All Forum Posts by: Rusty Thompson

The best advice I have seen is to partner with a investor in the area you are interested in investing in. Then you have someone in the area who is vested in ensuring your acquisition is successful.  

If you can't find cashflow properties in your area you might consider looking somewhere else. In my market conventionally MLS properties will not cashflow. But with persistent searching I have been able to find properties that I could rehab and rent, that will cash flow. I acquired the majority of them with HM. Fix them up, refinance into conventional, then rent them out. A good way to locate them is VIA Auctions, Direct marketing & whole salers. The only caveat is you need to know your market & how to estimate rehab costs to know it is a good deal.

The question on how much stake to give your cash partner depends on the exposure. If he wants to invest in the project & is will to take half the risk, then he is entitled to half to profit. If it is a loan, that you are personally guaranteeing then I would give him the same rate you would give a HM lender. In my area I am getting 9% for a 5year balloon, 10% down and 5points up front. It might be different in your area. But worth checking into. Either way, If I was you I would reduce his exposure by using his money as a down and financing the rest with HM. That way if any deal goes south, the loss is only a percentage of his total.

I first considered getting into real estate when I was 20. Everyone in my life told me about how much of a dead end it was & convinced me to be afraid of success. It took me a decade & a major life changing event to get into it. It is one of the best decision I have ever made.

Welcome. I thing Oregon is a great place to invest. I'm sure you will do great.

What kind of return it your money partner looking for? What kind of payback period does he want?

Personally, I think you goals are admirable. I know I started 3 years ago with very little knowledge. Your doing it right by starting on biggerpockets. I wish I had known about this website before I bought my first couple deals. 

A 5 year plan that starts with a 100k bank roll is a great place to begin. I also have a 5 year plan, but could only pull 14k out of mt 401k. I leveraged it to buy 3 houses right out of the starting gate. Was it a good idea. Probably not, but I learned a ton and my equity position and cash flow from the three is amazing. 

Each path is different & I don't know your area. If things cashflow were you live, my first step would be to use a 5% loan to purchase a cash flowing 4-plex that you can live in and manage yourself. Rent out the other 3 units & rent the extra rooms out in the unit you will be living in. It will give you the experience you will need when you are managing multiple units, allow you to live rent free & allow you to make some extra money. There is also nothing like a home loan to skyrocket you credit score. 

In the mean time decide how much you need, to do REI full time and if you can acquire it with the 100k. And also if landlording is for you, because it isn't all Unicorns and Rainbows. If it is, read some of Ben Leybovichs articles on Investing in Multi-Families. Maybe you will decide that Flipping is really what you want to do & you realize that landlording isn't all its cracked up to be.

Just some thoughts

You could work backwards. Figure out how much a PM would charge per unit in you area then determine how much it would cost for onsite managment. When the cost of onsite management approaches offsite, then the convenience of onsite becomes affordable. Another aspect you can consider is that you onsite could also manage any offsite properties you have.

I'm not saying you won't find one, but I have never had any luck locating a agent who can find a better deal than myself. The two problems I have faced with Agents are.

They are interested in closing deals not helping customers. If you spend to long find a good deal, or don't take there advice on what they think is a good deal they will move on to another client. 

There business is built on relationships with other Realtors. I have yet to find one that is willing to damage their reputation by sending out a lot of lowball offers they don't think will get accepted.

I have moved away from the idea of a buyers agent. If you are mainly interested in properties of the MLS. Search for yourself. Check auction sites. Call around. Get experience in the markets you are interested in investing in so you know if a deal is good or not. Then approach the selling agent and have them represent you. If you are investing out of state then find a partner in that area and go 50/50 in with them on local deals. It is a strategy that a couple investors on this site use & I really like it.

@Nat C. @Sam Leon I don't use a buyers agent for, I'm sure, the same reasons that you do. I changes the dynamic of the relationship. If the sellers agent is suddenly going to double their commission they are going to be very motivated to close. I know far a fact that I would not have 2 of the 5 deals I have done if I had used my own agent. What the selling agent did was bad business, but I feel its about as unethical as using doubling the selling agents commission. Either way they are being bribed to make sure that your offer is presented as in the best interest as the seller, that you get "premier access" to the property & that they are going to insure utmost customer service. 

USE THE SELLERS AGENT WHEN BUYING REAL ESTATE

If, and when I decide to sell my properties I will put it in the contract that the selling agent can not represent the buyer or receive a referral fee from another agent. There is no other way to keep grantee they are working in your best interests.

As far as advice, I wouldn't giver her a extra percent. I usually negotiate a percentage of the commission towards my closing costs. Its technically illegal in my state. But it can be worded in such a way that the funds are not coming directly from the agent, so it works out. They still get 4.5% and I save 1.5% on my closing costs.

If I remember correctly there is a lot of good information on Note investing from you self directed retirement account in this podcast

POD CAST

There is a lot of information about what you are going to do, but not a lot of information about why you are doing it. Define your goals first, then go from there.