All Forum Posts by: David Friedman

Pros

1. Real estate is a tangible asset with more control over said asset when compared to stocks or bonds.

2. Every investment needs an exit strategy. I would go as far to say that real estate has far more possible exit strategies than any other investment.

3. Land appreciates over time. As more people require more resources, land will appreciate in value.

4. I know my local real estate market better than I will ever know the inner workings of Coca Cola or Microsoft.

5. Tax benefits

Cons

1. Less liquid than keeping money in stocks or bonds.

That's all I can think of on the spot!

@Brie Schmidt is correct on this one. Banks will only loan on the purchase price. You must wait 6 months to a year (Called seasoning a loan) until you can refinance any other equity out of the property.

If you purchase with cash instead of using a loan, then you can avoid paying loan origination fees twice, but then your money is tied up in a single property.

Congratulations @Cal C. 

On some of my flips, I have finished rehab in approximately a week from purchase and then had a signed contract with an end buyer in the first 14 days. Unfortunately, every single buyer took over 30 days to fund the loan and close escrow. Keep up the fast closes (More money in your pocket to use on your next flip!) and make sure you have contingencies in place if your buyer takes longer than the agreed upon time. I am currently collecting $150 per day on a house where the buyer has gone over the agreed upon close of escrow. This is a huge incentive for buyers to close asap.

if possible, I suggest that you use an LLC. An LLC has a minimum amount of tax you have to pay each year. In California, the minimum you'd have to pay is $800. If you're making plenty of money anyways then this amount is negligible.

@Matt Taschner I have 4 business partners and so when there is a disagreement we try to vote. Anything above 50% and that is the choice we make. With this being a disagreement between two people, it is much hard to implement that system. Before you begin your next flip, put some policies in place on what to do in the future if a situation such as this arises.

Hello @Mel Rosario I've had success with multiple rental properties in San Bernardino and Yucaipa. We buy our properties for cash at a discount or have the owners carry the loan if a situation like that arises. As far as finding the right tenants, checking their credit, monthly income and doing a background check will pretty much cover all the bases when finding a good tenant.

@Jeff Low MF is overpriced in SoCal right now. It would be very hard for you to get a 7% cap rate on multi-family, even in San Bernardino, California. My suggestion would be to purchase some single-family homes at a discount, do any necessary rehab work, and then rent them out. You'll build equity into the house and you'll get higher rents with the improved property. You won't appreciate on multi-family unless you can decrease the vacancy or get improved tenants paying a higher rent. With single family appreciation will happen over time. if you are using cash to purchase these investment properties you really need to be buying them at a discount. Otherwise, your cash on cash return will abyssmal  in Southern California. single family is a little bit harder to manage, but if you have a good property manager you shouldn't have a problem. If you are interested in investing in the Inland Empire, shoot me a private message.

This kind of blanket rule harms investors that are ethical, all because a few decided to take advantage of the system. Wouldn't it make more sense to continue waving this policy and just implement a new regulation stating that the investor has to prove the renovations completed on the property? I keep very good track of all of my expenses. It would take me a few minutes to prove that I had done a large amount of work on a property. This is going to require me to pay more holding costs and lower my return on investment. 

My business model is not going to change. I can still fix a house up in two weeks or less. But now I have to hold on to a vacant property that could be vandalized before I can even sell it. I will probably be choosing conventional buyers over FHA buyers. This rule honestly hurts anybody that is doing business ethically.

Hello @Jeff Darr !

Welcome to BP. There are a lot of free resources on this website that you can use to help decide on the right type of investing for yourself. Most BP members are against paying for info that is readily available on this website. One of the best things you can do is to network with professionals that are already successful in the area of investing you are interested in. Surrounding yourself with like-minded people and mentors will really motivate you to succeed. Although, you can learn a lot from BP, eventually you have to take the first step and purchase a property. Experience is hard to replicate.

I'm an investor in the Inland Empire myself. I flip homes all the way from Perris to Victorville. If you want to see what I do on a daily basis I'd be happy to give you a tour of my business.

Best of luck!

David Friedman

Hello Richard! Welcome to BP. 

I'm an active investor in the Inland Empire and I'd be happy to be on your buyer's list if you are wholesaling. Feel free to ask me any questions. If you'd like to check out some of my flips in varying degrees of being finished I'd be happy to show you around.