All Forum Posts by: Karmen Feist

My brother was in a very similar situation. It's really easy to see that it doesn't cash flow with management but that's now the end of the story...

He had a 15 year VA loan and had about 12 years left to pay on it.  His rent was going to be about $200 less a month than costs including management.  His house at the time was worth about $180,000 and I think he owed about $150,000.  

This is how I convinced him it was a good idea to keep it...
Cost per month =$200
Cost per year = $2400
12 years = $28,800 (if rents remained the same for the duration of the mortgage)

If his house did not appreciate AT ALL in 12 years, and rents stayed the same, his tenants would have paid off $121,200 ($150,000-$28,800) of his mortgage and it would be a free and clear property.  And that was with zero appreciation.
So, figure out those numbers and add the 6% that is gifted from the company.  Then decide.

He ultimately kept it and is incredibly thankful that he did (despite one of the tenants having a huge house fire from a heater they were running in a camper in the driveway - it was covered by insurance).

He only has a few years left to pay on that first mortgage and the house is now worth about $220,000 (up $40,000).

He was also able to use the equity from that one as a down payment to buy a short term vacation rental in Hawaii and is once again taping into it to buy land to build his dream home.

I know that many people on here push the other side because it doesn't cash flow, but if you already own it, it might just make sense to keep it?

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Hi Daquan!  Congrats on taking action!!!! Can I ask why you're planning on wholesaling rather than rehabbing and cashing in?  

Also, I really appreciate all the advice on direct mail but my advice is a little different.  If you want to have a really great list and a really great response (like 10% response rather than .5-2%) you should be creating your own lists and get a killer yellow letter campaign.

And the reason I ask about the wholesaling vs rehab is that many people think they have to start with wholesaling in order to save the money to be able to invest with 20% down.  Just FYI, if that's what you're trying to do, you don't need to do that.  If you're marketing and finding the deals, right now that's the hardest part of this business, you should be getting paid the big bucks :)

We started out in 2007 just out of bankruptcy as my chiropractic business went under.  As we got more into investing and the market was crashing, the option we chose was using private lenders to fund 100% of our projects.  No, it was NOT easy but it is AWESOME!  There were times that it sucked and we wanted to give up.  We worked our tails off and grew our entire business using private money almost exclusively.

Either way you choose, I totally commend you on taking ACTION!  As we like to say, "Do It Scared" :)

As a coach and seasoned investor my answer is totally personal.  I think there are many people who can do this business without a coach, but they will never know what they are missing by not having the experience behind them by hiring a coach to open their eyes to ideas they would have never thought about.  A good coach will pay for the investment in their program time and time again by the knowledge you'll get.  

We've hired several coaches over the years to up-level our business and change our strategies. Without exception, they have all been WELL worth the money.  While it hurts to take the leap and spend the money hiring them, it also gives us FIRE and DRIVE to make it work.  

The best coach we ever had charged $50,000 and looking back I would have paid him that and then some all over again for the ability he gave us to live the life we now get to lead.

It's all very personal.  If you think you can (and more importantly WILL) do it without a coach, then do it.  If you know you'd be better off with a system to follow and someone to hold your hand and keep you accountable, then look into a coach.

GOOD LUCK!

-Karmen

Just to understand:  Can you explain what you mean by "take the 500 off the list and upgrade to personal letters"?  Just so we're on the same page, the 500 that came back were old/bad information.  It was completely wasted $$$$. At that point you'd just take them off the list and keep marketing to the one's that weren't returned.

Also, not sure what it is that you're trying to accomplish with Transactional funding.  Typically transactional funding is for same day closes, are you thinking of doing short sales or some other same day close strategy or are you looking for private $ for flips?

What we've found is that most people without money think they need to start out as a wholesaler, when really they could get private money to do their deals.

We teach our clients all of this.  How to find the leads, do the marketing and how to find the money because as wholesalers, you're putting in all the work to get the deals and then settling for small paydays when if you just took a few more steps to get the funding, you're paychecks would be a whole lot bigger.

We started with almost no money, and horrible credit and actually had to borrow money to pay for a mentor to teach us all of this.  And we've built the majority of our business using private money.

What's your exit strategy?  I've always dug up my own lists and that's what we teach our clients to do as well.  I JUST spoke with a potential client who bought a list from list source, sent out 1000 pieces and got over 500 back.  As far as absentee owners, from what I understand, that is THE most sought after and marketed to list out there so your competition will be pretty stiff.  If that's what you choose to do, I would think long and hard about how you're going to set yourself apart from the rest of the flock.

AND if you have more time than money, I would absolutely suggest you pull your own lists to save that money and put it towards the campaign itself.  Depending on your exit strategy, you can decide which lists you're going to use (foreclosure, bankruptcy, probate...).

Best of luck!

Are you thinking about buying a list or building your own?

We started with private lenders and 10 years later still use mostly private $$$$ :)

We aren't in the area but we are mentors and have a client in KC, not too far from you.  If we can be of any assistance, let me know.

Just curious, what state is your other property in?

Hi Joseph!  I can tell you my husband and I would have been lost if we hadn't hired mentors along the way.  We've been in real estate for over 10 years and have seen the good the bad and the ugly.  We've been asked to "teach" for some of these companies and we now teach others what our mentors and experience have taught us.  

So many others have nailed the key here, you can accumulate all kinds of information for free, some can take it and run, some need the hand holding and step by step guidance.  Either way, you'll pay for your success whether it's through your own mistakes or paying someone else to avoid them.  It totally can be done either way, I just believe it's a matter of personality, time frame and resources.

I can tell you that you should know step by step how to walk through as many possible strategies as you can, as that's the best way we've found to not only make the short term cash but also the long term wealth building.  Finding someone to teach you all of that will be well worth the investment.  Just for comparison, our most expensive mentor cost us $50,000.  I would pay that again in a heartbeat but saw the MUCH bigger figures on here as well.  And while it may very well be worth $250,000 you might have similar/better options at a much smaller investment.

Best of luck!

Karmen