All Forum Posts by: Malhar B.

I tend to disagree with a lot of the posts above. I don't believe that investing in two separate markets that are far away is impossible. I do it, relatively successfully. In fact, I don't live anywhere near any of my markets and I still do rehabs, flips, rentals, lease/purchases, etc. IMO, it is very possible to raise capital without having to be in one market only or even near the market for that matter--I have done it and continue to do it. As long as you have and are starting to build a track record of successful deals, I don't see why a potential private lender wouldn't be interested in an investment backed by a first lien in a hard asset.

I remember in my super newbie days, when I was trying to wholesale a property, I found a buyer that was interested in buying my property, but did not want to put any earnest money down. Having no choice, and a limited buyer's list at the time, I spoke to my attorney and he told me the contract is still valid without earnest money and said that I could write something like the following in the additional stipulations area for clarification:

"The Buyer and Seller mutually agree that there will be no Earnest Money attached to this contract, but, nonetheless agree that consideration will be the mutual agreement between the Buyer and Seller according to the terms herein this Purchase & Sale Agreement."

This was a valid contract, according to my attorney, because the consideration was the mutual agreement of the terms. Well, in the end, the buyer didn't show up to closing, I was labeled a super newbie and learned a valuable lesson... when selling, get earnest money! :) It was pointless to sue as the seller for specific performance and waste time and money... I just went out and found another buyer (this time with $2K earnest money) and ended up wholesaling the deal and upped my status to just a regular newbie! Woohoo! :)

In the beginning, I'd suggest don't get bogged down with the entity structure, etc. Get your first deal or two done. I've met so many people that are talking about land trusts and LLCs and series-LLCs and S-Corps vs. C-Corps, etc, etc, etc... then I ask them, wow, how many deals have you done? And most of the time, the answer is zero. Once you get your first deal done (wholesaled, flipped, whatever), you can talk to your CPA & attorney and they'll surely be able to guide you. That's how I did my first few deals--then I had the money to pay the professionals to figure out what I should be doing! :)

The state of the particular market Bryan is referring to is chock full of foreclosures. I feel like I buy one every week out there! :) But, that's because I have investors looking for buy & holds. The prices out there are highly depressed because 80-90% of the sales in the area are foreclosures.

J, I'm sure you've seen this happening in and around Atlanta, too. I know I have. If you're going to do a flip, make sure the comps in the area are really going to support the value that you plan on adding. Bryan, your particular area has comps ranging from $10-40K, so yes, it is difficult to sell traditionally (via MLS), but there are several options available to you, namely lease/purchases or lease/options, seller financing, or possibly rent it out and flip it to an investor looking for buy/holds.

I invest in this market right around where you invest, Bryan. It definitely is difficult to do flips there. I checked out the MLS listing for your properties and you did some nice rehabs for the area. However, all of the properties I've purchased in the area have been for cash flow. It is tough to do flips around there, to say the least.

I agree with Edwin. Rent to buy seems like a good option in the area. You just have to make sure you can get someone in there that is motivated to getting into a financial place to close the deal. I checked out Edwin's creditcast site and that's some cool stuff, Edwin. I'd definitely like to explore the software you've developed.

I invest out of state and it would be near impossible for me to manage the properties I invest in. I've found that finding property managers is one of the toughest things to do. Of course, many will have the "right" answers for various situations (I do about 1-1.5 hour interviews with several prospective companies), but you only find which ones can put their money where their mouth is, so to speak, when they actually have the property management contract.

As a result, I always make sure there is an out for me. I usually will give a PM company about 90 days to market a property without getting rid of them, however, I stay on top of them at least once a week. If you're going to hire a PM, you have to stay on top of them; after all, it's your investment. During a vacancy, I follow-up once or twice a week to ensure marketing is going well and to find out about showings/calls and feedback. This is crucial.

If you want some more information, feel free to PM me and I can send you a document I use about all of the different topics I cover with a prospective PM company.... there are a lot! Hope this helps!

I'd say flexibility is key. Wholesaling is less risky than flipping because when you wholesale you don't necessarily need to own the property; you may be able to just assign the contract, resulting in profit with little risk involved.

Flipping, on the other hand, you'll have to purchase the property with either your funds or someone else's, HML, private lender, bank financing, etc. Nonetheless, your credit and reputation will be on the line. What if you can't flip the property?

I always have more than one exit strategy in my deals. Sometimes, if I can't wholesale a property that I believe to be a strong flip opportunity, I'll get a lender on board and I'll flip it. Worst case scenario, if that doesn't work, I'll rent it out. As long as you can cover your expenses, AT A MINIMUM, you should be okay.

With all that said, my first property was a flip. I borrowed money from a HML, and there were times I didn't know if I would be able to flip it or not, but the deal came together. In retrospect, I probably could have still made a nice profit if I had wholesaled the property and saved myself a lot of stress!

DOM around 50 days, is good... at this price point, you'd probably be getting an FHA buyer anyway and the 90-day seasoning requirement wouldn't allow you to close with the end buyer until after that period (earliest I've found is the 97th day)...

As for financing a 57K deal, I had to finance, and continue to finance all of my deals... that's the way the biz works, OPM... Gotta start somewhere, good luck!

INCOME
Rent... $650 per month

EXPENSE
Mtg - 20% dwn, 7% int, 30 yr fx... $240/mo
Property management... $65/mo
Taxes... ???
Insurance... ???

Simple maintenance issues... you may want to escrow an amount for these also.

What about vacancy allowance?

Lots of things to look out for... 50% and 2% rule are great basic rules... Lots available on the forums on these rules.

Not sure if this property will cash flow that well once you add the additional costs.

Can anyone recommend one or a few property managers they've had good experiences with in and around the Atlanta, GA metro area? I have a few rehabs going on right now and haven't nailed down a property manager yet. Your referrals would be greatly appreciated. Thanks!