All Forum Posts by: Nik Parks

@Rick Santasiere That's an excellent example of why wholesaling isn't unethical (or doesn't have to be). Do you have more examples? Just curious :) I actually plan on wholesaling soon so I don't think it's inherently shady. 

@Andrew Hall I know I'm a little late on this thread but congratulations! Did everything work out?

So you got your first lead after a month of direct mail marketing? Your budget was/is $500 a month? I'm still in the research phase :) I'm always curious about the numbers of wholesalers are further along than me.

How has Facebook marketing worked for you?

@Antonios Diakonikolas I'm actually in a similar boat :) I live in Astoria and I'm ready to start wholesaling. I'm trying to find a place that is a reasonable drive from NYC (I don't plan on doing it in the city). Have you found some good areas in Long Island? Best of luck!

@Andrew Michael This is great advice! I hadn't thought of developing a relationship with a divorce attorney or estate lawyer.

I don't think she's less entitled by any means. I stated that it's completely fine that she doesn't want to put in any sweat equity :) It's easy for things to get misconstrued when non-verbal communication is involved so perhaps my thread came across the wrong way.

I completely agree with you, everybody needs to come out ahead in this scenario. I would never conduct business any other way. If my thread came across any other way, it did not accurately represent my intentions.

I appreciate your input and these are great questions to ask her. Do you have any information on having a silent partner? I'd love to learn more about that.

The reason I was thinking of getting a loan from her instead of partnering up is because:

1.) I've always heard that family and business don't mix well. This leads me to believe a buy and hold strategy could get sticky.

2.) One of the most appealing aspects of REI is the control you have over your asset. I don't really want to share the control with a partner. That may be a bit too idealistic if I don't have the cash?

Thanks again!

Hey guys,

I looked for a similar thread and couldn't find one. If a similar question has already been answered, feel free to point me in that direction :)

Basically, my aunt wants to partner up on REI. However, I think it would be better to get a loan from her instead of partnering together as investors. She wants to put in the money and just receive a RIO, and that's completely fine as far as I'm concerned. However, I would want control over the asset if I'm putting in the sweat equity. If I decide to sell or refinance down the road, I wouldn't want to have to convince a partner to agree with me. I would want to just be able to do it. I apologize if this is a really long question.

Here's what I'm thinking. Is this realistic? Is this a good strategy? Keep in mind, I'm keeping the numbers simple in this example.

Let's say I borrow $20,000 from her for a 10 year loan at 6.5%. I haven't pitched these numbers to her so if these are good…bad…whatever, I'd love to know what you guys think :)

From what I understand, a traditional mortgage lender will see this as a red flag as I'm essentially borrowing money in order to borrow money. So I may be better off finding someone who will do seller financing (I'm willing to make a lot of phone calls). I can also negotiate the mortgage rate with the seller if I take this route?

I read  Brandon Turner's eBook and I love his strategy. Let's say I find a house that's worth $100k, I purchase it for $80k, and put $20k down. I try to charge 1% - 2% of the value in rent each month ($1k - $2k per mo). But I understand it's difficult to even get 1% per month now-a-days?

Am I correct in thinking that I would pay my aunt $227.10 per month for 10 years. She would receive a total of $27,251.30 or a 36.26% ROI. This would be a good deal for her, right? She just wants to put the money in. She isn't interested in putting in the research or sweat equity and, again, that's fine.

That means I would pay my aunt $227.10 per month and I'd pay the seller, if I get a current mortgage at 3.554%, $270.90 per month. That's a total of $498 per month excluding taxes, repairs, etc. That's really going to cut into my cash flow, but if I can implement Brandon's strategy and increase the value by 10% within the first 12 months via minor repairs, I can build equity.

Am I calculated this correctly? I think I'm getting thrown off somewhere. I think I'm getting thrown off because I'm talking about seller financing and borrowing the down payment.

Year 1: the house is worth $100,000. But I pay it at $80,000. I put $20,000 of my aunt's money down, leaving $60,000 to pay the owner. That means I already have $20,000 in equity because I bought at a discount.

Year2: the house is worth $110,000 because I increased the value by 10% via minor repairs. This means I have $30,000 in equity.

What's my next move? What would make this a good strategy? Or is this entire strategy flawed?

Thanks guys. Again, sorry if this is a really long and convoluted question.

Cory Binsfield, I'm a newbie here. Would you (or anyone else who might know) mind elaborating on depreciation, equity capture, and mortgage pay down?

Thanks!

Mike H. and David Krulac,

Thanks for the excellent points! I've been going back and forth on the whole SFH vs. MF thing myself.

I've talked to a couple of investors and they've said that, depending on the area, MF's can attract a "rougher" demographic as well. Of course, it varies from market to market.

I currently live in a MF in NYC (I'm renting) and I think it's safe to say that I'm a pretty standup guy :p

Welcome, Nick!

I'm definitely in the same boat as you. I live in NYC and the market is just ridiculous here.

I'm originally from Arkansas, so I think I'm going to invest there from NYC. Out of state investing can certainly be more difficult and risky—but I've read through several sources (BP being a big one) that putting a good team in place is they key.

I'm learning that Northwest Arkansas is actually a really great market, despite the stereotypes :p

Are you fairly set on relocating or are you thinking about investing from out of state?

Lance H. and Sam W.

Gotcha. Thanks for clarifying! Now I understand how it works :)

Thanks, everyone!

My post may have been confusing. Unfortunately, I was in a rush when I wrote it—I apologize.

In the latest BP podcast (episode 14), the guest stated that multi families and commercial property can be valued based on NOI. Now that I think about it, he was talking about two, side-by-side five plexes…so maybe I just misunderstood?

It sounds like refinancing is advantageous if you can get a lower mortgage rate. Why else would someone refi? I thought Brian Burke said in podcast episode 3 that he refinances in order to pay back his investors. And Brandon Turner has discussed a recent purchase in which he used hard money and he plans to refinance in 12 months to pay back the hard money lender.

I guess I'm just not fully understanding.