All Forum Posts by: Matt F.

I noticed that most Auction.com listings have a starting bid that is less than what is owed.

Is this just a sales tactic, or in a single-bidder scenario (unrealistic) would the property actually be let go for such a low price?

Thank you.

Hello everyone,

I’ve been checking out this website for the past couple of months and figured it was time to introduce myself. BiggerPockets is clearly a great resource for real estate investors with any strategy and of any experience level.

BACKGROUND:
I graduated with my B.B.A. in Finance at 19 years old and was fortunate enough to find a decent paying job right out of school as a business analyst.
While pursuing my degree, I interned at two small real estate investment partnerships. I didn’t really have a specific job title -- I just did whatever the two partners needed, and shadowed them.

I had the opportunity to review bank notes, purchase agreements, leases, etc. I was also responsible for keeping QuickBooks current, monitoring the performance of the portfolio (COC return, operating expense ratios, etc.) and sending that information back to them, etc. Just a bunch of random things really, but it was all beneficial, in my opinion.

PRESENT:
I save about 38% of my take-home pay, which will be used as my initial investment capital once I’ve saved enough. I can potentially save more by getting roommates when my lease expires in August. I don’t have any debt – no student loans, no car loans, no credit card balances, etc. but I don’t exactly have a huge net worth either.

Right now, my plan is to continue learning as much as possible and connect with other people in my area. I want to start establishing relationships with lenders and perhaps get some hands-on experience in the local market by assisting someone who is already successful on their deals.

FUTURE:
I plan to make my first (and perhaps second or third) investment before this time next year. My long-term strategy is buy-and-hold for the cash flow, however, I am somewhat interested in flipping at first in order to increase my available capital if I can find a trustworthy and experienced partner.
Ultimately, I want the primary source of my income to come from investments in real estate and private businesses.

Although I’m pretty much a silent reader for now, I will join the conversation as I feel like I have more to contribute.

Thanks to the active members for sharing their knowledge, and good luck to everyone on their endeavors!

Matt

Very helpful insight Bill.

At this point, I think the deal structure described in your second post is what I'll research in more detail.

Thanks.

Passive income I currently have:
1.) Royalties from music
2.) Affiliate products online
3.) Stock dividends

It's worth noting that all three of these are in VERY small amounts. I might as well ignore them, and definitely don't count on them to survive or anything, it's just nice to get a check in the mail for a few hundred dollars every now and then. These are all literally 100% passive and only required a few hours of work several years ago.

Passive income I plan to develop:
4.) Real estate cash-flow
5.) Private business cash-flow
6.) Purchasing other intellectual property rights and books-of-business (insurance)
7.) Lending

Thanks for the replies guys!

Don,

Let me try to address the issue you raised in your example. It is a valid point, but in my head at least, I see it as slightly more.

Basically, what I'm actually trying to offer is the opportunity for the seller to "forget" the property, get $600,000 in cash upfront, plus 50% of cash-flow until they have been paid a total of $1,100,000 (premium for waiting...arbitrary number).

The seller could potentially refinance the property themselves to get cash, but that would mean they had the intention of keeping the property.
My idea assumes the seller is trying to get out, but would accept less than 100% of the amount they want upfront.

So rather than "....My 50% is worth $175,000 plus I have received $600,000 cash. So for the priviledge of selling my $1million property for $775,000 I have also ceded control of the property to you."
The opportunity I see is for the seller get the responsibility off of their shoulders, get $600,000 in cash upfront, plus 50% of cash-flow until they have been paid a total of $1,100,000 (premium for waiting...). So they have $600,000 cash, $175,000 equity in property, AND 50% cash-flow to a certain dollar amount.

Your example seemed to miss that last part. It was still a good perspective nonetheless, and I may be the one missing something.

Bill,

Just curious, why do you think it would be easier to do a deal like this on C-Stores, grocery stores, etc. than for multi-family properties?

Additional details:

By multi-family, I am referring to 4-12 unit buildings. The prices are usually listed in the $1,200,000 - $3,000,000 range.

Hi,

I am eager to begin investing in multifamily real estate for the long-term cash-flow, but lack any significant capital to do so, especially in my area (Los Angeles).

I've been trying to think of creative ways to acquire my first couple of properties.
Here is one of many ideas. I'll probably post the others after seeing how this goes.

Please take the time to point out any potential issues you see with my logic. I greatly appreciate all feedback and advice that more experienced individuals have to offer.

*I can get approved fairly easily for a loan with favorable terms at 65% LTV. The seller does want cash, but does not NEED 100% cash today. Why not have the seller agree to sell the property at 60% of value to a newly formed partnership that takes out a loan for 65% LTV. The seller will have a stake in that newly formed partnership (reason for selling at 60% value), giving them access to a portion of the cash-flow until they've been paid out say 110% of their asking?
I kind of took this idea from the "earnout" concept when purchasing a company.

I may be forgetting something crucial here, but if that is the case, guide me in the direction I'm trying to go please.

Perhaps such strategies aren't uncommon amongst investors, but they sure aren't used by the average person.

Thanks,

Matt