All Forum Posts by: Kevin Siedlecki

@Cory M. Sounds like a very reasonable strategy! I am looking at a similar strategy for myself, jumping back into real estate investing after I sold most of my portfolio a few years ago. I like the way you put it: "an ok deal now is better than a great deal in a another few years." The tradeoff of paying for management also resonates with me. 

What turnkey company are you using? I am just starting to research who to go with for myself. Thanks!

Hello BP!

It has been a long time since I've been active here. 

From around 2010-2020 I built and managed a small-medium-sized portfolio in my area (which is not an ideal market). I sold most of my properties when COVID hit and prices skyrocketed, and now I'm looking to get back into it. This time I am comfortable enough with the business to look at markets away from home, and I think the better yields, less expensive properties, and better market outlooks will be worth the money that a turnkey company will cost.

I heard about Norada a lot back when I was more active in BP, and I remember thinking they sounded pretty good, but looking into them now, it sounds like they are not actually a turnkey company. It sounds like they act as a broker and do not manage the property once you buy it.

1) is that correct, or am I seeing bad reviews from a disgruntled minority? 

2) Does anyone have good experiences and recommendations for turnkey companies?

Thank you!

Kevin

@Manuel Prado - yes, it's not the actual rates that turned me off. The problem was the range. Like I said, there is a huge difference between 30k at 16% and 80k at 9%.

I did not know about the money-back guarantee. I will have to check into that. That would give me an out if they come back in two weeks with something closer to the worst terms. 

@Manuel Prado, @James Watts, @Maurice Colbert, @Juan Carlos Flores

Glad to see this thread. I searched for it after my sales call with Marty, which did not go so well. I was hoping to see some good feedback here as I decide whether to go through with the program. Here's my experience with them so far:

After hearing the guy on the Clayton Morris podcast, I understood what the model was, and appreciated how upfront and un-salespitch-y the explanation was. That changed as soon as I signed up for a phone call.

I never got a call, but I did receive 3 VERY sales-pitch-y emails from them, which included the phrase "the money you desperately need," and asked me to call them. I called and left a voicemail. Marty never called back, so I called again after the third form email. Eventually, I connected with Marty. We had a great conversation for about 15 minutes. He explained how it all worked, and it made sense to me. I was ready to take the next step, which I assumed would be to go to the credit consultant and get some specifics on the products they could offer me. 

That's where my confidence in him started to slip. Marty started trying to close the deal, asking for my billing address and credit card information, right after mentioning the credit consultant. I still had a lot of questions. At that point, all I knew was that he said I would be able to get 30-80k in the first round, at 0%. I knew that was a 12-month teaser rate, but Marty kept that part out, never mentioning what rates would be after the teaser. I had to ask that question AFTER he tried to charge me $3500 for the service. And the answer was not satisfactory: 9-16%. 

So, bottom line, he wanted to charge me for the service when the range of product I might be receiving was $30,000 at 16% (An awful deal: my personal credit card has a $35,000 limit and 12.99% interest), and $80,000 at 9%, something that might actually be worth paying for. That was a huge disappointment. I am very skeptical of a company trying to close a sale before I know what I'm actually getting.

To make me even more cautious, the day after I spent 20 minutes on the phone with him, telling him I wasn't comfortable being charged before I knew what I would actually be getting, and would have to think about it, Marty called again. He left a voicemail as if we had never spoken, saying simply "I have a note on my desk to give you a call." That kind of lack of organization was another red flag for me.

I am happy to hear that they have worked out well for those of you who have gotten in. Did you all have similar experiences with the sales team, though?

@Kenny Breeze - The flipper's profit is very simple: ARV - purchase price - rehab costs - holding costs. If you insert a random number when you shop deals around, you are going to lose credibility real quick.

To follow up on @Erich Beyer's point, When you wholesale, your profit is the difference between what you get the property under contract for and what you sell it for. In order to calculate that, you need to have a deal under contract before you have a buyer, even if you have confidence in your buyers to come through. In other words, you can't know the flippers profit until you know what you are paying for the property, and what you are going to sell it for. That has nothing to do with having a seller in place.

@Account Closed - not to rain on your parade, but the numbers aren't adding up for me. If you have $2.4 million in equity, that means you've got over $4.5 million financed. Even if it's all ideal terms: amortized over 30 years and 4% interest, your annual P+I is over $325,000. Your pro forma shows almost $100k less for P+I. Can you clarify?

You're also missing CapEx estimates, It looks like you've got a nice portfolio here, but not one that is generating a six-figure annual income in the long run.

@Danny N. In my renting days, given the choice between an ocean view and $250 extra cash per month, I would take the $250 every time. 

Rents don't necessarily correlate with the market value of the units. Think about it this way:  in general, a renter has less money to work with than a buyer, and is therefor less willing to pay a premium for an unnecessary luxury like an ocean view. That's why in most markets, over-rehabbing units by including extra features like stainless steel appliances and granite countertops does not increase the rent enough to make it worth doing. An ocean view is even more of a neutral luxury, adding no real value or comfort to your unit. It's great for your advertisement, and you might have more applicants, and therefor better tenants, but it won't justify more than a 10% rent increase over other similar units.

@Brian Nordman - I'm not a mortgage expert, but I had a friend in this situation not long ago. PMI did not automatically fall off, probably because you need to get a new appraisal to be sure the LTV is accurate, but he had no problem refinancing to get rid of PMI when he got to 20% equity.

@Dan Miles - cash out and lower payment is a no brainer. Even if it made the loan significantly longer, I would do it. 

@Tom R. - The biggest question is: does the partner add value for you? Does he have experience that you can draw from when things come up? If you're running the day-to-day, but he has more experience and will get involved when you run into inevitable problems, then giving 50% is not bad. As they say on the podcast, 50% of a good investment is better than 100% of no investment. 

Either way, you could probably remedy what you see as unfairness by taking a management fee as part of your compensation. Take 8-10% gross rent yourself before the 50/50 split.