? 
• Do you have the time to invest in more than one deal? 
• Are you the kind of personality that can handle multiple things at once, or do you need to ease into something?

You will likely get all kinds of excellent answers from other investors, but always remember that most REI is so personal and local.

Best of luck and please keep us posted on what you do.

@Daniel Patterson, this post is a goldmine for books that you will be looking for: https://www.biggerpockets.com/renewsblog/2013/04/1...

H/T @Brandon Turner

Hi @Bailey Mason,

Great question!

Do you have any of the following: your own money to put into the deal, flipping education, local knowledge, an understanding of your market, resale prices, understand construction prices, and other things that would make a private lender comfortable lending to you?

If you have some (or all) of these areas of knowledge, maybe you can get your lender comfortable lending to you. The first flip is definitely the hardest to raise for so you need to be scrappier.

You also can bring the deal to an experienced flipper and work on it together. (YES, YOU WILL NOT MAKE AS MUCH MONEY ON THE DEAL. However), you will gain the experience you need.

Also, I think if you are buying the house at a good price and not leveraging too high (i.e. you putting in a solid amount of your own money into the deal and not making your lender put too high of a percent down) that might be a great way to tell them that they have a nice safety net.

A few other things you can bring to a lender to get them comfortable: 1) Get the property appraised and/or; 2) pay a broker to do a BPO as-is and ARV; and 3) Get the property inspected with an official inspection report; 4) Get MULTIPLE contractors into the property and get detailed SOW's (Scopes of Work) 5) Show your other experiences, accomplishments, and skills in other areas and how they are relevant 6) show your credit score and other personal assets you have in case the deal goes south.

Best of luck!