All Forum Posts by: Account Closed

@Lucas Mills Or you can buy them Subject To and sell to Tenant Buyers for cash flow and never worry about CapEx again.

@Kellie Fernald Unless you are flush with cash, that volume of purchases might be a bit of a challenge. Talk to your banker and ask how many units they will fund. For the remainder, find a  commercial lender and how much down you need for the remainder. Figure out your finances and the sources.

@Collin Corrington If you aren't *trained* to do Subject To & Creative Financing,  What could possibly go wrong? ;-)

@Account Closed I don't do Fix & Flip anymore. It has the highest tax bracket, takes the longest and is the riskiest. Generally a Fix & Flip runs for 3 to 6 months and and you can only do so many in a year. The market changes and you can be left trying to sell a property people can't afford. 

I start with the assumption that I am *not* going to put more than $25,000 into a property, "All in."

So, for instance, if the seller has $8,000 in equity, I give them $8,000 out of the $25,000 I have allocated and use the rest, $17,000 for the expenses. I Purchase (I take over the loan), pay escrow, pay title, pay carrying costs, pay utilities, pay for marketing, pay for property clean up, I do *very little* rehab and I keep $5,000 in reserves from that $17,000 in case I need it later. I've developed a spreadsheet for this model and I can tell pretty quickly if I am within my "safe zone". I assume 3 months to sell. Usually sells within 30 days though.

My typical houses are in the $150,000 - $300,000 range. I invest & coach in multiple states and In the Tri-Cities the numbers are a bit lower of course but relative to the same percentages. Say a property has a PITI of $1,200. I go to rentometer and see what rents are going for in the neighborhood. I then mark up the payment into the first quarter of the "red zone" on the chart, say, $1950. So the difference between what I pay and what I get is my monthly "cash flow" or $750 in that case. (That's from an actual deal.) People are willing to pay more if they will actually own the house rather than rent forever.

I do my comps and mark the sales price *up* beyond what things are currently selling for. Say, $30,000 above market. (Less of course in the Tri-Cities). It's "whatever the market will bear". I don't use real estate agents so I am saving the 6% fee, $12,000 in the case of a $200,000 property.

Then I offer the property on Owner Financing/Lease Option/Wrap/etc to business people who have great incomes, some money set aside and want to own a house but can't get financing because their Tax Returns don't show enough income. (Self employed get *great* tax write offs but that doesn't help when trying to get a loan from a bank).

The first Tenant Buyer who has $25,000 to put down and qualifies under DoddFrank gets the nod. If they have the money to put down, if they have a job that will support the payment under good lending guideline Ratios, (I used to be a loan officer and that is how I was trained), and If they don't have *unpaid* child support, if they aren't *delinquent* on student loans, if they aren't currently in a bankruptcy, if they aren't currently in a divorce, if they aren't currently in a lawsuit, etc. I don't care if they had a bankruptcy discharged last week. I don't care if they have lates and long ago write-offs.

So, I get the $25,000 back when the Tenant Buyer comes along, usually within a month or two. I get the $750 a month ($9,000 a year) cash flow and I don't care how long he wants me to carry the financing. Each year that goes by is another $9,000 to me plus the principal is being paid down. When he eventually does do a refinance, the difference between his payoff amount and my payoff amount I get to keep. This is a more *complex* technique but anybody can be taught how to do it. I read at Realtor.com that the average gross return on a Fix & Flip is about $25,000. This is *far* easier, faster, less risky and more lucrative. IMHO

@Agypse Gos I would think that the next *big* earthquake in your area is more of a concern than North Korea. We know there WILL be another earthquake, we just don't know when. North Korea is finding that China is putting pressure on them to smarten up. When North Korea loses China's tacit support, North Korea backs down. That is about where we are right now. North Korea is backing down.

@Ron Flatt Congratulations to you and your bro's. It's an interesting dilemma that I haven't run into. I am not a CPA or Tax Attorney and I'd think you'd want to consult with both. But, I am a "strategist". I would probably have each of the three brothers form their own LLCs. Then I would divide the properties on paper to be as equal as possible with "scissors, paper, rock" deciding any issues. I would then have the Corporation sell/deed each of the properties to the appropriate LLC. Ultimately the properties and notes are in the separate LLCs and that allows each brother to liquidate as desired. It could all be done over a BBQ and a game or two of horseshoes. Now, I have to tell you, there will be a dozen people after me that will tell you why it can't or shouldn't be done that way, but I challenge then to a game of "scissors, paper, rock" to decide if they are right.

Hi Tom. I don't know if you should buy in Buda or in Pest but Decide which kind of investor you want to be (SFR, Commercial, Land, Tax Liens, Passive, HML, Multi-Family, Notes, Fix & Flip, Buy & Hold, "Subject To", apartments, duplexes, assisted living, REOs, Foreclosures, Short Sales), etc. Decide how much money you have access to, & the zip codes, city or state you want to focus on. That will determine the next step. Outline where you want to be in five years. Put it all in writing. Start working your plan. There are plenty of people around to help you each step of the way. Drop me a line if I can help.

 Hi Adam, the first Adam was caught in a lie and he got kicked out of the garden. There wasn't a second chance.

@Joshua Whipple You can get a better idea of an area using Trulia.com has a section on neighborhoods and city-data.com gives even more detail. 

@Moises B. Just to be clear, his job is to negotiate and get you the best deal, his job is to make sure there is a clear title, his job is to make sure you don't overpay, his job is to make sure the other side "performs", his job is to make sure you don't "crash and burn". Don't underestimate the complexity of the transaction and it is *highly* unlikely that you currently possess the knowledge and skills to keep yourself out of trouble until you've done a few of these. If the seller won't accept you having a real estate agent, pay your agent the 3% they deserve, out of your pocket and follow his advice. Otherwise, your next post is likely to be a "woe is me" type of post. I see them all the time on BP. People who *think* they can do it on their own without experience, with a coach, without a real estate agent. You need one of the three. The most costly is *experience*.  ;-)