All Forum Posts by: Bryan Casteel

OK Aole,

You have my attention. You have acknowledged that the right knowledge can mitigate the risk of commercial investing. Donald Trump would think a certain deal is a no-brainer that I wouldn't even touch because he has more knowledge than I do.

Now, lets assume that an investor studies hard and understands the language of the commercial game. What are the differences that you have seen in going from residential to commercial? What are the expected returns of each? How much more creative can commercial get than residential?

Aole,

I like your presentation. I have been reading your messages over the past couple of days and it seems you are driven and knowledgeable. Thanks for discussing the merits of commercial lending.

When you work with the lenders, what are the different ways that you can structure a deal in the best terms for the investor? I am sure there are ways to think "out-of-the-box" of traditional loan scenarios. What have you been able to pull together?

I have experience with Dave Lindahl and I have found his materials to be very good. David is very thorough and works hard to understand the market cycles in various cities throughout the country. His approach to commercial residential is very straight forward and he provides a good business system for trying to duplicate his efforts. I would recommend his materials and events.

vlfour,

Listen to all cash - this is a bad deal. I can't tell if you are intending on living in this place or if you are wanting to keep it as a rental. Either way, you need to step back and let it go. This is an investor taking advantage of you.

Lets keep this one in the Rehabbing Section. I posted my thoughts over there:

http://forums.biggerpockets.com//viewtopic.php?p=5744#5744

Now this is an interesting topic that is very close to my heart. I have been 'round and 'round with this one many times before with wholesalers and other rehabbers. Here is my take:

Both of you are right that base hits are the way to make it in rehabbing...BUT, make sure the base hit doesn't get taken away from you because of a mistake on the bases. OK, enough of the analagy.

There is nothing wrong with going for quick $10K profits as long as it doesn't turn into a $10K loss right before you eyes. In other words, make sure your risk and reward are in balance. You mention that you are considering ALL expenses such as purchase, fixup, holding and selling costs which is great. So many people miss the HUGE expeses of holding a property and selling a property. Also watch out for market corrections in the neighborhood. I have been bitten by a 10% price correction in a very nice neighborhood that all of the sudden had too many sellers and not enough buyers.

If you are going to take on a very light job that is straight forward and you are going to account for all expenses, then go ahead and feel good about the $10K profit and go get another. On the other hand, if you are going to get into a big rehab, that $10K can go away in a quick hurry and you will be one sorry pup. I am finishing a property right now that I have had over $20K in surprise expenses that I didn't plan on when I started. If I had only planned on a $10K profit, I would be sick right now. As it stands, this project has enough margin to cover the extra expenses and I will still make a healthy profit. Sure, it would have been more profit without the surprises, but at least I bought it right and I can absorb the hit and still feel good when it sells.

Make sure your risk and reward are in balance. Don't take on a $30K fixup job for only a $10K profit. If you were right with your numbers you will quickly figure out that it wasn't worth it and if you made a mistake or find a surprise, you will be very sorry. Focus on making base hits and take the doubles and triples as they come.

Hi fireman,

I have had some very good deals from estates, but they didn't come to me from a "death mailing" - morbid marketing angle for sure. The deals I got are from mailings that I made to people who owned property in my county but lived out of state. It is a bit of a back door into the estate world.

I am going to start with the death mailings soon to see what I get. One thing to watch out for is the amount of time from the origination of the estate to when you send the letter. Most people aren't worried about the real estate for awhile and the probate courts might hold things up as well. You might try to send a series of letters/postcards over a 1 years period. If you don't get them at the right time with the first mailing, you might hit them at a better time with the 3rd or 4th mailing. Plus, your tenacity will pay off because you competition won't send repeat mailings, they will just give up.

Hi Dwayne,

I drive past a local non-profit charity business every day on my way to the office. Today I noticed a new quote on their sign that said "Experience is what you get when you don't get what you want." It really hit me because it is sooooooooooooooo true in real estate. The knocks can be hard but the experience is priceless.

My partner and I decided awhile ago that we were taking our business big so we had to bring on employees. We have had to let some go after a month or two of working for us because they just weren't going to help us get to the next level. When we talk about bringing on someone, we talk about how we have to find a "horse". Someone to ride to the next level. If we hire someone that turns out to be a stubborn mule, we have to tell them that they are not going to work out. It is a tough conversation to have, but one that will keep your business growing.

This technique is the basics of how Lonnie Scruggs talks about doing mobile homes. The numbers are smaller but the rates of return are higher. He buys 10-12 year old mobile homes for $2K to $3K cash and then sells them to buyers for $5K to $6K on terms. I would think that he gets a fair amount of them back for non-payment, but he just does it again. If he has to put some money into fixing them up, it really isn't that big of a deal since most repairs on mobiles are pretty minor.

I hadn't heard of anyone doing this with homes, but it makes perfect sense.

tackleberry, many people are in situations that they can't get loans or don't want to get loans. I am sure that all cash is doing his homework on the buyers, but many people just don't like to deal with banks. If they can get the financing straight from the owner they jump on it even at a higher interest rate. I never knew how many people were in tight situations that caused them to not be able to get a loan until I started selling houses on lease/option.

Hey Edge,

You won't find me shorting REIT's any time soon. There is just too many ways for them to creatively keep good numbers for their investors. The builder's might be a better short play though, if rates jump up as expected, they are going to be hurting for awhile as they adjust to the lower market demand.