All Forum Posts by: Robert Leonard

I wouldn't mind joining this conversation, but all I see on Rache's posts is "this post is awaiting verification." 

Welcome to BP @Jordan Cardwell!  I recommend you listen to the podcasts starting at number one until you've listened to them all.  They are like short courses on different strategies and you can learn a lot from them.  Take notes and look up the things that don't make sense at first.

As far as making real estate your full time job, that's a great goal to work toward.  If you get a job in a related profession you can start building contacts and learn while you earn on your job.  Think mortgage company, a large property management company, a mortgage or commercial business related position at a bank as the type of places that have connections to the business.  Having a job is the first part of fixing your no money problem.

Otherwise, it takes determination and some know how.  It's all pretty simple but it is not easy.  See you around BP!

Congratulations on your deal on the duplex.  You would probably negate any expenses with the income from your GFs rent if you tried that.  The interest you pay on the entire property is deductible in most cases.  Run the numbers and ask your tax advisor what's your best option.

Well @Account Closed, it sounds kind of messy, but unless you elected to have your LLC taxed as an S Corp, ( you would know if you did that) your LLC is a "pass through entity" and all of the income and expenses pass through to you individually on your tax filing. It can cause problems with your asset protection when you don't keep things separate between what's personal and your business. But otherwise, on the tax side of things, it's pretty inconsequential. You can still expense the real expenses related to the property/deal to the property to reduce your tax bill.

Get your tax and asset protection advice from your own professional advisors, but generally speaking, you are doing business with an LLC, but effectively negating the LLC and doing things like a sole proprietor. That means if something goes wrong, and you get sued, you have an asset protection problem. That's why it's important that you get your business in order and keep your business and personal matters separate.

Whether or not you can keep 30k or some other portion of the proceeds of your deal is a matter of how it fits in your overall income picture for the year. You could have 38k proceeds from the sale and still have loss money on the deal. Yes, you need a CPA to help you figure that out. A lawyer will help you understand how to keep your LLC activities separate from your personal activities to maintain your asset protection.

Huge positive!  When investors want to build where you are and the lenders will finance it, you are in a very good location.  The term is progression.  Under the principle of progression, the value of a property increases when it is surrounded by or in close proximity to higher valued properties.  You just have to maintain it and make upgrades over time because the location will warrant the investment.

Welcome to BP @Ryan Terwilliger!  With your background, you have a huge advantage.  Project management is a big piece of the rehab side of this business and you should have contacts and know how that will serve you well in your investments.  However, I would recommend you seek an investor who is looking to hire a project manager and you can put your construction know how together with their investing know how and compliment each other. 

Working as apart of a team could be a great way to start and learn the business.  It may work out that you continue doing business that way if you and the investor work well together?  Partnerships are tough to make work, though.  So being an employee or even getting paid as an independent contractor working on a percentage basis for projects can be a good way to "get your foot in the door" of the business, without learning it all the hard way.

I recommend against getting started and learning form your mistakes.  That's how you handle a hobby.  If this is your bread and butter, learning from mistakes could sink you and I think that's an unnecessary risk.  Yes, there's risk in everything we do, but there's a big difference between calculated risk and careless risk.

Good to see you keep moving forward toward your lofty goals @Mark Ferguson!  Sounds like a great deal!

NO CARPET in a rental listing is a plus.  However, bedrooms get less traffic and carpet doesn't wear out like in other higher traffic areas.  If you go with carpet, avoid the temptation to go cheap on the padding.  Cheap padding crushes and makes the carpet look worn faster.  I have a unit I just filled that I had the BRs steam cleaned (like I did 5 yrs ago) and there are only minor blemishes that practically disappear when the room is filled with furniture.  Its a Berber and holding up really well after 10 years and the 3rd family.

I removed two rooms of laminate and I'll never use it again in a rental.  My new preference is vinyl plank in wet or high traffic areas.  A little A/C leak caused a major failure of the laminate.  Anything that has zero tolerance for ever getting wet, is no good for a rental IMO.

One more point.  No matter how many times you see it written, there is no such thing as "laminate wood."  There's solid wood, engineered wood and then there's laminate.

 Only in the wildest of imaginations can you expect to find the same thing/needs in two different properties of the "same type & area." Some will need only paint and carpet.  Some will have been lived in by well or poorly managed animals and some by people who live like animals.  Some will be remodeled and some will be all original.

While I think the expression, "it's not rocket science" is way overused in REI, it doesn't mean you don't have to think and be smart about how you do the business. The posters before me gave great advice that I think will help you understand that $/sqft will never be "tremendously accurate."

Welcome to BP @Keith T.! Here' my $.02 from a couple hours to your West down I-10.

"Most hard money lenders seem directed towards individuals who cannot obtain conventional loans (for people with no other options). Is this just a misconception on my part"

I have to disagree with that and say that's your misconception.  HMLs are a different option. Fast, efficient, and flexible.  I'll paraphrase an ancient saying, "he who holds the gold, makes the rules." HMLs have their own rules, some want more information, experience or other things, than others.  The best HMLs offer investors the opportunity to operate at high volume and bring a high level of expertise to the table.

"I have no problem getting financed by a traditional bank, so I'm only interested in hard money for the flexibility and speed. Are there any other advantages to hard money that would allow me to compete with full cash offers"

Proven consistency of closing deals with HMLs or otherwise, is the only thing that might allow you to compete with real cash offers.  When offers line up, cash is king.

"I've also read advice saying get the deal before finding funding. I work in the finance industry and this seems counterproductive to solid due diligence. Any advice on finding hard money BEFORE having a deal in hand?"

That's a wholesaling strategy, not a buying strategy.  I can only expect that your objective is to buy, since you are looking for a lender(s).

"I would like to get some estimated deal sheets so I know what to expect."

What do you mean by deal sheets?

"Do hard money lenders give more favorable terms to borrowers with solid financial history, or is it all about the deal?"

If you are thinking in terms of your FICO score, not so much. Some look at it, some don't. If you are talking about REI experience, definitely. Again, HMLs have their own rules and from one to the next you will find as many unique sets of rules as you'll find HMLs.

Your title to this post mentions private lenders (aka PMLs), and all of the content focuses on HMLs. The terms do get used interchangeably and I think that leads to the misunderstanding that they are one in the same. IMO a PML is someone you know through personal relationship whether its a new acquaintance or a family member who has money to invest. That PML funds your deal(s) at a rate that's better than you can get from HMLs and better than they can get in most other fixed income investment options. The PML might not know very much about REI and they don't need to. But you sure better when you put their money on the line.

HMLs on the other hand, are in the business of acting as lenders to REI. They bring a whole different level of know how to the table and when they reject a deal, you will be wise to take note of any of their observations. They are real REI experts who have maximizing profits and minimizing risks in REI down to a science. That's why I use the terms accordingly.