All Forum Posts by: Luther Wilson III

For sure, @Hunter Bentz.  We're here in the Kansas City market making moves as well.  We're investing and we work with quite a few other investors as well.

Location is important...  You mentioned seeing a lot of very cheap investments.  There's a reason why you're seeing more of them that are on the lower end of the spectrum.  That's not exactly a good thing.  Invest there at your own risk...

 A few things we've had to get real about:

1.  It costs more to get better product in decent or better locations now.  1a.  It also cost more to get properties renovated as well.  Your expectations may need to be adjusted.

2. The "all in" costs (purchase & renovation) for most "deals" now are higher. Not all of them - definitely a majority of them though. Most of our best deals now are leaving us or or clients "ALL IN" closer to 80% - 90% of the ARV. We're doing mostly BRRRs - I do not and have not worked with fix & flippers over the last 5 or 6 years for a number of reasons... Mostly because I found it to be a waste of time. Buy & Hold is where it's at for us right now, bro.

3.  True real estate investing is a a long-term play.  If you're planning to get in a try one deal then you might consider just forgetting about it.  I'd encourage you - just like I do all of my investor clients now - to set your intention to buy & hold properties for the next 5-10 years, at least.

If you have access to capital and aren't afraid to rehab and utilize leverage along with following the above then your odds of succeeding will be higher.

Here's what we've been targeting the last 3+ years and it's working incredibly well: B-class single-family homes - ARV's in the $150k - $250k range and sometimes higher - no renovation projects over $90k yet lol - and we do some creative financing as well, which has been an absolute game changer.

Copy that.  Unfortunately, it may be something you want to simply chalk up as a learning experience.  You could get an attorney, no problem, but the cost along with the time & energy you'll have to sacrifice...  Is that really worth it to ya for a failed AC unit?  Surely, you have better things you can do with your time & energy.  If it was a larger project it'd be a different story.  

It depends on who's involved and how we structure things.  We're open to it...  Shared equity for a longer period of time (2-5+ years) is the idea.  We can do some short term stuff as well (6-12 months).  :)

Seeking capital investors who want to partner up with us.  @Phil Shearcroft and I have been at it, purchasing single-family homes in and around the Kansas City market for the last 3 years.  We've purchased 13 homes during this timeframe and looking to buy several more over the next 5 - 10+ years!  :)

We're looking to grow and bring some other investors on board with us. FYI, we've been paying our private lenders handsomely! The goal is to build and grow a portfolio of cash flowing single family homes. Why SFHs? The good COC / ROI, the flexibility and the opportunity we see here in the Kansas City market.

If you're already here investing or have considered getting in to the KC market, yet haven't found the time, energy, or courage to move forward with some purchases, we might want to talk.  We along with thousands of investors who have come before us have proven that it works!

We have the acquisitions, renovations, and dispositions down pretty well and we're only getting better at it!  Our methods are working better than a majority of investors I've seen here in the market.  If you're willing to listen and let us do what we do best then we can win together.  We just would like more buy in from additional capital sources.  What we're doing is working and we're gonna continue growing it regardless; just looking to share the love a really scale things a bit.  :)

Luther

It depends on who you ask... Some investors look at the potential built in equity or "all in" amount being a certain % of the ARV and others base things off of what the monthly cash flow could be. There are investors who routinely try to hit the 1% rent ratio rule and there's some that won't purchase a property unless it subject to the existing financing or if the seller is willing to carry a note. The list goes on...

Your buyers will let you know.  The last few years have been crazy and it seems a lot of the "fundamentals" have gone by the way side.  Now things are already looking different in the market...

As far as someone being motivated to sell that's rather subjective.  When I think of a motivated seller I think of someone needing to sell like yesterday.  Like they need the money to help assist with an ailing relative or they could be at risk of losing the house to foreclosure.  For whatever reasons...  If the house is vacant, the seller is behind on their mortgage payments and they're going through a divorce then that might be a lead.  That's distressed as far as the situation goes but that seller may not admit all of that to you on the first couple conversations.

You've done a bunch of cold calls but what are you trying to accomplish, bro?

 Fantastic.  That all sounds pretty decent.  I'd budget more for maintenance/repairs, less for cap ex. less for the PM, more for the vacancy (perhaps just in the early stages) and I might include another row for what I used to call (OSF) the Oh **** Factor.

You didn't mention the taxes or insurance...  What's that gonna be like?  You're getting the deed so those bills will be coming to you each year!  Either way, there's gonna be stuff that comes up that you'll need to be ready for or have to figure out somehow.

Another thing you'll want is access to additional capital.  I don't need to know all of your business but maybe you have, at least, an extra $20k - $40k set aside to eventually put back in to the property?  

The low down payment and 0% interest is great but you're taking on a mutiplex rental property, bro.  :)  At some point you may need to put out $3k - $7k to get each unit truly renovated.  Plus, there's gotta be something else going on, right?  Most of the time when the seller is willing to walk away from a property or do something creative with the financing there could be a catch.  Unless, the seller just really likes you.  :)

What would be your down payment amount and monthly payment?

The price isn't as important if you plan on holding for a long time.  A 30 yr note at 0% is stellar...  I think what would be more important is your total out of pocket costs and the potential cash flow.

You'll want to make sure your other monthly estimated costs are on point too...  When you run your pro forma how does it turn out?

If there's no pre payment penalty and no balloon then that's even better!  :)

One more thing, please, tell me you would be getting the deed at closing?  What's the deal there?  Is it a true owner finance deal, a lease option, or a contract for deed?  There's differences to each and you for sure will want the deed, sir!  :)

There's a lot of different ways you can go with it.  That $75k (if things fall into place within the next couple years) could be invested a ton of different ways.  

Whatever your tastes, preferences and risk tolerance all come into play.  Everyone claims their way is great, the best, and gets great returns but in reality it's great for THEM.  There's a multitude of reasons that it works for them...  

I like single family homes and creative financing because I've watched people close to me do it for the last 20-30 years and I know it very well.  What's your niche gonna be?  :)

Keep in mind, we're dealing with rental properties lol.  Managing expectations is at least half the battle.  :)

@Brock Dowis, what are you working on?  Let's talk shop - see if it's a good fit.