All Forum Posts by: David Weiss

@Mark Kumm , I spoke with @Anthony Dadlani yesterday afternoon, because I'm looking for a funding partner. While I won't argue that his money isn't expensive, different lenders bring different things to the table. For example, Mr. Dadlani's program comes with no monthly interest payments (which was what the original poster was requesting, after all), he doesn't require a property inspection prior to lending and he requires zero points down. Among the HML's I've spoken with so far, he is the only one to offer any of these features (though of course there may be others).

If your business needs don't require these features and you have access to a lender who offers cheaper money, to your point you would be better off financially going with someone else.

But if you do need these things and are willing to pay extra to get them, Mr. Dadlani has a program that may meet your needs.

Bottom line, you devolved into personally insulting another businessman simply because he charges a premium for specialized services that you don't think you'll ever need. I think it was uncalled for and perhaps doesn't show you at your best.

PS: I am not affiliated with Mr. Dadlani in any way. In fact I decided to go with a different HML for the reasons discussed above.

If a wholesaler brings me a deal that I can make work that I wouldn't have gotten on my own, he deserves to be paid.

I'm better off getting my own deals (cutting out the middle man improves profits) but if my marketing isn't keeping me as busy as I want to be and a wholesaler can help remedy that, they've earned their money.

It's as simple as that.

Robert Kiyosaki's book "Rich Dad Poor Dad" is what got me interested in making money for myself rather than depending on someone else for a paycheck.

Consequently, when I decided to get involved in REI, I bought his Cashflow 101 game and played it a few times with my family.

My wife, who has some moderate involvement in my REI business, found the game to have little replay value. She's not interested in developing RE business acumen (she's content to let me take the lead on that) and doesn't find the game as entertaining as traditional family board games.

I would call it educational and a good way for certain concepts to gel when you're first starting out. My 11 year old daughter also plays it and enjoys it, though she has found that she enjoys learning about business concepts in general, so take that for what its worth.

I would recommend buying it, playing it until you find you aren't learning from it or enjoying it anymore, and then sell it on Craigslist (or here) to get some of your money back.

There may be additional risks depending on your exit strategy. For example, if you acquire a property via Sub2 and rent it or sell it via a Wrap or Lease Option, if the tenant/buyer stops their monthly payment, if you don't step in to make those payments you could be sued by the seller. (The fact that a properly worded Sub2 agreement doesn't legally oblige you to make those payments does not protect you from being sued for fraud, etc.) Or if you have a tenant/buyer in place and the bank invokes their due on sale and subsequently forecloses on the seller, you could end up being sued by the tenant/buyer.

A lawyer experienced in creative financing can help you mitigate these risks, for example making sure the buyer and seller both sign affidavits accepting the clearly spelled out Due on Sale risks, and making sure the contract with each party includes legal remedies against you if things go south (remedies that are better for you than being sued).

On the other hand, if you're in a state that takes 9 or 12 months for the foreclosure process to complete itself and you intend to rehab and sell the house in a strong seller's market, Sub2's can be a great way to significantly reduce the cost to acquire the property and you'll probably be able to rehab and sell the property (and pay off the accelerated note) before the bank can complete a Due on Sale foreclosure. I'm not sure there is any downside if you're lucky enough to be in such a situation. (I invite others with more experience to point out any risks I may be overlooking, as I intend to start doing flips this way but have not done one yet.)

Do your research and then get in touch with a lawyer experienced in creative financing. The risks vary greatly depending on your situation, your state and your strategies.

@Michael Quarles, you are my hero. :)

Thank you for the detailed breakdown of your approach and especially for including the psychology behind each of the comments you make.

"Joshua Dorkin's List." I love it!

I agree, I'd also pay a nominal fee for access to the list if it was relatively robust for my area.

I also agree that it'd be helpful to do something to avoid faux reviews. Maybe put in some kind of requirement that a person can't submit a review unless they've made 20+ posts to BP and been a member for 1+ months or something. It'd not be foolproof but I think it'd greatly reduce fake reviews and at least we'd have the potential to get some relevant content from posers.

My partner and I are looking to establish a long term relationship with a hard money lender who can finance our SFR rehab flips in the Dallas-Ft.Worth metroplex.

What we're looking for:

* 100% Asset-based lending

* Loans guaranteed by our LLC, not our persons

* 14/3 lending terms

Please email me at [email protected] if interested in discussing further. Thanks!

If your purchase plus rehab costs end up at 70% ARV and you get an HML for that amount at 14% interest with 3 points and interest-only payments until sale and you carry the property for six months, your numbers play out this way:

Loan Amt: $88,200
Carrying Costs (w/o Loan): 1% ARV x 6 = $7,560 (this may be high)
Points and Interest (3% + 7%): $8,820

You end up losing $16,380 of your margin to financing and carrying costs.

You should end up with around $20k in profit depending on actual rehab costs, holding time and closing costs. It's a newer house so the risk of unforeseen rehab costs are lower. If the final Risk vs ROI is acceptable to you and you are in a position to pay the Financing and Carrying costs out of pocket, I wouldn't let the hard money issue stop you.

Incidentally, if you can get the owner to sell to you via a Wraparound Mortgage, you can significantly reduce the amount of hard money you'd need to obtain, improving your profits.

Incidentally #2: Some HML's impose penalties if you carry the loan for longer than six months. Make sure you understand your loan terms before putting a renter in place.

Good luck!

I also think this is a great idea. Maybe we could get @Joshua Dorkin to weigh in with his thoughts on building out BP to include an easily found/searched section for this....

Bill Gulley,

Apparently "Advanced Reply" is what I need to post active hyperlinks. Here you go:

http://www.lonestarlandlaw.com/subject-to-transactions.html

http://www.cleverinvestor.com/education/investing-in-real-estate-creatively/subject-to-sub2/

I think we may have been on the same page all along but were getting caught up in the terminology.

I acknowledge that an interruption in Sub2 payments exposes the investor to the risk of litigation, and I do not know to what extent good Sub2 documentation constitutes a strong defense.

A possibly useful parallel: adultery is not prima facie illegal in many U.S. states, but it nevertheless exposes you to the risk of being sued for divorce. The same distinction applies with failing to make Sub2 payments.

Anyone can be sued for anything in America, and being in compliance with all regulatory and contractual obligations does not guarantee a successful defense. The only proof against an unfavorable court ruling is to keep your business partners happy enough to not sue you.