All Forum Posts by: Christopher Dittemore

After reading most of this thread and a few others about the Velocity Strategy.

I've finally wrapped my mind around this.

Does this strategy work? Yes, but here's why it works.

I'll take a common example that's been shown a few times:

You get a HELOC for $20k and take $10k out.

You put this initial $10k down on your primary mortgage. It goes directly towards your loan paying off $10k in principle.

You have $1k/mo in discretional income after paying all expenses. So it takes you 10 months to pay off this $10k. So you can repeat the process over and over again. You're effectively paying down $1k/mo in principle payments through the HELOC.

If you take that same $1k/mo that goes to paying off the $10k chunks and instead put it directly into your mortgage you achieve a better result. You don't pay the HELOC's higher interest rate

You can improve this pay-off result even further through bi-weekly payments of $500/mo instead of one time monthly payments of $1k.

As far as having cash available every month? You can still get a HELOC and only use it when you need it. You don't need to flip flop between HELOC to mortgage. You can pay the $1k/mo to your mortgage directly and use the HELOC when/if needed.

Hey! I'm a new investor living in Redding, California. I haven't been able to locate a local REAI here. I'm looking to build my team, but I'm not sure how to go about finding an attorney, realtor, and title company that understands creative real estate investing. Any referrals or suggestions?

I didn't see if you had a mortgage or not, but waiting means you're going to be losing profit through holding costs. I'd contact a local REIA and get referrals to PM companies/realtors. Also I'd put up some signs in the area and have a friend take calls with a list of questions to ask. I'd even request an application fee for pulling credit etc.

I'm new to this myself, but my thinking would be to wholesale this property to get the 5k that you can put down on another deal, plus you'll find out if and why its really a good buy or not from experienced buyers as you're calling them/showing them the place.

@Mary B.

Thanks Mary, that's a great idea, I was thinking it would be a little weird having contractors show up when you're giving a bid though, but that seems to be a straightforward way of doing it.

@Chris Piper

Chris your list was exactly what I was looking for, what are the biggies that I need to make sure aren't wrong and how to see that. Also what are the common changes you would make in a rehab home, so I really appreciate you taking the time to comment.

You just got a motivated seller on the phone... He invites you to come down and make him an offer.

You drive up check out the place and inspect it for a potential money maker.

What are you looking for to determine what will need fixing? What are the bare minimums that you always fix-up to ensure you top dollar when it comes time to sell? What about the gotchas that you've learned over the years to inspect because it cost you or a friend big money in the past?

And as a bonus question: how do you determine how much it's going to cost so you can quickly make offers, but not lose money on the deal?

It really depends on what your goals are, if you want to brand your name then you definitely want to create a business page, you can also do sponsored newsfeeds in a proximity zipcode. This will put a face to a name.

If you can get emails when you're buying your lists this is a beautiful way to do mix message marketing with your mailers. If you can't, then I don't really think it's going to be useful to you besides finding cash buyers/jv partners etc.

Hello,

I'm an experienced Internet marketer, but new to Real Estate investing. My background is mortgage underwriting, insurance sales, and even a loan officer. So, I believe I have the foundational chops.

I've spent thousands of dollars on Real Estate education, but I'm excited about BiggerPockets because I've always found success is found in the relationships. No matter the business I've started.

I just got started a couple weeks ago, bought a bunch of courses on wholesaling just to learn the process. I decided to start with finding a buyer, so I went online and looked up all the rehabbers I could find and contacted them.

I decided to go with rehabbers because I felt they would be the most likely to have cash to pick up property, since they deal with large chunks of cash through buying/selling. Renters I figured would be more cash poor and would need financing, but I want to purchase all cash on assignment.

Anyways, 2 days ago I found a cash buyer, who is buying in my area at 65% ARV and does a few houses per month, so I figure I'll keep feeding him deals.

Yesterday, I came across a deal in Detroit for an apartment building that has 48k annual profit and they want 65k for the property. It seems like a decent deal, but I don't think it's amazing.

Today, I am starting my marketing processes to find motivated sellers. I drove around a few areas the other day and wrote down some numbers. I also did a lot of research to find wholesalers in my area to see if they had some properties under contract they would split the assignment fee with me, but I only found people in Detroit. Which was quite surprising.

I still need to get to the Local REIA meetings, I think that's where I will find the wholesalers and figure out which title companies to use that will do assignments, etc.

I did go to the REIA websites though and write down the vendors that they suggested, I plan on calling them on Monday.

Do you guys mostly use direct mail to find your motivated sellers? Through some research I found that many people are using ListSource and simply mailing them a "I want to buy your property" Yellow Letter.

Seems fairly straightforward.

Chris

I find this very interesting because creating an REIT and buying apartment complexes has always been a strategy I liked.

I'm curious what you believe your potential profit will be by the time you sell this property at year 5. You definitely know far more about this than I do at this stage and have relationships I would have to develop and I'm wondering what kind of return there is on this type of investment.

I'm an experienced Internet marketer so I've always figured purchasing under-performing apartment complexes and then fixing and marketing them for higher occupancy would increase the value of the complex - so at that point I could sell it or just hold it for the cash flow.