All Forum Posts by: Michael Kevorkian

@Daniel Sperling I just sent a message to your inbox to connect. Let's chat this week if you have the time. Talk soon...

Investment Info:

Small multi-family (2-4 units) other investment in Chicago.

Purchase price: $300,000
Cash invested: $60,000
Sale price: $375,000

Purchased off-market direct from owner. Tried to wholesale to the list but no luck. Decided to fund it with a hard money lender and list it as-is on the MLS. Sold it in a week to another rehabbed for $375,000. The cash invested is actually the downpayment amount needed for the hard money loan and was not used for renovation.

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

Great neighborhood with a lot of new construction and renovation in the area

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

Direct mail to owner and the deal was negotiated on the phone in a single call. Sent the contract for signature and got the deal locked up same day.

How did you finance this deal?

Hard money

How did you add value to the deal?

Bought it right

What was the outcome?

Sold to a rehabber

Lessons learned? Challenges?

I need more lenders who understand this business and how fast these deals turn. Unfortunately most of the ones out there require huge down payments which limits how many of these can be acquired at any one time depending on the cash available at the time.

Investment Info:

Single-family residence wholesale investment in Downers Grove.

Purchase price: $110,000
Cash invested: $1,000
Sale price: $160,000

Wholesale deal that was brought in by another investor. They were direct with the owner, pre-foreclosure situation and it was sold to another investor who is doing an extensive gut renovation to later flip to a retail buyer.

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

Great neighborhood with high values for move-in ready inventory

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

Fellow wholesaler

How did you finance this deal?

N/A Wholesale

How did you add value to the deal?

Bought it right

What was the outcome?

Sold to a rehabber

@Jason Marcordes not sure about the license. I think it’s a hostel and to be honest, not sure what any of it means from a licensing perspective as it’s not my area of expertise.

The value makes sense compared to your sale, but not from a flip perspective. High $500’s plus $300K and holding costs. What’s the upside other than hold? That’s Pilsen though...

The basement was unfinished and I assume they either duplexed or made a 4th unit (zoning is RT-4). The rest of the units were all one floor / one unit.

@Doran Summers Truth be told... it's hard to say. Pilsen is a wild market. The Bohemian House group bought the property from the guy I sold it to and are near done with the rehab. There are no hotels in Pilsen and I think that they have a unique product they are offering. If they spent say $300K in rehab which is a fair estimate by my book, I just don't know if it's worth much more than that. They seem to be heading toward STR with it which could make sense for them and that business model.

@Doran Summers No missing information. That actually happened.

@Joe Cassandra Truth be told neither I, nor my hard money lender could pinpoint the value on this deal with anything that started with a ($5) in front of it. I was happy as a clam to have done the deal the way I did at the time. It should go without saying, had I known better I would have funded and flipped it myself. There is absolutely no good reason not to if you can agree on value. I put in the wrong end sale price, I thought it was $576K when it was actually $562K and will change it in the deal posting.

Please see attached screenshot from the MLS record. The end buyer (the one who bought it for $562K but it was listed for $549K) did a full renovation and I believe will be running it as a full Airbnb).

@Todd Nagel hire an attorney. The right one will absolutely be worth their fees in guiding and protecting you from a lot of potential issues ranging from regulation to wind up of your deals. 

I have done it all (seems like it anyway) over the years and after coming full circle, going broke twice, bankrupt the last time and all the ups and downs, I learned a lot. One of the big lessons for me was how you raise money. For example what are you (investor, borrower, personal guarantee, skin in the game etc.).

How are you reaching out to people to raise money? 

Loan applications? 

Idle conversation at a party? 

Marketing?

There is a lot to consider but one thing is for sure, be prepared and protected for the "what if" scenario. Like... what if it all goes bad? Do you all walk away (based on your paperwork) or are you a corporate borrower who put 20%+ down and backed up your loan with a personal guarantee? No walking away there so easily that's for sure.

In closing I will say this... money and success have an incredible magnetic effect in this world. Start small, just do a deal or three and you'll be amazed at how many opportunities, lenders, investors etc. will start showing up out of seemingly nowhere, and start to kind of throw money at you to see if you can have the Midas touch for them as well as yourself while doing what it is you do.

Best of luck

@Daniel Sperling

@Eudith Vacio

Thank you very much! I appreciate you taking the time to comment. Best of luck out there! 

@Jaason White welcome to real estate investing! While I could go on and on about a number of subjects and how to's, I think the very best thing I can offer is just get to talking with sellers first to get over your fears. You can do this without any out of pocket expenses whatsoever just for practice and you never know... you might just get a deal out of it. Here is how I would start out:

1. Find a good script to follow, I know there are countless scripts you can find with a quick Google search.

2. Just start CALLING (text and emails don't count yet) sellers to get comfortable with having one on one conversations with people you don't know. When you do this you are following your script.

3. Use free lead sources to start like Zillow, Trulia, Craigslist etc. You literally have nothing to lose and are simply practicing right now.

Eventually you'll go see the properties and make offers etc. etc. but for now, get out of your own way, call and talk with people and remember... a good call lasts 15 minutes or longer. If you are in a hurry to get off the phone and make the next contact something is wrong. Try to remember the story of the father bull and the son bull on the ridge looking down at a pasture of cows. Take your time... the results will be far more rewarding. You must build rapport to move to the next step in the process (site visit or make an offer site unseen).

If after this you still feel uncomfortable with the lead generation side of the business then I suggest you either address your fears and overcome them OR acknowledge that is not possible (and there is nothing wrong with that). No one is great at everything and sometimes the only games we can win are the ones we don't play. You can then look to different strategies like working with wholesalers or realtors and just buying, renovating and selling or renting properties. 

Investment Info:

Single-family residence wholesale investment in Chicago.

Purchase price: $120,000
Cash invested: $1,000
Sale price: $160,000

This deal was brought in by a realtor who is on the buyer email list that properties are blasted to. She reached out and mentioned she had a seller looking to make a deal off-market. Got the property under contract and flipped it to another investor.

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

The price was right

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

Realtor brought it as an off-market opportunity

How did you finance this deal?

N/A Wholesale deal

How did you add value to the deal?

Bought it right

What was the outcome?

Sold to another investor