All Forum Posts by: Michael Zau

@Steve K. I totally get this. Hence the saying, "you only make money on the buy." I already know that in C class housing this is pretty much the deal and choosing wisely the upgrades are important. The valuation is $65-75k on the resale if I intend on fixing and flipping, which alot of people would do in this specific scenario.  However, I can cashflow, and then fix and refi cashout in the future if the values increase. (I dont count on that). But the purchase price allows me to use funds from the refi, rather than from my own account. Choosing the right property manager is a huge deal.  The wholesaler whom already owns over 100 doors in the area put me onto a few guys that he already uses. The main key for me, was that when I refi'd that I got ALL of my money back, and then some so that any increased cost would be financed. in the loan for future expenses.   I may decide to sell, but until that time comes, I'm still in the money. 

@Matthew Irish-Jones  , I consider this an investment, and I define that with a 10+ year hold in mind.  That still being said, Even after buying, fixing and added money over that period, my internal rate of return is still great as it still comps out at 70k+ and I will be able to refi again in the next economic boom of 2030-2033.  I'm under 50, so property manager or my kids can manage the property managers of the area. St. Louis is still a waterway city.  I suspect that it's turn of economic boom will happen the same way that the Dallas Ft. Worth area took about 20 years to recover from 83-2008, that was 25 years.  St. Louis has that possibility as well. Even if the property goes, down by 20%, I'm still in the money, so value isn't as much concern to me at this moment.  My biggest cost over time will be when the tenant leaves, so as I engage and figure out how to find proper tenants, the key will be longevity.  I would consider a lease option with a tenant if they have a written budget and ability to pay 125% of market rents to cover the closing costs after the option period opens. 

@Matthew Irish-Jones the gross rental income is $800, however after my expenses, the net income is $400. 

Investment Info:

Single-family residence note investment investment in Cathedral City.

Cash invested: $28,000

note of 1st TD with hard to prove income, except bank statements.

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

down payment of 80%

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

referred to me by financial advisor

How did you finance this deal?

cash

How did you add value to the deal?

no prepay, funded within 7 days

What was the outcome?

still receiving note income plus late fees. also funded with a discount point, so yield is higher than note rate.

Lessons learned? Challenges?

receive payment from servicing company was late and they had some servicing challenges.

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

Overall Del Toro Loan servicing was good in its service. They've had some major employment changes the past 10 years, but still getting my payments and fees, so I can overlook that.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $19,000
Cash invested: $8,000

purchased from wholesaler. Partnered with beginning investor to handle the phones with property manager. I fund, she does the light lifting and the heavy lifting is with the property manager. BRRR method, to get original investment, rehab money and and all money afterwards is "gravy." still cashflows after the original BRRR. listed cashflow is how much I net after everything, gross is over double that amount.

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

price

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

wholesaler that has good reputation with multiple properties.

How did you finance this deal?

cash, then refi

How did you add value to the deal?

fix and rent out

Lessons learned? Challenges?

out of state \ finding money to partner \ finding partner to work with.

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

unfortunately no. but True title in StLouis is amazing,

rather than pay the real estate commission, which eats up the own payment, sell to another investor, like me, whom would rather take the loss financially, but can depreciate and take a loss, but have no down payment in the game. Also, taking a risk to subject to investors, which is what I'm referring to, is extremely risky when you dont know the actual investor buyer.  so do have options with in your own circle of influence, you just have to think more creatively.   I say keep with someone else. 

You are what you sell, so fix it up according to the tenants that you want.  I agree with Greg to go to your competition, so also use them as referral sources.  IMHO being transparency also creates a moment of being more referable.  The local property managers may refer you future good tenants as a way to keep the good ones there. 

Investment Info:

Single-family residence other investment in Oakland.

Purchase price: $300,000
Sale price: $375,000

We went to arbitration with the seller after they had sellers remorse. Judge helped rule in our favor to earn a buyout from the seller to us.

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

It was initially to be a flip or wholesale opportunity. When the date came for the seller to close, they sent over a letter of cancellation through the realtor. ( we used and paid for a realtor to handle the contracts. Also should note that I have held a real estate license over 15 years.) We had 3 people interested to either money partner or wholesale off to.

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

Referred to us by a realtor who knew that we had experience in flipping and wholesaling. Also knew we were willing to pay his FULL commission to close the deal.

How did you finance this deal?

We just needed the earnest money deposit, which we did get back. We also needed to show up to the arbitration. No other money down.

How did you add value to the deal?

WE offered to loan money to seller initially to fix and flip. We offered to show them how they could do it on their own. When we entered into contract it was understood that they could have done it on their own and we offered transparency throughout the deal.
Our profit was the buyout that they paid US , to cancel the contract.

What was the outcome?

When they canceled, we went to arbitration, as per the residential purchase agreement. they wanted to pay us nothing and at the end of the day we made a profit.

Lessons learned? Challenges?

Focus on the goal that we are in it for profit. Focus on the follow up. As a partnership, we need to have a common goal of when we need to walk away and when to refer back to each other during tense moments.

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

Yes, the realtor is an experienced broker. Experienced in investors. Experienced with wholesaling. Experienced in flipping. Always know who your partners are going to be. Those who are strong in their skillset.

If its a good deal now, its a good deal a year from now. - Zig Ziglar.

Put that thing into contract and then you can wholesale it.  If no one buys from you, then you know that it may have not been a very good opportunity.  But the numbers look really good from here.  If you can partner with someone that has a contractors license, you may be able to obtain private money or sell the opportunty for a share of the profit or for a flat fee in escrow.  You have options.  If you dont know what to do, Look for a cashflow 101 meetup on the meetup.com website and call the moderators to see if any of them will partern with you.  I host 3 of them in San Diego and work with the members when they have a deal to put together.  Never let a deal go, see how you can monetize it as soon as possible. Someone will want to make it happen with you when there is money to be made. 

@Ali Hashemi  Call me when you get a chance. I dont know enough specifics to know if this makes sense or not .  Add me as a contact on BP