All Forum Posts by: Michael Sanchez

Investment Info:

Single-family residence buy & hold investment in Spartanburg.

Purchase price: $160,000
Cash invested: $35,000

Off-market SFR in Spartanburg. Came partially furnished. Purchased with 12-month bridge loan; Refi after tenant moved in. Currently 14% CAP rate

What made you interested in investing in this type of deal?

Off market so was able to purchase under market value

How did you find this deal and how did you negotiate it?

self-generated lead

How did you finance this deal?

hard money; refi to 30 yr mortage after tenant moved in

How did you add value to the deal?

none

What was the outcome?

cashflowing $450/mo at a 14% CAP rate

Lessons learned? Challenges?

none

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

none

Yes it came fully furnished. It will be a long-term rental (12 or 24 month leases).

I have a Solo 401k set up but we're stilling looking for the right property to use it with. Looking for a vacation rental (down by Charleston or up by Asheville, NC). Then we'll do a non-recourse loan with it.

How difficult was the process to purchase using your Roth? I'd love to hear the details as I haven't done one yet.

Investment Info:

Single-family residence buy & hold investment in Greenville.

Purchase price: $180,000
Cash invested: $40,000

Off-market SFR in heart of Greenville. Came fully furnished. Purchased with 24 month bridge loan; Refi in 6-12 months. Currently 12% CAP rate

What made you interested in investing in this type of deal?

Off market, came fully furnished. Located in great area; easy to rent

How did you find this deal and how did you negotiate it?

Self-generated lead

How did you finance this deal?

Hard-money bridge loan (24 months). Will refi after 6-12 months

How did you add value to the deal?

No value added.

What was the outcome?

Cashflow $400/mo. CAP rate of 12%

Lessons learned? Challenges?

Attempted to do a Cash Out Refi however, appraisals for rentals (investment properties) have been coming in on the low end; therefore will not be able to pull out our down payment. Will refi in 6-12 months.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Straightline Funding

@Kelly Bellini

Integrity is the #1 most important trait in any relationship, especially a financial one. This is your investment.

I can’t remember his name but a Landlord “guru” once said it best:

“Your rental is not an asset. It doesn’t produce money. It deteriorates, costs insurance and taxes. Your TENANT is the asset. Hire them like you would an employee - their job is to maintain the property, pay the rent on time, and keep you up to date to the condition of it at all times.”

I wouldn’t hire an employee who lied to my face. A small lie means they’re fine making a big lie to you if it means it will cost them money.

My 2 cents.

I agree with most of the replies here: In my opinion, you're focused on building the parts of the project without the key ingredient: A Good Deal!

A good deal is like a gravity-well: it draws in money and people interested in making some of it with you. If you were to call lenders, realtors, contractors, etc. saying you have a deal under-contract and you're looking for XXX piece to close the deal, you'll be surprised at how quickly they respond. You can always ask for more time from the seller if you need it to close the deal, but asking for professionals to take the time to (do what exactly) is not very fruitful and it's something they MAY put on the back-burner. The emails/calls they are replying to are the ones where they have a good assurance of getting paid - a deal in hand.

Now how to find a good deal: 

1 - (my preferred way) Market to motivated sellers. Make offers after crunching some good numbers, make sure your contract has a Due Diligence clause (I typically ask for 30 days) this protects you and allows you to walk away for any reason during that period and still get your earnest money back. Also, make sure your contract has "and assigns" in the language so if needed you can always wholesale to another investor/buyer.

2 - Find a realtor who is interested in pushing you off-market deals. This is a bit tricky so I don't expect any newbie to do this in the beginning. This is more of a relationship-building method. If you can build a relationship with a Realtor who does his/her own marketing (to get off market deals), he can bring you to the seller before it hits the MLS. Once you do 1-2 deals with this guy/gal he will see you are a serious investor and will benefit sending these to you instead of putting on the MLS (for example, you can pay his fee and maybe even reduce it to 5% instead of him only getting 3% by listing it).

3 - You can always get licensed yourself. I don't recommend this for a newbie because it is expensive and it doesn't teach you the most important component in real estate investing - how to find good deals. The only thing you will learn is some legal terms and the basic structure of how to assist a seller/buyer. Remember as a Realtor your job is to make the deal happen, not be the Principle in the transaction. It doesn't mean you can't have your license and invest yourself (I've been investing for years and have a license), but I am just saying I first learned how to find good deals then I became an Agent in order to save on MLS fees and have access to MLS (icing on the cake).

Finally, to answer your question: "Do I throw people off when I tell them I am new?". Yes of course! Everyone and their sister wants to be a Real Estate investor. You don't realize how many people probably call those same people you did, and tell them, "I want to get started investing."

Very few people call them and say, "I have a deal under contract and I need someone to do XXX for me." Now that will get them off their butt!!!

Good luck. And stay with it! Remember, make competent people come to you: be the center of gravity. 

@Munya B.

Hi,

It seems I pushed some buttons. I don’t know your situation or what happened during your apprenticeship. I just wanted to relay my experience using the program.

I really don’t care if anyone uses him or not (well, not true - I wouldn’t want someone using the same techniques in my immediate area), I just wanted to pay it forward. I was able to pay off my student loans with the profits of this program, and while that may not seem a lot to some people, it was a game-changer to me.

Maybe it doesn’t work in high markets like San Diego (if that’s where you tried it); I have no idea. But it works in mine. And I’m not bragging but I did make a killing during this 2020 ordeal.

Anyway best of luck and take care.

Mike

Investment Info:

Mobile home wholesale investment.

Purchase price: $20,723
Cash invested: $2,351
Sale price: $34,000

Mobile Home with permanent foundation on 1.2 acres of land.

What made you interested in investing in this type of deal?

Seller was extremely motivated. They wanted it sold "yesterday"

How did you find this deal and how did you negotiate it?

My own marketing. My negotiating skills were put to the test on this one. At first the seller was fine with a closing date 45 days from contract, but a week later they had run out of money and wanted a sooner closing date. I also believe he was getting other offers possibly more than we had agreed upon.

I persuaded him to take $15k off the price and we can close in 2 weeks. Purchasing the property was not my original intention but I knew I can sell it for a decent price to another Investor.

How did you finance this deal?

Hard Money

How did you add value to the deal?

Cleaned up the place by removing all the junk ($500) and running an ozone generator in it for a few days to remove smoke smell.

What was the outcome?

Sold for $14,000 more than what I purchased.

Lessons learned? Challenges?

- Some sellers are looking to move quickly and that may require you to buy the property instead of wholesaling. Do your DILIGENCE and use their "urgency" as a negotiating lever

- If the seller requests to move-out after the closing date, be sure to hold half of their profits with the closing attorney to ensure they move out on the agreed upon date

- Visit the home frequently. The water pipe in the yard had busted and was gushing for 2 days.

- Vacancy insurance for homes you are holding

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

n/a

I signed up for Phil's Apprenticeship program. 

1) yes there's a fee to get in 

2) yes there is a monthly payment after first 6(?) months to use the software to keep track of leads

3) yes there is a 50/50 profit split (this is after expenses - so if you spend $200 on MLS pics you get those expenses first then the profit is split)

Honestly, the only reason I am posting is because of the talk that it is a scam. It is not a scam. It works, I closed 4 deals in 8 months. My smallest was $9k net profit (split with Phil) and my biggest so far was $30k net profit (split again). 

I think a good argument for the fee (this is my opinion, not confirmed by Phil or his coaches) is that a lot of people are "lazy". I know that's a bad word, but I've been guilty of it to. What they want is be be given a silver platter and want deals to fall in their lap so they can cash checks. Just like how Hard Money lenders ask you to put "skin in the game", because IT WORKS. When people have their own money on the line (or even worse they put it on Credit Cards) there is a fire under their butt to perform. Sometimes that doesn't work for everyone, but it works for most people - ME!

The fact that I put that fee on the Credit cards and had that monthly payment staring in my face every month, pressured me to come home after work scrutinize my marketing, practice my sales pitch on my wife, read/watch persuasion books/lectures and just be non-stop until I started getting leads. Once the calls came in, every time I struck out I wrote down what I thought I did wrong and improved. I think by the 10-15th lead I was confident in my pitch. I got 2 deals under contract that month.

Overall, the advice he gives CAN be learned through reading books. But the problem (IMHO) is that you can know stuff, but not know HOW to apply it. (I.E. I read about how to Double-close on a transaction but I now know all the things that can go wrong [and they did] and still close the deal). 

Lastly about the profit-split. One person posted "$250k I have to pay that person, what a scam!"... IMO: you're looking at it wrong. You wouldn't have gotten that $250k if you didn't have someone mentoring you! In other words, 50% of something is better than 100% of nothing. (not saying you NEED this mentorship program to succeed, I'm just saying that if you had the choice of stumbling around for X amount of years and spending YY amount of dollars investing and failing on your own OR you split the profit with someone who gives you advice on what to do with every deal and you reach that goal in 2-3 years; what would you choose?)

Ok, I'm done now before y'all think I'm selling his program too lol.

Mike

Hi all,

Quick background: I have a house that I am currently renting out. I still have a mortage on it. My mortgage/ins/taxes is $1200 but I am renting it out $1900 a month, so I am making a little cashflow.

I plan on getting out of the Navy this Jan 2016, also my tenants' lease is up Jan 2016. I  plan on sailing around with my girlfriend for 3-8 months once I get out. I have some money saved for this trip but not sure if it'll be enough for whole time (hence the broad window). 

My tenants have expressed an interest in buying the property, however, they have poor credit due to them both having gone through a divorce some time ago. (side note: they have been excellent tenants, paying on time, no complaints).

Here are some scenarios I've come up with:

1) Assuming they can get financing, I sell them the house in Jan and walk away with 10-20k in profit. However, since I will be sailing for the following 3-8 months, I won't be able to do a 1031 exchange and will have to pay capital gains tax (which of course I want to avoid). There's no way I can meet the time constraints of having a property identified and close on it in 6 months while I am sailing. (Mostly because I don't plan on coming back here, I will be going to a different state). Also even if I could, I would just be paying rent on a home I'm not living in, and that would limit my sailing time.

2) If they cannot get financing, I offer them a Lease-to-Own option. I would be collecting some cash flow, which would help maintain/increase my sailing time. I would however get a property manager which would cost me a bit off my cash flow. I finish sailing, then when the lease is up I sell them the house OR they decide not to buy and I keep the option fee and continue renting it out while residing in a diff state (any advice on that?).

3) I decide not to sell it and ask them if they want to continue leasing; if they do, then no issues (I keep the cashflow for sailing and possibly sell it in the future). If they don't I have to find new tenants in a rather short window and take the chance that they may be crappy tenants.

Question: If put in my situation, which do you think is the scenario you would go with and why? Or if you can think of another scenario I'm all ears!

P.S. This is my first property and I have very little experience in Real Estate. So if I'm not correct in something or something obvious has slipped my mind (i.e. further complications from those scenarios) please let me know. Your advice is much appreciated.

Also if you need some more background info, just let me know.

Thank you,

Mike Sanchez

Hi everyone!

My name is Mike and I'm 28 years old. I've been in the Navy since I was 19 but am looking at getting out this January. I want to learn more about Real Estate investing because I think it's one of the only things I would enjoy doing and am excited to get started.

As far as experience goes, I purchased my first home in 2012 and lived in it for 2 years. Now I'm renting it out and making $600 cash flow a month on it. This is what really sparked my interest in Real Estate. I want to learn more and start to acquire more properties and knowledge along the way.

Looking forward to chatting with you all.