All Forum Posts by: Rob Cook

@Nathan G

Investment Info:

Large multi-family (5+ units) buy & hold investment in Cody.

Purchase price: $225,000
Cash invested: $425,000

I bought it all cash, but used a line of credit for the purchase funds as well as for the rehab funds. SO...I have literally NO MONEY in the deal. Well, you get the idea and nomenclature. My rehab costs for all 4 buildings (8 units total) has been $200K total. I personally have about 200 hours invested in the whole project (Including my partner/spouse's time). It will appraise out next week for at least $650K. ALL because Nathan brought me the deal. And of course, Nathan and his firm, American West Realty, is managing the property for me, from the get-go. Seriously upgraded the property and the tenant base and quality in the process, and raised the rents substantially too. I have owned it a year and wasted a lot of time doing it all myself, so I finally hired help a few months ago and will have all 8 occupied by end of 2019. Nathan manages two dozen of my rental units, ALL which are in his coverage/service area. I wish he was able to manage ALL of mine, as that would be a blessing to me.

What made you interested in investing in this type of deal?

A perfect prospect for me, a seriously rundown property in my area which has great potential and rental demand for long term hold.

How did you find this deal and how did you negotiate it?

My real estate agent/property manager/friend Nathan G of American West Realty in Cody, WY, brought the property to my attention. I jumped on it and he helped me close the deal fast (In a few days). My profit is about $300K on it, with less than 200 hours of my own time, and NONE of my own cash used! Plus they will be outstanding rental units for me now, long term.

How did you finance this deal?

Cash buy, used credit line for all the purchase and rehab funds, so a true, "No-Money-Down" deal.

How did you add value to the deal?

Renovated the property completely, in and out. A substantial transformation that essentially doubled the rents and will almost eliminate headaches for the next 20+ years hold!

What was the outcome?

$300K profit on the deal and an extremely attractive long term hold rental for me. It should be completely renovated and occupied by the end of 2019, which is about 17 months after acquisition. I wasted over 9 months of that time but had 4 of the 8 units continuously rented the whole time I have owned it.

Lessons learned? Challenges?

Be ready to pounce, with CASH handy (or in this case, a credit line avail) and know your market well so you will recognize a bargain when you see it, FAST. Great deals will not see the light of day, so no time to screw around when one comes across your radar. Having a network of great pros keeping their eyes and ears open for deals and then bringing them to you first, is KEY! Thanks, Nathan!

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes, Nathan G of American West Realty in Cody Wy, has managed many rentals for me for 7 years or so and found me many great deals including this one. Would never even been aware of this one, for a perfect example, had Nathan not brought it to my attention. One of the most important keys to success in real estate investing is to have a great PRO like Nathan, to help with all phases of the deal, from bird-dogging for me to negotiating and acquisition, property management and disposition.

https://www.biggerpockets.com/renewsblog/tired-dre...

A good post everyone should read. One that started my idea for this thread.

@Caleb Heimsoth

I think the reason gurus teach wholesaling, is because it has the allure of "anyone can do it" which is what helps them sell their courses etc.  Makes sense, and is true. 

What I don't understand is how it matters?  Regardless of what you call a strategy, it is what it is.  I use the word wholesaling because it has become popularized and therefore recognized. A shortcut in discussions like this. 

The fact is, anyone who wants to acquire rental properties, should approach their search for properties the same exact way a wholesaler should.  Looking for underpriced properties. 

You cannot pay retail market value for a rental property, using 80% LTV financing, properly accounting for expense allowances and have a positive cash flow. Period. At least not in my experience.

So I think the distinction between rentals and wholesaling, as to how you locate deals, is a fiction. The differences come after finding the deal. How the property is disposed of or acquired.  

@Steve Babiak

Good distinction, Steve.  Wholesaling, like all other strategies, can work or not work, depending on thousands of variables, few of which anyone ever lists comprehensively in these types of limited scope posts.  Nobody should assume such simplicity even when a blanket statement is made.  Rentals work too.  Fix and Flips work too.  Etc. 

Obviously, I am not guarantying anyone, anything, teaching wholesaling here, nor am I check-waiving on this or any other public forum.  So there is no basis for anyone to construe any facts, not in evidence or to ascribe to me motives or claims I never made. As have others here. 

My whole point about Wholesaling and that "it works," was regarding finding undervalued properties.  In the examples and statements I made here, I was intending to make the point that someone found and bought the properties at a significant discount, using a wholesaling lead generation system. A completely normal possibility and option for many wholesalers are deciding to keep the properties themselves, as fix and flips or as rentals. That is usually what I do, and what most do, cherry-picking their deals from among those they capture. Apparently, that was the case on the ones I mentioned in Salt Lake. 

It should be self-evident that that wholesale operator on those I mentioned in Salt Lake, in having decided to take the title on these properties, made an informed decision to do so. I called and spoke to them, about buying any of these properties from them, and their reply was, we do not have any properties for sale... unless you want to pay full retail ARV price for them, and they laughed. So that pretty much proves what I stated, before, and in this reply. 1) they were wholesalers and 2) they bought them at a significant discount and 3) they were not willing to sell them for less than ARV because they know they can sell them to investors any time they want, easily. I.e., they are not motivated or distressed sellers. Thus, wholesaling works. For those guys who buy over 200 properties a year, It works. 

And not that you, Steve,  have mentioned it or incited any ill feelings here, but I will take this opportunity to state here for all to read (since I will not respond to or acknowledge the other rude posters' at all) the following. 

My driving for dollars portion of my activities with my coaching client in the Salt Lake City area was 5 hours, not two days in duration. I did not mention and will not divulge now either, whether or not any transactions of any kind were entered into by me or my client, or what addresses, or what terms, or the parties identities or any other private information about any of my business dealings. I made absolutely NO claims of any kind whatsoever. Why anyone reads such into anything I wrote, is baffling to me. And their arrogant, rude and largely incoherent, incomprehensible assertions and demands, and their apparent sense of entitlement that somehow I am compelled to answer to them, is even more absurd. No wonder they are so bitter and negative, they cannot possibly be successful with that attitude.

I am volunteering to share my valuable time and hard-earned experiences and knowledge with others here, without any pay, attempt or expectation of ever being compensated in any way by the readers here. Period. If people are too ignorant to understand and appreciate that, and cannot benefit from my offerings, then that is their loss.  I am neither selling or promoting anything including myself here, and if being in the business of Real estate Investing and educating others is disqualifying, then these forums are going to be pretty worthless.  I guess the trolls will rule then, because people like you and me who actually have something valuable to share, will withdraw and go back to our paying business activities and leave others to their own devices.  

Rant over. 

@Brett Michael

You are thinking well, about using leverage. There are many opinions about the use of leverage, and it is controversial.  On the one hand, the math advantages can be clearly shown that using leverage can increase overall returns. But that assumes a lot of other factors work out as planned. 

Many actually advise to never use leverage.  Which means they pay all cash for properties. Others brag that they never use any of their own cash in deals, period. So that can be confusing to any reader, as you have pointed out earlier. 

As with many aspects and options and decisions in business, and real estate investing, whether or not to use leverage and how much, is an individual decision. Among the factors to consider in making these decisions, are risk tolerance, availability of cash, creditability, greed, financial stature, market conditions and outlook, inflation/appreciation potential, what age/phase of one's life one is in and of course each individual deal or property's characteristics.  A lot of permutations. 

One idea you did not list, which might be useful is the Home Equity Line of Credit (HELOC) instead of a long-term cash out refi. Pluses and minuses to HELOCs just like most other vehicles.

The primary thing to always remember about leverage is that it cuts both ways. Yes, it can significantly increase your overall ROI, but it can also work against you equally swiftly and powerfully if your assumptions are wrong or changes occur. Such as prolonged strings of vacancy, loss of your income and ability to service the debt, unexpected major repairs if you don't have the reserves to afford them, etc.

Risk and reward usually go together. Each investor has to balance these and decisions about the use of leverage are a key method of doing so. If you take a long-term, patient approach to investing, you are not as likely to get yourself into trouble. 

You are in the admirable position of both having the equity, and the ambition to invest in rental real estate. Not sure of your age or situation, but having your existing SFR investment property paid off is impressive and beneficial. This could be the result of your diligence or a simple as an inheritance, so I cannot give you credit for it without knowing more. You are also discussing using the equity in it, to invest instead of to spend, so that is definitely commendable.

Think carefully about what your goals are, your plans.  Why buy more rentals? Why not keep debt-free?  Why not save up to buy the next unit with cash instead of with borrowed money?  Which scenario or dozens of others will best fit your situation and your goals. Only by doing this type of analysis and introspection can you know how best to proceed. 

Keep thinking about it. Play out various scenarios, trying to envision all of the potential futures and you will find what fits you best.  Don't expect 100% clarity, as there will be offsets to each possible direction.  Weigh and balance them then make a decision and do it. 

@Jerryll Noorden

It is the internet. Trolls everywhere. I ignore them. 

Note another raised her ugly head and chimed in while ago, in an incomprehensible blathering of fantasy, assuming facts not in evidence, ranting about jibberish as if, they are drunk. Oh well, their loss if they cannot learn from people who offer information and have to insert themselves and their dark motives and problems into this thread. 

So feel free to confront them when they are out of line.

@Jerryll Noorden

You are cracking me up, brother!  I like the way you think and express yourself too. I did not respond to the person you did, because I figured there was some serious mental impairment she must be suffering and I don't pick on cripples. 

You are an example of why Wholesaling is a very viable strategy for beginners. Frankly, I cannot understand arguments otherwise, other than that it is hard. Duh. You could not have stated that better.  And as I stated somewhere in this thread, ALL RE investing is hard usually. That is why we have an opportunity. If it were easy, everyone would do it, and there would be no deals to be made. 

Most people who "try" real estate investing, whether wholesaling or any other strategy, will fail. It is not peculiar to RE investing, it is in any business. And the lower the barrier to entry, the more unqualified people will enter, and create and become the dismal statistic. It is just the way it is.  Wholesaling, unlike most of the other strategies as typically approached, is the lowest barrier to entry strategy, because as we have both stated, one can wholesale without credit, a job, or large amounts of cash as would be necessary for down payment and rehab funds. Therefore, more idiots will try wholesaling, and more will fail. Does not mean wholesaling does not work.

I love wholesaling because it works. Because anyone who is willing to work can succeed at it. There is plenty of information available on the How-To of wholesaling and an avalanche of buyers out there ready willing and able to take them off your hands fast once you find and lock down good wholesale deals. And with the stock market unwinding, over the next 3 to 5 years, there will be an avalanche of money rotating into real estate. The only RARE and therefore MOST PRIZED real estate capability is, as always, going to be the ability to consistently and systematically locate GOOD DEALS.  And that is 95% of what a wholesaler does.  Want to be the guy with all the marbles, whom everyone respects and comes to, be a successful wholesaler and control the inventory for all the rehabbers and flippers or lazy investors who don't want to do the work to find good deals, and will have to pay you for your creativity and effort.

@Chrissy Parsons

Excellent point. I am an online marketer, which is nothing but, a modern version of Direct Response mail. You are right. And though ALL marketing takes some money, the profit from a single wholesaling deal can fund your marketing for a full year. Get started, get your first deal, then treat it as a business and act like it is your job, not a hobby, and you will join the ranks of the "lucky" overnight successes in Wholesaling! lol. 

I like the way you think, putting yourself in the sellers' shoes.  That is a smart and necessary deal-making skill and approach.  Helping others get what they want, will get you more of what you want. You have heard that before, and it will never cease to be true. Business, residential real estate especially, is about people.  So approaching it without regard for the people aspect, will not be very successful. 

@Derrick E.

Exactly.  And this, of course, is why does have an opportunity in RE investing and in ANY other business or profession too. 

The world rewards (pays) people for DOING the things others don't want to do.  This has been my edge in all of my business activities for over 40 years.

Want to find deals with the least amount of competition, buy ones others don't want - the dirty stinking broken down ones that are "too much work" for most people to be bothered with. 

While those types are practicing their "passive RE investing" (aka, known as never buying a deal, or not making any money because they buy from someone like me after I captured ALL the profit to be made), I am plodding along buying deals weekly and they think I am "lucky." Or more likely, that I am of subpar intelligence, working so hard and getting my hands dirty. Yuk. What an idiot. 

I have 4 rentals under rehab right now, and at most times, and I have been "retired" for 20 years. I applaud you, Derek, on your work ethic and attitude. Just remember, you are "making" $50 to $100 an hour for that 70 hours a week you put in rehabbing your own property. How many of your naysayers are earning that much? Let alone enjoying the lifestyle you have as a self-employed business owner. And the control over your future and finances. Plus, you are learning skills and knowledge you will use to find the next dirty hands deal, and snatch it right out from under the upturned snob noses of your "competition."