All Forum Posts by: Rob Gillespie

@Tuval Barnea

I would not do option 3! if you are gonna build new, I would pick a premium area and lot. 

I do not know the price or numbers. It is tough to give you a detailed answer, but I would look at how often it floods and how far the water comes up in the yard. 

Wholesaling it should be your first though in my opinion. Plenty of folks do not care, but with you being newer I would not suggest too many curve balls at one time. 

Good luck!

Congrats! 

My only suggestion is to look for one with more meat on the bone next time.. 

that is a lot of risk for little reward in my opinion. 

REGARDLESS... You did it!!!!!! Great job!

@Christopher Owens 

Everyone that is moving into an area it is because they want a better life

Everyone that is moving out of an area it is because they are looking for a better life. 

My point is, you need to work where you feel comfortable .

Watching the news and reading stats can paralyze ya if you are not careful. 

If a foreign nation had stuff going on like we do in America right now, we would be sending in troops to help and put them on a watch list for travel. With that said, living here in America, It is not that bad! In fact it is pretty freaking great!

I have invested in "war zones" and nice areas, it really does not matter. Just buy right and understand the market that you are in. My son started buying at 13, the only place he could afford was a war zone. He went there and worked on signing leases, meeting contractors an ultimately showing sellers. If I thought it was that bad, I would not have put my son in that type of situation. 

 I hope that helps. 

Good luck! Stay safe! :-)

Skip trace. 

Begin with looking at the name on the property. 

If LLC, look that up with secretary of state

If personal name. Mark it down. 

Next look at tax mailing address. 

Then look up the tax mailing address and see if it matches the owner. 

Then make sure THAT HOUSE has the same tax mailing address. 

Use a skip trace tool like Truth Finder or hire a service. This will tell you just about everything about them and their family. 

look at telephone numbers, addresses, social media. other business they are involved in, etc.. 

Basically you need to be a detective. 

I hunt with a bow and arrow, not a shotgun. I like to take the time to get to know my target seller, then I like to hit them over and over again. 

so many investors spend 20k per month with a postcard, but I think it is too much throwing crap against the wall to see what sticks!! 

Hope that helps

quick math using 50% Rule.

monthly rent x 12

annual rent divided by 2

Net operating income 19,386

paying 320k for this is a 6 CAP

your cash flow after payment is about 5850 per year

487.50 per month cash flow.

Your calculations are more accurate, but I have 30 seconds into mine and we are not far off.

Money loves speed! I can get though deals pretty quickly to see if they are worth exploring. This allows me

to make offers on the spot while other investors are still " thinking about it".

This skill has helped me snag a lot of deals before anyone else.

I think the deal is too skinny to do, but that is just my opinion.

Simply pay them to leave. 

@Matthew Barnett CoStar used to drive me nuts with the amount of calls they would have to verify my occupancy and what tenants were paying!  LOL

Think of your perfect seller...

Older

Not up with the times

Renting below market value. 

Made that building work because they did maintenance and management themselves. 

Owned it for a long time

Owe very little if anything at all. 

Kids are fed up with hearing about tenants there entire life and want nothing to do with real estate. 

Now with that said, what do you look for. Long term ownership. Low Loan to value with very little debt. Low tax amounts. many of the properties will be in a PERSONAL NAME not an LLC.

Now think of the type of letter you would write him/her...

Hand written

first class stamp.

small personal invitation type envelope. 

Tell him/ her that you are looking for a building to buy for your families future and you intend on 

taking great care of it personally.  Etc... 

Relate to the seller as much as you can. Perhaps reach out to the kids though skip tracing with a letter that you specialize in buying buildings from families that have owned and operated them for years. 

This is a game of farming, not hunting. when you find someone, it may take 3 years of letters every couple of months before you get a call. 

Hope that helps. 

@Scott Johnson looking at what you have going, my honest opinion is that it is just too tight to be a deal. 

You are selling a note with a 19 months of seasoning and it is still almost 90%LTV. The 10% is ok, but if there was an issue with payment, the note holder would be upside down with attorney and legal fees.

I would try to get your LTV below 65%

Make sure your borrower has some skin in the game. 

Make sure it is non owner occupied. 

Make sure you are not just lending on raw land. 

Seasoning is less important if the deal is solid. 

I think the risk on this deal far outweighs the amount of potential profit for you or a note buyer. 

That is just my 2 cents. it could work out great. However there is not enough profit to even cover legal fees if there is an issue. 

@Scott Johnson

If I understand you correctly, you are buying a Mobile home LOT? Do you mean in a park? I am a little confused on that. I assume you are buying a piece of land that its outside of a park and the local municipality is ok with you putting a Mobile home on it. 

There is so much to go over on a deal like this, but here is just a basic answer to your question. 

1. Security Security Security. What is securing the note? What is the loan to value. Note buyers want to be sure the money is secured. On a deal like you are discussing, the challenge I would have with buying that note is you are over 100% LTV. if you purchased the property for 16k on the open market, then that is most likely the value. if your note is for 25k, that is great that I can earn 8% on my money, but if I need to take it back, it is most likely gonna sell for 16k again. Which leaves me to my next concern....

2. Is this a consumer loan or a business loan? There is a big difference in paperwork when lending to an owner occupant vs. an investor.  The note with an investor could be a Cognovit note and easier to obtain a judgment in the event of default. If it is a consumer transaction, you will need to have all necessary RESPA docs and in most states a Mortgage originators license to handle the transaction. 

3.Assumning that LTV is good and Docs are correct The story on the borrower is good. Tell the note buyer all about the borrower. Have they done deals before? do they have money invested into this deal? do they have any pending legal issues that could result in a lien on the property? Are they making payments on time? ETC... you get the idea

4. Payment history. Can you PROVE the payment history? is there seasoning on the note? (this means has it been active for a while) How are the payments being collected? Will there be a break or change in payment method to transfer the note or is it able to stay with the same servicing agent?

5. What is the term? Is there a balloon or is it a fully amortized mortgage? Obviously on this one it is a shorter term, but I am seeking in general. I have the opportunity to buy a 30 year note right now, but have no desire to be collecting on this in my 70s! LOL

Hope that helps. I would not call myself a note buyer or broker, but Have done quite a few note deals and been on all ends of the table. 

Good luck!!!

@Matthew Krueger

I always make this joke with one of my good friends in the business. He owns quite a bit of real estate and his kids have a very blessed life. We are often on the phone when he is pulling up to pick them up from their private school and his Bentley and they are upset because the Wi-Fi is not on for the 10 minute car ride home.

I Love telling him to make sure that he at least gives them a couple free and clear properties in the portfolio that will be budgeted towards their drug and alcohol treatment center when they’re adults!

Clearly I am joking and I want the best for my friends kids, but my point is giving children something for nothing and they have nothing to do all day except counter money that is coming in from cash flow can be a dangerous thing.

It goes back To give a man a fish and feed him for a day or teach A man to fish and feed him for a lifetime.

I had my son by his first house at 13 years old with his own money he had saved and taught him how to take over back taxes and get owner financing for the rest.

He is 19 now and has done multiple properties, he is in the middle of two projects right now I’m top of his own property that he’s living in. He is dealing with the problems that come with Tenant /Buyers and contractors.

I love watching him have to deal with problems and get them solved to keep the deal alive.

My point is giving a hand up is a good idea but giving a hand out can be more devastating than rewarding.

Good luck with everything and if you want to keep on the path of giving away properties, I am up for adoption LOL