All Forum Posts by: Kevin Yoo

I keep getting voted for some recent posts. I think I know why I am getting voted on, but what does this mean overall on BP?

Do people actually look at this and decide whether to pay attention to someone's posts or not?

@Joe Martella

Joe, you have to do better than that. You are only stating the obvious when you say "I would never allow someone to use your credit. You are at that investor's mercy if you do and it can have an impact on your future plans."

You are at an investor's mercy if you give them your money or your time and this definitely has an impact on your future plans. Part of the process of becoming experienced in real estate investing and doing well involves risk mitigation. You just learn how to be less and less at the mercy of other investors, lenders, market trends, crooks, etc. etc. 

Joe, you have to explain thoroughly and share personal experience (if you have any) why allowing someone to use your credit is so bad. It will help many others who read your post. But don't fool yourself and others to think that a certain technique is risky whereas another is not. It is not the technique or asset class that is risky. It is you (the individual investor) and what you know or don't know that is risky.

@James Barnes

James, it is not easy and you cannot do it by yourself. I have a day job but I spend countless hours a week working on my real estate business and this is with two people I have on my payroll working on our real estate investments and half a dozen people around the country some working full time on our real estate deals. My advice to you if you want to provide what is best for your family's financial future is to simply go out there and start doing it but do it with other people that you put on your team. But be ready for setbacks because you will have them. And when it does, lick your wounds, move on and don't EVER EVER give up. It's your family's future.

@Jay Hinrichs

"however putting your credit up for others is highly risky and to be done in a Very controlled manner."

Jay, you know very well that all real estate investment is risky whether it is with your own cash or with your own credit that you put up to buy a property. And how else would you do real estate investment but in a very controlled manner. That is why John and I flew up to Portland to meet with you to understand how you operate before investing with you which by the way we still plan to do so. 

@Traver Freeman

I was wrong about you. You do have knowledge and network. Then use it. Just because you do not live in Florida anymore does not mean you cannot invest there. I am making very good money in California but it is not rental income. I do that in other places like Florida. Buy that 4-plex but non-owner occupied. Find a good deal at a discount with good cash flow and plan to finance it in your name with a good rate. Advertise this deal for a cash partner to put in the down payment and give away a good portion of the cash flow and equity. If you know the market, know the property, and have a good team, someone will invest with you. Then repeat this over and over again to build up your portfolio of passive income. You will reach your goals a lot faster and smarter than with the $25K you have in the bank right now. But do this in a "very controlled manner" because for the cash investor partner, this is a high risk deal if you do not know what you are doing. 

And don't let FHA limit on 10 properties be a problem for you. That is just FHA. There are programs that will lend up to 50 recourse loans. There are programs with non-recourse loans with no limit on number of properties. You just need to get out there and do your research and figure it out.

Let me address your other questions.

"So is what you're recommending even possible? Letting an investor use me to get a mortgage? The questions I have about that are, #1) Wouldn't I need to trust that investor 100% (this takes months/years to develop), and #2) Wouldn't they have any other number of creative ways to obtain the cash that they need rather than choosing to use me to take out a conventional loan?"

Question #1: I am sorry to make fun of you, but why would you invest in anyone that you don't trust? And how long did you think it would take to develop a trust in someone but many months and sometimes many years? By the way, you should never trust in anyone 100%. Not even your uncle who I am sure does not share your interest in creating great passive income for YOU.

Question #2: Yes they would have many other ways to obtain cash and conventional loan than to use you. But there is no other way to get 3 or 4% loan but to take out a personal loan on a property such as FHA. 3 or 4% loan could possibly even make a Chula Vista home cash flow. I have many many B and C class properties. I want to own some A class properties but they just do not cash flow well. With a 3 or 4% loan, that may be very possible.

If you have good W-2 income and good credit score, that is an asset that some real estate investor could use. You just need to find someone you can trust that knows what they are doing and help you build your portfolio. 

@Traver Freeman and @James Barnes

Traver,

Late to the conversation but I like the discussion and as always I have two pennies of my own to contribute.

Let me first say, you are a sucker in the making. I know this because I was a sucker once and took my money and bought up rentals thinking I could generate some passive income for my family. I did this alone without much planning and without a team. I lost everything. If you take your money and buy a few rentals out of state without a good team (and a plan) in place, you're just giving away your money. 

I still buy rentals but now I have a team in place and it looks so much more promising and returns are very very good. The problem with your approach is not the asset you are trying to buy, it is the lack of support from others such as agents, turnkey operators, property managers, lenders, etc, etc. You have to have your team in place. 

A post like this from an inexperienced investor wanting to know how to make it in real estate is so common and the response the BP Community to such posts are so predictable in that although we call ourselves a Community, we keep trying to show these novices how to do it alone when we know that real estate investment is a team sport. 

In a real estate deal there are five things you can bring to the table and they all have value: 1. Cash, 2. Knowledge, 3. Network, 4. Time, 5. Credit.

Cash is easy to understand and you have very little of that. 

Knowledge and experience is also easy to understand and you seem to have very little of that. If you have this, it can make you money. Look at all the gurus.

Network and who you know. The more people you know the wealthier you are. Some real estate investors make a nice living simply referring one real estate investor to another. And wholesaling/bird dogging in many ways is this. You don't have this. Go out and develop it as quickly as you can.

Time otherwise know as sweat equity. If you are working 2 jobs, you may not have much of this. But I believe this is one of the two items that you can bring to the table. I pay a lot to use other people's time in my real estate investments. 

Credit. I am going to assume you have a good score and W-2 income. This is a rarely thought of strength in a real estate deal. Find an investor that will use your credit and their cash to buy rentals and share in the passive income and equity play. I pay a lot to use other's credit in our rentals. THIS IS HOW YOU WILL CREATE THE PASSIVE INCOME YOU ARE LOOKING FOR. Keep your money in the bank. You will need it later.

The key to success in real estate is not to do it all by yourself. The key to success is to use OP__ (fill in the blank): other people's money, other people's time, other people's knowledge, other people's network, etc. But you have to be a team player and contribute. I have shown you how. 

@John Warren

1. I may not have enough money to get into some of the larger apartment complexes where economy of scale starts to take affect.

Find someone with the money. It is not hard to do. 

2. I can lock in 30 year loans at silly rates right now. I currently have one four-unit building at 4.2% for 30 years.

Find someone with the money. With these kinds of rate, it is not hard to do. You can be the credit partner. 

3. Interest rates are going to rise... I feel like prices may be a bit inflated due to the last 4-5 years of low interest rates. Won't prices fall once interest rates rise?

Initially, the prices will go up because everyone is going to try to buy before rates go too high. Once rates get too high perhaps close to 10%, then prices will decline. That's my prediction. 

I would love to get peoples opinions! I would love to get into some 5+ buildings so I can do a value add strategy, but I am definitely worried about the interest rates rising on those commercial loans in the next few years!

You should always worry interest rates, but you can figure out a way to make money in commercial properties even if the rates go up. Value adding is definitely one of the strongest ways to do this. 

@Gianni D'Alerta

"I am trying to hold fast. Hard when there is so much information, and no one to hold your hand. Not that I want someone to hold my hand, but someone to guide you when you need a hand is invaluable."

Gianni, I'll hold your hand as I am doing so for several people now. And I won't even charge you $50-100/month. I'll do it for free. This is because I will get as much out of you as you will get out of me if the relationship is a good one and two-way. I have offered this so many times to so many people. There is initially tremendous gratitude and flurry of interest but most of the time 80 to 90% of the time, they just simply disappear. But in the 10 to 20% of the people that stick around, stay engaged, and keep learning, they are part of my team now. And I am as grateful to them as they are to me because all that they do so much for our Community collectively.

Therefore, it is not the teacher, the material, or even how much you pay for it that matters. It is how engaged, persistent, and hungry you are that matters. Everyone says they are hungry and will stay engaged. Very few actually perform. Sort of like the 10% of RE licenses that ever make it as @Bill Gulley said. 

@Eric Jackson

Eric,

This sort of post of how to invest a small amount of money in real estate is not an uncommon question. I take other people's money and invest for them. That is my business model. And I agree with all others who have humorously responded to you that $5K is too little to do anything with. Even if I gave your father 100% return, that would be $10K and then what would he do with that? Invest it again for another 100% return. Even then, it would take a long long time for it to come to an amount that would help him in retirement.

The more important question is how active will he be in working this $5K. If he wants to be totally passive, buying shares in a good REIT is probably the safest way to invest in real estate. If he can be very active, then he should invest in more risky real estate investments but be prepared to kiss it good bye instead of relying on that for retirement. Since he is retiring, he should have a lot of time to be very active with this money which is what I would do. But it does take work and that may defeat the idea of retiring.

@Account Closed

Jeremy, I did not know birdogging is illegal. How do you know this?

Jovante, birdogging and wholesaling are both still and will always be a viable but very difficult ways to get into real estate. I say this not because I do them. I say this because I buy from birdoggers and wholesalers. I do not know if you are already doing this, but talk to LOTS AND LOTS or people on what they are doing in real estate. Don't corner yourself into being a birdogger or wholesaler. There are a lot of ways to make money (and lose money) in real estate. Networking is how you will do well and not because you do only one type of real estate. You don't work in or want to work in a fish bowl. It takes a team. Good luck.

@Jason Hatfield

Does anyone have any experience doing this?

We do private lending in second position all the time. But we want a lot of meat on the deal and we vet people out very carefully. With a good deal and with a good deal of experience or with an honest and thought out approach, you can people to lend to you. HML will do so as well but with a lot more experience and restrictions.

Is this a common strategy?

This is not a common strategy for me at all as I do not try to get seller financing and a few times I asked, it was rejected. It does not mean it is not possible. But my belief is that if you have a good track record, investors willing to pay for the purchase and rehab is much more common than seller financing. That is how we do it over and over again.

How would it differ if I was assuming an FHA loan or using Subject To Deal?

The obvious answer is if you take over a loan, you are getting financing from a bank that does not know they are financing you. And if you default, the seller gets screwed and bank gets property back. With seller financing, the seller is financing you. And if you default, the seller gets the property. But practically speaking for your purposes as long as you do not default, it is the same. 

NEVER EVER PAY FOR GURU REAL ESTATE EDUCATION. YOU SIMPLY MUST LEARN BY DOING.