All Forum Posts by: Sean Williams

Surrounding yourself with people smarter than you...what value can you bring to them? BRRRR strategy has been immensely helpful in terms of accelerating growth.

My hope is that sharing this might motivate another BPer that was in the same position I was just 12 months ago (or even a couple years ago for that matter).

It's hard to believe it's already 3 weeks into 2020...things have been moving SOOOO incredibly fast already while our team has been in the process of finishing the refinance (BRRRR) of 3 single family homes, along with closing on the acquisition of a commercial/small multi-family apartment (13 units total) at the end of this week. It just suddenly dawned upon me that I hadn't quite taken the opportunity to look back on 2019 as a whole and simply digest everything that happened - definitely a B-LU-RRRR (see what I did there).

For the majority of the year my "day job" encompassed managing a 15 agent brokerage focused mainly on assisting others with buying and selling their primary residence, before eventually switching brokerages and starting a new team at my current brokerage. The brokerage I previously managed finishing the year with 173 closings and over $40 million of sales volume (mind you this is Louisville KY with a $200k ave sales price). By night (and afternoons and weekends and lunches and dinners and lost sleep), my investment partners and I also managed to successfully BRRRR 7 homes with exactly $0 out of pocket - if you don't count gas and LOTS of coffee. I realize for some on here that is child's play, but for all us other mere mortals, it's a reminder that you gotta start somewhere. Here's my recount on how it all happened:

First a quick backstory: Between 2014 and 2018 my friend and I managed to purchase 4 single family rentals using money out of our pockets for down payments using mostly commercial financing, along with some private financing...plus lots and lots of sweat equity. This included a house going up in flames, a nightmare of an insurance claim and then eventually a 1031 exchange into a dream-of-a-student-rental house. Since that time we managed to partner up with a much more seasoned real estate vet that has provided invaluable insight, mentorship and fuel to the house-buying fire.

NOTE FOR NEWBIES: this person that I consider a business partner, and more importantly a mentor, came directly from BiggerPockets. Not because I asked him to mentor us, but because I brought him a handful of investment deals from the start. This led to us "talking shop" for hours on end (cause who doesn't love talking real estate?) and inevitably building a great level of trust - over time - as in years. AKA - figure out how you can bring value to others!!

Eventually this person brought us a wholesale deal in late 2018 (he made $8k wholesale fee) and we bought it using his financing with a 1st lien position at 12%...yes approx. 8% higher than the going bank interest rate. We ultimately BRRRR'd that house in 3 months to get him his money back, and a house with $0 out of pocket (light bulb!). Lesson learned: The cost of the money was irrelevant to the value of trust that was established in this deal. Btw, every month we are technically making infinity returns on that house :)

From there we began to realize that everyone else's strength brought a unique value to the table, which ended up with us forming a partnership in Spring of 2019...which then snowballed into us BRRRR'ing 7 single family homes with ultimately $0 of out pocket. And yes for you "negative-nancies" out there, we do have to split the cash flow and equity (and debt)! But 50% of a watermelon is better than 100% of a grape as Mark Cuban would like to say.

Here's the financial snapshot:

~$650,000 worth of property
~$520,000 worth of debt service
~$130,000 worth of equity ($43,300 each)

~$1,300 cash flow (after PITI)
$0 out of pocket
Infinity ROI
Infinity knowledge
$5,000 set aside for future repairs (money from bank refinance)

Lessons Learned:
-Plumbing is one of our largest expenses
-Check all the electric, worth the peace of mind
-Granite is worth the extra cost even on <$100k homes (better ARV, tenant proof and better tenant)
-Section 8 isn't so scary if you've got a good tenant
-Having a truck is a game-changer!
-A good contractor(s) are invaluable
-A relationship with a local lender pays dividends
-Make mistakes the sooner the better
-Never know who you're going to rub shoulders with, stay on your A game

Here's a few pics:

@Leslie Lovelace first and foremost I am not an attorney and would suggest seeking legal advice. If you want the names of a few reputable attorneys, just send me a DM and I'll pass another their information.

With that disclosure out of the way, I will share with you my best guess after practicing for 11 years in KY:

1. To my understanding, just because the contract does not explicitly state specific performance does not necessarily mean that those means as a remedy are not available or enforceable

2. How does your contract read in regards to closing? If its "time is of the essence" then essentially your closing deadline is a "drop dead date", however if this language is not included, KY allows for an unwritten "reasonable" extension of timeframe for closing (what's reasonable 1-2 weeks?). If the buyers are still pursuing then one could likely argue the contract is still in effect.

3. Most contracts have a section in regards to how to handle disputes such as "mediation and/or binding arbitration" section for such matters

Keep in mind that when you sign a purchase agreement, and all contingencies have been fulfilled, the purpose of the contract is for both parties to perform and be protected. With each piece of individual real estate being a unique commodity, it important that when executing the contract you know what you are signing up for and what the ramifications could be if you don't perform. Other things most people forget too, depending on the transaction, include:

- real estate commissions that may be due
- inspection, survey and other due diligence fees incurred
- legal fees recouped for the party bringing the claim (should they be proven correct) - plus you have to pay your own

At the end of the day, don't stick your head in the sand if you aren't sure...get with an attorney that practices real estate law!!!

@Dana McMahan appreciate the update on this, I'll have to add them to my list for future reference! Thank you

@Fredie Robinson glad to hear you had a good experience with Crawlspace Doctor. I was basing my review on the fact that a buyer had sent them out for a 2nd opinion on a deal where I was representing the seller. They ended up recommending a total encapsulation for the crawlspace and provided a quote - however the crawlspace was already encapsulated (aka they didn't actually look at the space). So maybe just caught them on a bad day!

@Dana McMahan ohh you have to love crawlspaces, pretty much always bank on issues like this with crawlspaces. Obviously stopping the water source is important, but also conditioning the space is truly the only way to prevent it from coming back in the future since crawlspaces are open to the exterior elements. This route costs significantly more but is not a temporary fix either...just something to consider when getting prices is the actual scope of the work to be completed.

The 2 I rely on usually are AquaLock and Black Diamond. I know there are a handful more but in my experience for the cost vs. scope vs. warranty, these 2 are the best in the business plus they are very reputable. They are usually booked out 2-3+ weeks though.

Ice Blasters is another remediation company, but keep in mind they are usually only removing the mold and not addressing the core issues - water intrusion and unconditioned space. I would NOT use someone like the "Crawlspace Doctor" either - wayyyy too expensive. Best of luck!

@Matt Everling there's multifamily all over the city, so if you're strictly seeking to meet the 1% rule then some areas to consider would be:

-Southern Pkwy/3rd St/Iroquois park corridor
-Churchill Downs,Taylors Blvd, UofL areas
-Shelby Park, Old Louisville
-Shivley, PRP, Valley Station
-West Louisville, Portland

Certainly theres other opportunities if you go a little outside the city to Mt Washington, Sheperdsville, Shelbyville etc

After doing some digging, it appears to be the same case here...affidavit of affixation or conversion. And then a structural engineer will be required to verify. Appreciate the input!

Hey BPers,

I am currently working with a client looking to purchase a lake house on Nolin Lake just south of Louisville, Kentucky. The one they want is a manufactured home that has been secured to a poured concrete foundation with a basement (really nice and rock solid!). I understand manufactured homes are considered personal property, not real property, so I am just simply trying to navigate financing options for them, as well as, figure out if there is a way to convert the personal property to real property since its really an
"improvement" at this point. I have heard something called "retiring" the title?!?

Also, I have heard of a couple lenders that will finance these kinds of deals, but wanted to get your alls input. Thanks in advance!

@Jacob Huelsman greetings to the forums from a fellow real estate broker and investor in Louisville, KY. Would love to hear about your experience in New Albany, that is foreign territory to me!

@Rich Somers Hey Rich, just a couple of thoughts from a Louisville, KY Broker:

1. The purpose of disclosing to a seller how you plan to pay for a property is so that the seller can accurately evaluate the strength of your offer vs. other potential offers. If you intentionally tell a seller cash but intend to use financing, that is called FRAUD. I don't recommend going that route! Also, cash means liquid cash, not HELOC etc. Put yourself in the seller's shoes, I am sure that would light a fire under your a$$ if someone tried to pull that on you.

With that being said, if you intend to actually pay with cash and then circumstances change where maybe financing makes better sense, you CAN change your financing in the middle of a transaction as long as it does not adversely affect the seller. Meaning it cannot change their net proceeds and/or delay closing. If this did happen, it is always advisable to keep the seller in the loop in regards to the change in financing terms and get it in writing...they can't necessarily stop you from doing it, it just can't negatively affect them.

NOTE: all of this partly depends on the contract you are  using, but regardless, deceit is never a good look and will likely cause a long-term ripple effect. Here is Louisville, word travels fast!

2. It is advisable that you let your current commercial lender know about any other deals if the new deal is going to close before your commercial deal. Otherwise I would try to delay closing until your commercial deal is closed. Usually there is some type of form or affidavit at closing stating that "your financial status or position has not changed since you applied for the loan".