All Forum Posts by: Jon Reed

When you say "Private Lending" what are you meaning? Do you have a private lender in mind? is it a family friend? a coworker? Or are you just looking to hop on google and see what comes up with a search for 'Private Lender'?

All of that factors into the answer to your question. I would suggest networking through your friends and family and see if any of them can be your hard money lender for a deal at 10% yearly interest. When it comes to making an offer just write in that it is a cash offer and put down a big chunk of earnest money (which you can get from your hard money lender). 

The idea that all offers must come with a 'proof of funds' or 'pre approval' is not true. A seller just wants to be sure that you will be able to close and almost every seller will gladly take an offer that closes in 2-3 weeks and has a nice 3-5K earnest money check attached to it.

Based your question it sounds like you lack cash to go on a 'traditional' investment path of 20% down for each property you buy.

If you have no money then I would suggest a quick flip... make 20K (give 10K to Uncle Sam)... and flip something again.

If you have a good day job that allows you to have extra income to invest then go with a BRRR strategy.

First steps to figure out if the place is worth flipping.. and how to fund it...

Skip this deal and take a few months just learning everything you can about real estate... start talking to people who have already done it in your area... become an expert.

In one of the bigger pocket episodes it talked about the triangle of real estate resources (it had a trendier name but can't think of it). A deal needs..

1. Time
2. Money
3. Knowledge

If you do not have any money then be the person who can invest the time and has the knowledge... if you have no knowledge then you better have the money to partner up with someone who has the time and knowledge. If you don't have two of those three things already then figure out which one you need and another person to fill in your missing quality.

So the question is... how to get $9,000 in the next ten days?

Start calling every family member, family friend, best friends cousin and see if they would lend you $9,000 for 90 days.

If you had more than 10 days you can get creative like pulling a car loan out if you have a vehicle owned free and clear... or a home equity line of credit... or selling that PEZ collection that has been in the attic for a decade

Don't. Try. To. Time. The. Market.

If you are in Real Estate for the long term just start buying... some years the prices will be high and you will buy properties... then the market will dip and you will buy properties... then it will go back up and you will buy properties. 

People who try to time the market usually fail to ever get started or never make the 'crazy' returns that everyone dreams of. This same concept is exactly the same as buying index funds vs. actively managed funds.

Just look back at homes prices 20 years ago... where they lower.. yep! Will home prices be higher in 20 years? yep!

Without seeing a floor plan it is hard to say. But gut reaction is that it sounds a bit sketchy. There seems to be a lot of red flags in this idea... such as the framing of the shed sitting right on the slab. There is also some major unknowns such as the shed may have 2x4 studs on 3 foot centers. Also, you will need to run a HVAC vent into that shed now to keep the washer pipes from freezing and to keep the rooms from being 80 degrees in the summer.

Speaking of that how well insulated is this shed? Does the houses attic attach to the 'attic' of the shed?

OOoph... if this was me I would just keep the washer and dryer in the new bathroom (a nice stackable unit) and put in a small corner closet in the guest bedroom. That shed just seems like a can of worms.

That list does cover the heavy hitters, but just to sum it up here are some that I always look for (I also get a home inspection for each property before buying it and ask my inspector to check for these things).

Stuff You Can't See (aka takes a test or a professional)

• Asbestos
• Lead based paint
• Lead in the soil
• Buried oil tanks (if the home use to have an oil furnace)
• Collapsed/Rooted sewer lines
• Poor septic tanks (I have heard of people buying homes and finding out that a 50 gal drum is the septic tank)

Stuff You Can See (or easily find out on your own)

• Old wiring (knob/tube, cloth, aluminum)
• Cast iron plumbing
• Broken roof rafters
• Dry rot, termites, wet rot, and just wood support issues
• Mold
• Fuses/Multiple electric panels
• Sloping floors
• Cracked foundations
• Signs of water in crawl space/basement

Those are the ones just of the top of my head which can quickly add thousands of dollars to a job.

You will have the opportunity to learn a ton from any of them. I would start with the real estate broker side and just get in the door and ask them if you can help cold call for them (calling FSBO or other off market properties to see if they would list their home with the agency). There are more administrative jobs in real estate than actual realtor roles... so don't let that stop you from offering to help out. If they don't need your help yet then just follow up every week. This shows that you are serious about wanting to help and learning.

Calculating ROI on flooring improvements is just a shot in the dark. Sometimes your rent may only be able to be bumped from $750 to $760 after $4k in new flooring... according to the math it would be dump to do that improvement. However, you may end up getting a higher class tenant who wants to stay for years instead of months in the home and take pride in the home. So in that case a $4k investment of new floors could save you 5x that in a few years by avoiding lower quality tenants.

My 'ROI' calculation for improvements is much more based on would my wife and I be happy living in the house. If the answer is yes then it probably doesn't need the new floors... but if we wouldn't move into it then we would install new floors.

Simple. Find a new place to live. 

Personally, I rather jump start into my own duplex and invest my time into that instead of investing my time into finding out how I can get a pet into my current place or how I can get my landlord to call my neighbor and get them to not block the driveway.