All Forum Posts by: Kevin Yoo

@Nick Brubaker

Nick,

I am late to this discussion and could not find the patience to read the multiple replies you have gotten. So, I apologize if my comments are a repeat of someone else such as Jay Hinrichs.

You are going about looking for a market to invest in by looking at the market which is not my way and which I find to be flawed. There is really no bad market. There are only bad real estate investors. All markets are good markets. 

Your success in a market does not depend on employment, industries, locations, etc, etc. It depends on your real estate team. You can loose a lot of money in Vancouver but make a ton of in Detroit depending on who your partners are in that market. Spend a lot of time investing in people and not in learning about a market. You will NEVER become as well versed in a market than someone who is actually living and investing there. 

I spend no time reading up on a market. No one I talked to has ever told me not to invest in a market that they live in. And if they did, that is the person you do not want to be your partner in that market. Someone is making good money in every market. Your job should be to find THAT person and give him your money. 

I spend a lot of time sharpening my skills in reading and vetting people. I have lost $100s of thousands of dollars on bad partners. But I am making $100s of thousands of dollars and will make such finding and creating great real estate teams in any market that I invest in. 

Lastly, live where you will be happiest. Invest where you will make the most money. They don't have to be the same as the internet makes far away investing so easy. Where I live ain't that great but you might want to look it up. I'm pretty happy here.  

@Charles Worth

Charles,

1)How low can your returns go before you just withdraw from the market or seek other avenues for returns?

It depends on what you are doing. For rentals, I am still getting annualized ROIs in 12 to 20% range in all my markets. For fix and flips, I am getting no less than 24% and sometimes getting 40 to 100%. It took us couple of years, but we have developed a Community of Investor Partners that allow us to do this. Nothing to brag about. Just honest hard honest work. 

2)Is your market at that point already and what are you doing about it?

See above. 

3)Do you think the sudden availability of more abundant funding will make still investing a good idea because you can capture the spread between the funding rate and the (much lower) return like many funds are doing now?

This is the question I am most interested in seeing others answer. We are just finishing our first refinance tranche of $700K of rentals with B2R and we had to jump through hoop after hoop to get 6.5% rate of 65% LTV. But I am starting to see 4% rate for 75% LTV. The purses are really loosening up. I would like to know if others are taking advantage of these loans. It changes our cash flow for the better. Investing is still a good idea if not better.

4) To what extend have you started to focus more on the risk mitigation side of things than return?

We do both. Otherwise, it is not investing. 

@Helen Kirk

Education is very important. EAC Community will give you that but you have to thoroughly engage yourself with us. No silver spoon but bunch of generous, smart, active real estate investors in our Community.

The other property seems to have some promise. I admire you trying to finance it yourself. But OPM is as important as education in your success as RE Investor. EAC Community will give you that but you have to thoroughly engage yourself with us. No free money, instead very expensive money but very easy money.

Let me know if you need any help. Good luck.

@Helen Kirk

Thanks for reaching out to me. I do see that you are very green. That does not mean, however, that you are not someone who can become a good Ground Partner for our Community. I will have my virtual assistant Madel Santiago send you all the Partnership documents for us that you MUST read and understand. I will also have her send you a spreadsheet for you to use to present this deal in our weekly EAC Community meeting. 

I see that you have wonderful attitude about this but I want to warn you not to fall in love with a deal as you seem to be doing with this home. We are more likely than not going to reject your deal not because of your lack of experience but because the numbers are just not going to make sense. The experience of going through this deal, however, will be a great education for you. And having us as your partner will ensure your success. If not us, make sure you get someone. Don't go at it alone. This is a team sport. Get on a great team. Kiss a lot of frogs before you find your prince of a deal.

@Kevin Rizzo

Kevin,

We are always looking for the diamond in the rough partner. Please call me whenever you can and be happy to talk with you. 

This past week, EAC Community invested $150,000 in gap funding request from a San Diego rehabbing company. This company is a very well-established company with a long track record. We had been discussing with them on providing gap funding for their rehab projects for many months. This property 2420 Upas Street, San Diego, CA 92104 has been seen by our EAC Team and found to be an excellent prospect. It needed gap funding because their original investor backed out at last minute. This property was purchased for $855,000. The rehab should cost $110,000 and final sales price should be $1.2M. The company plans to cash us out early for cheaper money or keep us in the deal till the end and projects the funds will be needed for 3 to 6 months. 

We have negotiated an annualized return of 36% for the gap fund. The $150,000 came from two Preferred Investors and two Managing Partners. These four Investors will receive 24% annualized return and EAC will receive the remaining 12%. Due to the availability and ease of use of EAC capital, this company plans to use us more in the future.

Having the financial backing of our Community Investors allows us to essentially serve as a bank to underwrite very safe and high yielding projects. EAC Community is constantly looking for real estate projects to invest in throughout the country. We are not a HML and will not charge any points or have carrying costs. We will fund part of or the entire deal. We are not cheap but very easy to use and dependable.

@Bill C.

The way this deal is structured, it is very much in your favor which for putting up all the cash is warranted. I would not worry about the "two turns in commission." You want such motivating factors in place. In Fix and Flips speed is the name of the game and you want to increase your odds of getting property sold as quickly as possible. If your agent gets both commissions and gets paid very well from this deal, one he deserves it and two he will work that much harder next time. 

Your relationship with this agent and his past performance is extremely important. It sounds like that is all positive. So, the chance of you succeeding with this deal is so much higher by this fact. You want to keep him happy and rich. But if this is the first fix and flip that your agent is doing this may not be the deal you want to do with him. This is because I am very worried for you on only the $17K profit. This can be eaten up very quickly with something unexpected. And something unexpected always happens with fix and flips. You want $25K to $50K profit to make a fix and flip a solid good deal. 

Even with such good margin in place, be prepared to lose money on this deal. It has happened to me and should happen to everyone if you do enough fix and flips. Chalk it up to experience, don't punish your agent and move onto the next good deal. 

Lastly, using HM is a good idea but there are problems with HM I am sure you are aware of including paying points, fund hold back, and monthly payments. If you can deal with those things, using HM will increase your returns sometimes dramatically. 

Good luck.

@Jeremy Jones

Thanks, Jeremy.

My contractor who has the B&C in Indianapolis is renting per room to retirees. He tells me there is very little turnover and has a waiting list. You seem to have rented to younger people. 

So, my burning questions is if there is anyone out there that has taken a 3/1 $30K home that would only rent for $600 as a SFH and turned it successfully into a rent per room situation to retirees and gotten over $1000 rent (but now paying for utilities).

@Jeremy Jones

Thanks Jeremy.

But there must me others out there in BP Nation that actually did this with their rentals that you are not living in. 

Moreover, can you Jeremy or others tell me the legality of doing this? Are their licenses, permits and codes that one must meet in order to rent per room?

My contractor has had a house in Indianapolis that he made into a boarding house for retirees years ago and has bee doing very well with a waiting list.

My question to BP Nations is has anyone rented per room in  a single family home and had you rental income increased. 

I am most interested to hear from people who have done this legally and  turned an acceptable rent property to an outstanding high rent property