All Forum Posts by: Mitch Messer

Is the business able to be sellable? If it is not set up with systems and people in place to run it you will be mainly selling your book of business. I would not sell. If he hates managing he needs to hire that out and then use the extra time to start flipping. To throw all your eggs into the flipping basket without doing a deal to me is not wise. Do a few then decide about going all in.

Thank you for your reply! It is sellable and we have had an assessment with a broker. We are just debating to follow through or not!

We did try hiring out the manager in the past for 2 years - but my husband didn't manage that person well, so they didn't manage the employees well, and we ended up losing money. Employee management is not a strength of my husband (and he happily admits it!).

Well that's good. I would still push through and do a few deals before selling. You might hate flipping over running a GC business but I would not kill your income source.

I'm 💯 with Caleb on this: Test out your flipping plan before you sell your business!

Has your business broker explained that the majority of businesses put on the market do not sell?

And, even if you do find a seller, you're looking at a minimum of 6-12 months of due diligence and financial review.

Plus, the new owner is likely going to want you both to stay on for a least a little while after the sale!

The time to find out if flipping is a viable pivot is now, while you still have income!

Thank you so much! It's helpful to hear the perspective outside the broker. For a company our size, we were told more like 1-2 months of due diligence and 1 month of staying on, but we have nothing to truly compare that to in the "real world". I appreciate your input - very helpful!

Yes, to be fair, if it's a straight-forward all-cash purchase, then the due-diligence likely could be done in 60 days or so. I was being too pessimistic in that regard.

I'm glad the overall message was received as intended!

0 Votes

Nashville, Tennessee

Quote from @Bryan Galaz:

Quote from @Mitch Messer:

Quote from @Bryan Galaz:

I have over $500k in equity with my primary residence and feel like I should be using it to get into real estate investing, but have no idea how to get started. How can I use that equity to buy a rental property?

Thank you!

Hey Bryan, I applaud you for wanting to put your funds to work.

And, I 💯 agree that real estate is likely the best path forward.

My question is this: How certain are you that the best way for you to "get into real estate investing" is as an active investor?

Finding a property, negotiating a deal, securing a tenant, and managing a rental is seriously hard work!

And, I'm willing to bet that most landlords don't do much better than a 10% annual return on their funds. (Most probably do FAR worse...)

By contrast, private lenders are currently earning about 12% annualized interest on their money.

And, getting exactly ZERO calls at 2am from unhappy tenants!

Note: I'm not judging. I've been a rental property investor for 25 years.

I'm just wondering if you're aware of RE investment alternatives that might better suit your situation.

I never thought about investing in that way. How would that work with money coming from a HELOC?

Bryan, it would be quite similar to what you were planning. You'd access the HELOC funds and then lend them to an investor at an agreed-upon rate for an agreed-upon period of time. (There's obviously paperwork and structure and closings, but that's the gist.)

Also, it doesn't have to be either/or. You could invest some of your funds into a direct investment, and some you could put to work indirectly as a private lender.

To be clear, I'm not advocating that you should do any of this. I was just wondering if you'd even considered this option!

I often see folks jump straight to being an active investor, and I know just how much work that can be, often for disappointing financial rewards.

It's generally better to be the bank!

1 Vote

Orange County, California