All Forum Posts by: Ben Leybovich

John, I think yuu are onto something with that last comment!

I don't look. Deals come to me. Why? Because people know that I am a serious player. They know that I am not so much an investor, as I am someone with a tool bag that is large enough to be able to solve people's problems around RE. Charles, RE is not necessarily about dirt with huildings on it. It is more about people and circumstances. Check out my web site. Might be something that interests you. If so, look me up by email, phone # on the site, or right here.

I have a 10-unit under contract as we speak. This is the only deal I found this year that was good enough to put under. Downpayment - 2.5%. CF day 1 - $1,000/mo. Expandability possibilities - $350 - $500/mo. Deals like that do not come from wholesalers.

It is a pleasure to make your acquaintance Charles. Hope I can help.

I agree with Bill G. Figure out the basics.

If I may, I’ll give you this advice. This alone will save your but many times over. I’ve learned that when getting into a deal, you must have 3 exits available to you. Thus, if you use hard money, but can not flip within the time-frame, have refinancing options lined up. At which point you have a rental on your hands. Can you cash flow this property in this case…

Flipping is very, very hard - the hardest thing there is in RE in my opinion. There is no margin. Check out this clip:

In short, assume the worst case. It should not be a matter of either making money or loosing money. Rather, frame the proposition as: which way will I be making money?

Personally, a wholesaler is the last place I would think to look for a deal.

The Government borrows money from the FED. FED prints money and writes a check to the government. This borrowed money is not free. The government has to pay interest on it. Where does the government get the money to pay this interest? Taxes is one place, but that’s not enough. The government borrows more money with which to pay interest on the previously borrowed money. The formation of the federal reserve system guarantees national debt – it is structural and unavoidable. Taxes have to go up because they spent too much and won’t be able to pay interest when rates go up. How long before hyperinflation hits? Your guess as good as mine…

Good job Tim. My first deal was similar - seems so long ago.

Welcome Steven! You are definitely in the right place.

Sorry Kanku, I meant to address my reply to Charles. Appologize

Kanku,

In this life, you’ve got to have one of two things, either knowledge or money. You’ve come to the right place to ask questions. A lot of guys and ladies here have spent their lives studying and practicing the art and science of RE investing. The trick, for you, is to know the right questions to ask!

Why would you go to a wholesaler? How would you be able to tell whether the deal you are getting is good, or you are being screwed out of your money? HAve you done the market analysis? Do you have the money lined up to do a deal? Do you know what is the footer is and what is its function? Have you priced out how much it costs to replace roofing/siding per square in your area? Do you have relationships with contracts established? What are passive losses and how do they impact taxation of profits on a flip vs. a long-term investment?

The point I am trying to make is that unless you know these answers and much more, you are jumping the gun looking for a deal. Remember, money follows knowledge in this business. But, knowledge is never free - you pay for it with your time. Have you put in the time? Have you put in the time to keep out of trouble; to keep from loosing money?

Without the knowledge, you are better off handing you money to a stock broker. They will take ****** care of you, but it’ll be better than a wholesaler…

Devin,

You are smart to look at newer structures. And if you are trying to rent them for a while, but ultimately flip them for cap gains then this is a good proposition. However, if you are going to hold onto them for cash flow, singles are not the best in that vacancies are much harder to handle in singles then multi. It’s not like you just loose the rent if it’s empty. You still have to pay mortgage, taxes, insurance, etc. So you get hit on both sides. Potentially, 1 month of vacancy kills your profit for a year. I have both, and from long-term perspective I'll take a multi any time.

You are wise to consider the cash on cash return as the definitive metric. Of all of the metrics we use to evaluate deals, this one hits home. I have a 10-unit under contract as we speak. The financing package I've put together, which involves both commercial and private money, has me leaving 2.5% of my cash in the deal. This will be well over 100% cash on cash. In this context, 15% COC is perhaps not so great...

I always remind myself that there are 2 profit centers in every RE deal: one is the bricks and lumber on top of a dirt pile, the other is the terms. Perhaps the latter is the much more important piece. I focus on terms. This is difficult because most deals out there don’t lend themselves to negotiating many of the terms that should be negotiated in my opinion. This is why I am happy if I only find 1 good deal per year – but it’s really good. I hope this makes sense to you. Look me up; we'll talk more if you want.

Devin,

You should be fine then, unless you don’t meet some other qualifying criteria like debt to income, credit score, etc.
Can I ask you, though, why you focus on SFR if cash flow is your primary focus?