All Forum Posts by: Michael Moikeha

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $285,000
Cash invested: $10,000

6 bed/3 bath home. Purchase subject to the existing mortgage. The owners had $30k equity. We paid them $10k upfront, and the remaining through $5k payments at the first of every year, no interest. After 3 years, we refinanced and pulled $60k out, but were able to reduce our payments.

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

This was exciting as it was our first rental. It was also an opportunity to purchase subject to the existing mortgage. The couple was on a fixed income with a large home and yard that they could not care for. They had 2 adult children living at home and not helping out. We gave them market value, they got into a smaller place for just the two of them and they were extremely happy.

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

This deal came about by talking to everyone and anyone we new. It just so happened to be a nice couple who found out my business partner was looking for a home and they said, "Come buy my house!"

How did you finance this deal?

Subject to the existing mortgage (about $255k at 5.5%). $10k down and $20k owner carry, no interest, paid $5k a year at the first of every year.

How did you add value to the deal?

Fixed it up a little and put renters in it.

What was the outcome?

Since we bought it, from DAY ONE, it has had tenants in it with zero vacancy between turn overs. The day someone moves out, someone was moving in.

Lessons learned? Challenges?

The magic guru stuff can actually work out, but it isn't easy!

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

no

Hey! I did a little searching, but didn't find anything, and can't figure out how to ask the question in a Google search. This is what I am looking for - 

I have a sign posted at a project. I use the phone number 555-5551

I post an add to Facebook. I use the phone number 555-5552

I send a batch of mailer. I use the phone number 555-5553

I post some signs on phone poles. I use the phone number 555-5554

I leave door hangers on homes. I use the phone number 555-5555

Now, I want ALL of these to ring through my same business line, but when they ring through, I will know which marketing avenue that person is calling from, so I know which marketing avenues are being the most effective. So they really aren't different phone lines, but the same phone line that can annotate where they are calling from.

Does anyone know where I can get something like this? Any help will be greatly appreciated! Hopefully this also gives some ideas to people out there to take your marketing to the next level scientific approach!

Does anyone use any software for managing data and teams? I'm looking for something like Pipeline or a CRM, but one that is Real Estate specific or allows connections to Property Radar and things like that.

Originally posted by @Matthew Paul:

Originally posted by @Michael Moikeha:

 True, but you also don't pay 1/3 when you call in for your reservation, 1/3 when you show up, and then the rest after you eat.

True .  

Every contractor  runs their business differently .  Some contractors are new construction production work , some are trades , some are general contractors . Some set their terms to the customer , others allow the customer to set the terms . I have something that works for me , I am fortunate enough to have a backlog of work . Its all residential homeowner work which has very high margins and very high agravation factor . 

It all boils down to reaching an agreement that is agreeable to 2 parties . 

 In reality, I have no qualms with the way you run your business. It's a great model from your side and you get business, so you have no reason to change things to benefit anyone else. 

I've helped a few normal residential people out with projects and there really is a high aggravation factor. The contractors who go investor are usually the ones who want to work on projects without homeowners still living there and more autonomy. 

Whatever works between 2 parties as you say.   

 True, but you also don't pay 1/3 when you call in for your reservation, 1/3 when you show up, and then the rest after you eat.

thanks @Stacie Smith

I believe I have looked through his already. 

@Matthew Paul

to your earlier post - 

I agree with you that it is cutting off your nose to spite your face, but there are plenty of contractors that do.

And I get what you mean with not wanting to share confidential information, but if you do the amount of work that it sounds like you do, there are a whole lot of people out there who have your contract already. I'm no competition to you, as I am not even a contractor, but I am curious in seeing how different people structure deals and contracts to have the best outcome and secure both parties. 

I have a thing for reading contracts, and a 30 page contractor contract is something I would like to review. Maybe if I ever end up in Maryland, I will have to do a project with you to check it out. Or you could email me one and Ill keep it a confidential.

To the post above -

I see it more like this. This isn't a loan without interest, on my end. You are still getting your money throughout the project, so I would need a loan too if that was how I was paying. If anything, you are getting an interest free loan, where most other industries have to manufacture a product prior to accepting payment. 

To reserve a Tesla, all I need to pay is $5,000 down. When it is completely built and delivered, I pay the remaining $100,000. I am not paying them the $80,000 (random number) up front to cover their warehouse costs, material costs, permits, etc, and then their profits upon delivery. That would be crazy. 

I don't want to pay a contractor for a product I don't have, just as I don't want to pay for a car thats not built. 

If I was in your shoes though, and I could get away with not having any business costs that I pay out of pocket, I would totally do what you are doing! You have a great gig where you never have to risk anything. 

Did you ever figure this out?

You have more security than I have, as you can lien on the property. As a flipper, that means you are going to get paid regardless. If I was a normal homeowner, that lien may not do you much good as they could live there for another 10-50 years.

You may get a fine and lose your license, but you now have a huge chunk of my money, and to try and get that back, I will be fighting you in court, while all you need to do is close up shop.

I know contractors get burned, and I know investors get burned. We are all recovering from burns while trying to find the best way to move forward. 

We have a few good contractors who work for us. They did the retail, but you have to deal with homeowners who are emotional. Flipping, its all about the money and they can get in and out without having to work around a homeowner or have that homeowner breathing down their neck.

I had a pretty solid contracting relationship with a company that had 5 projects going at the same time for us (after doing a handful before that) and we got comfortable with them. They asked for money we paid it, but then they got up on the payments and held us hostage. 

Wouldn't continue work without another check even though they had money for work that wasn't done yet and they weren't on track. We lost a lot of money. Im not interested in paying people for work that hasn't been completed anymore. Its a tough situation for both parties.

Would you mind sharing your contract with me? I would be interested to see what it consists of.

@Matthew Paul

So on $150,000 project (as the main post on this thread states) you would require $50,000 to sign the contract, $50,000 to start it? You want $100,000 without having done ANY work!?! I'm sorry, but that just doesn't seem reasonable from my point of view.

A lot of the reading I have done says that you should always stay about 10% behind the progress of the property. So if its 50% completed, I should be at 40% paid.

With your system, what security do I have that you will do anything now that you have $100,000?