All Forum Posts by: Owen Dashner

Ben, are you a member of the Omaha REIA and Omaha Real Estate Meetup Facebook groups? If not, join them and ask this question there. There are a bunch of contractors and investors on the page that will likely be able to get you in the right direction.

Hard money loans offer outstanding returns, require little day to day effort, and are short term.  Obviously there is risk involved.  My best advice would be to underwrite the loan as if you were going to be the one buying it.  If it's a good deal that you would buy in an area that would sell quickly, it is likely a good loan to make (obviously consider the borrower's experience level as well).

It certainly wouldn't hurt to have your LLC setup and ready to go for when you are ready to use it. I would get referrals to local CPA's instead of using an add-on service from an agency. Make sure you join the Omaha REIA and Omaha Real Estate Meetup groups on Facebook. Both have monthly meetings and the REIA has a luncheon on Friday this week at the Tired Texan. Lots of knowledgeable investors and some newbies attend. See you around!

Welcome to BP, Gene! Reach out if you have questions.

@Paul Higbie right, I was referring to typical commercial lenders with that part.

Jorge,

Congrats on getting started. Some thoughts on your questions below (context: I am a partner in a hard money lending business).

1. Let's first make the distinction between hard money lending and private lending. Hard money is a loan on the underlying asset. Most HML's are going to only be able to loan to LLC's or corps due to the Dodd-Frank legislation requirements on consumer loans. Private money can come from any individual, typically friends and family when you are getting started. Private money could be unsecured by the asset (i.e. you could borrow the money from your mom or grandpa, best friend, etc.) in the form of a promissory note, or it could be tied to the property itself with a deed of trust or mortgage. Private money can be loaned to an individual or an LLC/Corp, but keep Dodd-Frank in mind.

2. Conventional 30 years financing is most commonly issued to individuals, not LLC's.  If you quit claim the property from your LLC to yourself, it may be a taxable event - so be sure to consult your tax pro before doing anything.  Also be aware that the original lender (hard money or private) will likely not be a fan of you using a quit claim while you have a loan out (in my business, we do not allow this).  They likely will have language in your loan docs that specifies what the consequences could be if transferring the title to another entity or yourself while the original loan is still outstanding.  You could have the loan called due. Private money lenders (especially friends/family) may be more flexible on this stance than a HML.

3. This is going to vary widely from lender to lender.  As I mentioned above, friends and family are common private money sources and will likely be more flexible with terms than an institutional lender.  The easiest way to do what you are describing is to use an LLC to buy the property, finish your rehab, then refinance out of the hard money loan into a commercial loan using the same LLC with a commercial lender (or private lender if you have access to one). Pros - A lot less paperwork and headaches with commercial loans vs conventional loans, plus faster decisions and processing times. Cons - typically shorter amortization period, higher interest rates, and shorter periods of fixed interest before ballooning.

Hope some of this helps.  Feel free to DM me if any questions.

Good luck!

Owen

@Benjamin Hecker Have you expanded your marketing channels to direct mail and PPC? We consistently get 2 deals per month from each of those channels.

What about the MLS? Everyone says there are no deals there, but if you set a lead measure of making one MLS offer per day, you will likely pick up 8 to 10 more deals per year that way.

What about networking with wholesalers and investor/agents in your market? Make one of your KPI's taking 1 new wholesaler, agent, or investor per week out for lunch or coffee, and I guarantee you will add more deals.

@Dimitri White, welcome to Biggerpockets and real estate investing! There are several groups in the Omaha/Lincoln area that get together monthly. 

The Omaha REIA meets monthly on the 1st Tuesday at the Ozone Lounge/Anthony's Steakhouse off of 72nd & F at 6:30 pm. The FB group page is: https://www.facebook.com/group...

The Omaha Real Estate Meetup meets monthly at Site 1 Brewing on 26th & Farnam St. in Omaha. Normally the 4th Wednesday each month at 6:30 pm.  The FB group page is: https://www.facebook.com/group...

Lincoln has the Lincoln Real Estate Investors group that also meets monthly at Grata in Lincoln, I believe the 2nd Monday each month at 6:30 pm.  Here is the FB group page: https://www.facebook.com/group...

Over 100 investors, agents, contractors, lenders, wholesalers, and title people go to these meetings each month to see the speakers and to network (most importantly).  There are both ballers and newbies that go to these meetings, so there should be something for everyone.

Feel free to reach out to me if you need anything.  Happy investing!

@Tim Oppelt we spend about $5k per month on PPC, so roughly $2,500 per deal for that channel. Omaha has about 1M population, so it is about half the size of KC I believe.

Jon, as others mentioned, your direct mail campaigns need to be planned out over periods of time, consistently.  You also need a much larger list than the one you mentioned.  Typically .5% to 1% is a normal response rate, so you need to budget accordingly to attract enough of a response that you will get legitimate leads which then convert to deals.