All Forum Posts by: Peter Fennig

Hi Nick, good choice on wanting to use real estate investing as the vehicle to Financial Freedom. One of the best things you can do is to network as much as possible especially with local investors. Drew Wiard and Adam Beckstedt host a monthly REIA meeting the first Wednesday of every month at the Mike Thomas & Associates building off of North Coldwater Street in Fort Wayne. It goes from 6:30 p.m. until 8:30 p.m.

feel free to reach out to me if you ever have any questions , I'd love to help if I can

Thanks Phil, I was just about to start talking to the local banks and just go down the list. Definitely don't plan on waiting until my credits repaired enough for them to start approving me for refi loans using that strategy...so I was wondering if there was any other strategy with using somebody as a co-signer such as my money partner who's got a W-2 job?

I've currently got a Private money partner who brought all the money to the table for my second flip forthe purchase and the rehab. With the numbers the way they look I could definitely do the BRRRR strategy on this deal instead of flipping it, recoup all his money with a 75% loan, pay him back and keep the property, rent it out while recycling his money on the next property to do the same thing.

My question is this is my first time using this strategy if I go that route, and I'm Just getting out of a messy divorce that ruined my credit score and Credit in the process and I wanted to know if that is a waste of my time trying to find a bank With my credit the way it is who will finance the property... Or if they're loaning you 75% loan to value, Will they base it mostly on the asset or will my credit score be a major factor in that still. ?

No, I was in charge of the rehab and finding the rehab money then managing the project, they were novice and had never done this before. The $4,000 I found and and borrowed from my now current partner on my second flip, then the $3,000 was money out of my own pocket to finish the project that I got paid back for all at closing. What they took was the nearly $7,000 profit after all expenses were paid back at closing After claiming there was miraculously $7,000 of expenses that were needing paid back prior to me coming on board that was never once talked about in the nearly 7 months of working on the project... And of course, I had nothing in writing to prove otherwise.

Thanks Odie, But I'm still very glad for the experience because I learned a lot from it and will not repeat the same mistakes on the many more flips to come in the future. It was a valuable yet expensive education expense, lol.

To answer your question though, the other 7k was absolutely needed in order to put in the finishing touches that would allow us to reach that ARV. Otherwise there wouldn't have been enough money recouped from the sale of the property to pay back the original 11k loan plus interest and their 22k. It was an all in or nothing type scenario...and also at the time everything was going very well between the three of us. Justin and I were even looking at houses nearly every other day and making offers to find our second flip. I simply put too much trust in people who I thought were friends and I assumed they'd never do what they did

That's awesome man, huge congratulations!

For starters some may not look at this as a success story, but I most certainly do. For one I got all of my money plus interest back that had been promised to my lenders on my first flip and two, I learned a very valuable lesson which is to always get it in writing....even if it is a so-called friend you're doing business with!

The beginning of July 2019 I had been trying for months til that point to find my first flip and hard money lender without success. It wasn't until I had an old friend Justine Fey and  his wife Amber Rose reach out to me to do some repairs to a house they owned which had damage done to it from a kitchen fire started by a tenant.

It was nice catching up with Justin because him and I both had a real  passion and love of Real Estate from a young age after High School...and so in catching up after so many years,  I decided gave them a really heavy discount on the repairs I had done. While nearing the end of the repairs, the more we talked about real estate investing, the more and more Justin, Amber, and I thought that simply partnering together and flipping the property would be much more  advantageous for everybody involved. With that said the three of us decided to flip the property.

I'm a full-time contractor myself, So I told them I would take on the remodeling and project managing as long as they could help out where they could and when they could since neither had experience in project managing such a project on this scale. Another important detail is that this property's ARV was at most 50k according to the CMA my realtor did at the beginning.

Justin, Amber, and I had discussed from the very beginning that they wanted their 22k back which is what they told me they had paid for the house 6 years prior, and that I would put together and find the money needed for the rehab costs. I knew this was certainly no get-rich-quick flip or even barely pay the bills flip from the beginning, but I was motivated to get my first flip under my belt...and more importantly to use it to attract a bigger fish who would bring money to the table for flips going forward. 

To stay completely transparent to the details, I approached my dad with this project and told him I needed 11k for Rehab costs and that I'd pay him a flat 13.5% interest rate which to my surprise he agreed to! I budgeted 4K for labor and the remaining 7k for material which I knew was an extremely tight budget (even impossible) in order to get the property to the condition it needed to be in to fetch that 50k ARV. I formed an LLC, and put a lien against the property for the $11,000 plus interest a month after we had already commenced work and had spent over half the 11k (VERY stupid and would never do again!!)

Around September 2019 is when I realized there was no way we were finishing this property on the original $11,000 budget and that I needed to find more money. Fortunately, I learned another valuable lesson about a month before that the worst thing you can do is not at least ASK for something, because the worst someone can tell you is no. I had reached out to a previous customer of mine that I did a kitchen and bathroom remodel for and asked him if he was interested in investing. In real estate... and for the second time that summer to my surprise he told me yes he was!! After a couple hours of talking over the phone, he committed a six figure budget to my next flip! I was ecstatic with excitement! I explained to him that we were working on our first flip already and that I was looking to acquire more money for the budget in order to finish it to get it to Market. He asked me how much,  I told him 4K and he agreed to loan me that amount at a flat 15% interest rate with no collateral, just a promissory note between him and I. I went and discussed the arrangement with Justin and Amber and we all agreed that it was the route to take. (Note: I should have done a second lien on the property between Justin, Amber, and I for the $4,000 plus interest that I borrowed...but I didn't because we were what I thought at the time, friends)

Now fast-forward to November 2019, the house has been completely rehabbed ( new roof, Windows, siding, flooring, doors, HVAC, Electrical, Plumbing ... basically the whole nine yards at a budget that no other contractor in their right mind would have ever remotely considered)  and my realtor performs a new CMA which brought to light a new comp that brings up our ARV to a new listing price of $54,900! We list the property and within about a week have three offers! We countered the highest offer and they agreed, bringing the agreed to purchase price to $57,222! You would think in this situation everybody would be thrilled and congratulating each other... Especially because I ended up putting an additional $2,900 of my personal money into the property to finish up some of the essentials. Unfortunately, that wasn't the case at all.

For the next month and a half mostly because the buyer was having issues with their Bank which got cleared up.... Justin and Amber for the most part ended up and ghosting me through phone calls and text messages. I continually tried to set up a time to sit down with them and go over all the receipts and numbers to determine where everybody stood and they'd constantly cancel on me for one lame excuse after another because suddenly there was all the sudden nearly $7,000 of expenses they told me they also needed paid back for on top of the 22k. I continually tried to call both their cell phones and never got a response or call back and the only responses I would get would be vague explanations through text messages of where this supposed $7,000 came from that was never once discussed in the 6 months of rehabbing and numerous conversations the three of us had about the budget and expectations.

All in all, the house finally closed about 2 weeks ago, and I got my dad's money plus interest back my investors money plus interest back and my Nearly $3,000 of personal money used to finish the property back.  I've still yet been given an explanation on where the nearly $7,000 profit went but I have a good idea that Justin and Amber just got greedy and knew that we didn't have anything in writing.

So in conclusion of this long stressful and Irritating situation that I have nobody to blame but myself, I  learned to ALWAYS
get everything in writing before ever commencing any work or spending any money! My lesson was learned, and I have since purchased my second flip with that same partner and his six-figure budget... and the numbers are looking to be a much more profitable payday at closing then that 7K that was stolen and ruined a friendship. I just hope This helps somebody else not make the same mistakes that I made at the beginning of their investing career

Never heard of it till now Bill...I'll look into though. Have you structured something similar around that model?

No Aaron, it's a main floor roughly 1500 square feet that's been divided using a hallway with doors on each side totaling 6 separate offices. 

Hey BP members, I'm needing information on how to or what steps should be taken in order to rent out Office Space Under One Roof by the door? I've got a commercial building that has six individual offices on the main floor with a shared common kitchenette area and bathroom. My question is what's the best way going about getting those doors rented and occupied? I've dealt with my own personal rentals for residential apartments but not commercial space like this. Wasn't sure if there's anything that I have to be aware of or how different the lease agreements are or should be? Any help would be greatly appreciated, thanks