All Forum Posts by: Peter Schaub

Hi BP,

I'm working as a  hard money lender that is based in Austin. I operate in Dallas, San Antonio and Houston as well. We've got a house in Houston that we are inspecting today before we fund. We'd like to have lunch with a couple of investors or agents today, so we can make our time as productive as possible. If anyone is available to discuss how we could increase our presence in Houston, or has any suggestions, shoot me a message. Thanks.

@Josue Vargas and @Jay Hinrichs

Thanks for the responses. I think these are great ideas and I'll follow through on these next week. I'll update this form to let BP know how my experience goes

Hi BP,

I work in mostly wholesale in Austin selling to flippers and developers. I'm interested in learning more about buying land and subdividing it into lots. I have poked around the city website, however the information is very dense and reading city code seems to be an inefficient use of time. Is there a better alternative? A newbie guide is helpful for understanding concepts, but I'm looking specifically to understand Austin. Any suggestions?

I fully understand where you guys are coming from with having some sort of money down. It allows us to share both risk and reward. I have some minimal capital, and I am happy to use it, but I can't work with a HML with my resources at the Austin price point.

I'd love to go take make a reimers trip. Though between coaching and wholesaling my next week is booked! I'm going to Salt Lake City tomorrow for the national competition and I am leaving for new mexico the weekend after that. If you'd like to meet at Crux Climbing Center or Austin Bouldering Project, I can do that a bit more readily.

@Aidan Mosher Thanks for the heads up. Unfortunately I couldn't make it, as I coach a rock climbing team and I had practice. I think I've seen you on meetup.com I'll try to make the next one I can.

@Jay Hinrichs

I agree that wholesalers are creating a de facto net listing. As an agent, this would be a problem if you also signed any buyer/seller representation agreements, which I do not. (I'm a licensed agent and a wholesaler) I know there is an attraction to wholesaling for those new to real estate, because of the common myth that you don't need capital to get started. Everything in real estate requires capital, though some approaches need more than others. I'm curious, what is everyone's opinion on closing contingent upon finding a buyer? Is this common? or do most wholesaler's actually buy and relist for a period? 

Thanks for the input guys. You're both right I should be more diligent in going to these meetings. I went to a two investor meetings every week for about 2 months, but then our office location moved and I stopped going. The feedback I got when I asked then was mostly  referrals to hard money lenders. However after fees and down payments, I still need about 15% (10% down with 3-4 points plus a couple of fees on top) to fund a deal, and unfortunately I don't have that yet. I have enough capital to flip in the sub 100k market with hard money, but this isn't really feasible in Austin because of price. In Austin with around a 200k purchase price and a 30-40k renovation budget for an "average" deal (if such a thing exists) I still need around 35-40k in liquid money to get it done. I'm hoping to find someone who has the capital, but may lack the time or experience to partner with.

Hi BP,

I'm a realtor in the Austin area looking to get into flips. I currently work as a wholesaler for Housemax realty. Housemax started as Aslan TX Investments, a large fund that has flipped more than 300 homes in the last 2 years. I'm looking form a partnership with someone who has the equity to either use hard money or cash for deals, but may lack the time or the skill. I can find, manage, and sell a flip from start to finish, but I lack the capital to do it myself. Any suggestions where I could find such an partnership?

Hey Nam,

So there are a ton of different ways to finance deals, but I'll throw out a few ideas for you. For the record if you haven't read The Book on Investing in Real Estate with No and Low Money Down, I highly recommend it. It isn't go to be the end all be all of real estate financing books, but it does point out and explain some great strategies you can use, especially once you've tapped out of conventional mortgages.

1) Partner's - If you have not already formed an LLC for your rental properties I would consider asking an accountant if you should. If you have then signing on a new officer and drafting an operating agreement really isn't too hard. Partner's are great because you have trust and rapport when you bring someone on as an investor. Another possibility (Disclaimer: I'm not a lawyer) is to form an entirely new entity, separate from your current business, and find someone who wants to finance some deals. Your corporate office is probably the first place I'd suggest.

2) BRRRR- if you listen to the podcasts I'm sure you've heard this term. It stands for Buy, Rehab, Rent, Refinance, Repeat. So this would be a deal that you would flip and then rent instead of sell. You'll have to acquire these with hard money, private lending, or some other non-conventional loan as their usually in too bad condition to have a traditional mortgage. Once you've fixed it up and rented it out for 6 months - 1 year, you can find someone to refinance it under a traditional mortgage (do that ahead of time) so you can ditch the hard money or whatever loan you used to acquire it. These can help you get around the debt:income ratio because you usually have an equity bump during the Rehab phase (thus decreasing the debt on the house).

2) Private Lending- this is exactly what it sounds like. Individual with a lot of capital will lend to flippers or landlords such as yourself. Think of this as owner financing for acquiring investment deals instead of retail deals. These are more expensive but if you're out of luck with conventional mortgages its one avenue to consider.

3) Lease options - Make sure you really do your homework and understand the financing before using this one. Brandon Turner, in the book mentioned above, bought one of his first deals through a "master lease option". This means you'd lease a multi-family property (which you may potentially then sub-lease for a little cash flow) with an option to buy at a predetermined price at a predetermined time. This allows you time to see if the property cash flows correctly and if you have any problems with tenants, while also finding financing.

Thanks Jim I will reach out to him