All Forum Posts by: Jason Mak

@Chudney Wesley sure, I understand the risk and educational aspects of this deal. That is how I got involved with HML too. We are all just giving you objective advice based on the information you presented us.

Like you said, $15k is a lot of money for you.  You should get to know the other two lenders better.  If the deal goes awry, the three of you would be on the same team and would have to work together in order to recover your assets against the rehabber.  

I would be leery of sharing 1st position with other lenders.  If things go wrong, then you guys could possibly split the 1st position three ways but that could open up a can of trouble unless you know the other 1st lenders well and can work together.

Agree with @Joel Owens , $45k should be a sum that a prominent real estate investor can raise with one lender.

In terms of documentation, at minimum you need (depending on your state and no legal advice given):

- Promissory note or loan agreement

- First Trust of Deed

welcome Danny and thank you for your service

Hands down go for it!!! Think about the $3.75 per hour as invaluable education for your future as a REI. Get in there and get involved with all aspects of the business and milk the mentors for as much knowledge as possible! I run a substantial portfolio and find myself doing the simple stuff a lot so it would be good to get a headstart on that. One caveat is to make sure that your future mentor knows that you are interested in learning as much you can so he won't be peeved when you pester him with questions.

This is very true but you can also shield yourself from liability with insurance and common sense (making your sure your contractors have insurance!).  LLCs have annual administrative costs and a layer of administration which can add up depending on the size and timeframe of your deal - so that is really a judgement call.  If the deal is small and short enough, you may not gain too much advantage by creating an entity.   

Do you plan on holding your house for such long term?  If you foresee appreciation in the short term and imagine selling this house within 10 years, why not go for a 10 year loan and get lower rate and more cash flow?  Obviously assuming that you plan to sell the property within 10 years but may people do.

off topic: in one of my buildings (88 units) i bought a key machine and my onsite manager make extra keys.  Saves me $$$ on having a locksmith or going to home depot to make duplicate keys

welcome Adam!  Are you going to be looking for local deals?  I'm not too familiar with the Oceanside market but it seems that compared to Orange County up North and San Diego down South, that there may still be some good deals there.  Is that true?

Since we are in the multifamily, I will answer from the prospective of apartments.  In Los Angeles County, all multifamily buildings with at least 17 units must have an live in manager.  This would typically be your onsite manager who are typically compensated with free rent and/or salary.  If you own some a building like this, you could "self manage" it by doing bookkeeping, overseeing turnovers, leasing etc.  Most times, the onsite manager could handle some of these regular duties.  You as the self-manager would have to keep an eye on profit and loss, etc.

A property manager would charge you between 3-10% to manage the building and manage the onsite manager.  They would be responsible for your P&L as well as held accountable to all the costs, however, typically you wouldn't expect them to live in your property.  They would have a corporate office per se.  

Hope that makes sense.

if you go with the student rentals route, considering putting in simple furniture - then you can advertise as "furnished units" and charge a nice premium.