All Forum Posts by: Kevin Cardinale

My awesome hard money rental property empire.

Ok, first things first, I have nearly no savings, no verifiable income, but lots of heart :mrgreen:

My idea is that I would find a property, oh let's say it is asking for $40,000 and to move a tenant in requires $15,000. ARV would fetch a fantastic $85,0000.

So I go to a hard money lender and I need uh, [trying to remember this deal off top of my head] $40,000, plus $15,000 = $55,000 [yes i have to do math as i go] the LTV would be 65% [right?]

I rehab it up, trying to do some of the repairs myself [that's like a really big joke, at this point] but come in right at $15,000 as projected. I move a tenant in. Then I waddle over to the real bank and I somehow show them the tenant, rental agreement and they pay off the hard money loan, and pray to god I somehow walk out with some money as well.

Rinse / repeat?

Someone said, I'd fail on 2 instances:
1. hard money lender would never lend me [ a noobie ] anything, except a phone to call someone that cares
2. the bank wouldn't care if donald trump were renting from me, because I have no proof I exist... financially speaker.

They did suggest however, that I might snatch a Vegas investor and parade him in front of the hard money lender and promise them, he's the one doing everything. But, that still doesn't cover the bank.

I know I got flamed for saying 100 buyers on your list, but the reality of the times can sock you in the mouth if you're not careful.

Here's the scenario. You are dealing with a 2 bedroom / 2 bath condo, in the hills. You know you have a great deal and could stand to profit $15k easily on the deal. However, you only have 30 people on your list. 20 of them will not even look at a condo. Of the 10 left, 5 will not deal with anything less than 3 bedrooms. You then call your sure fire, 5 motivated cash buyers. Guess what? They are all in the middle of 20 transactions and are strapped right now.

While it might be great to think having 5 buyers is sound judgement, with predictions of a double dip and another housing correction, your list might become useless. Sure less is more sometimes, but sometimes, just sometimes, more is more.

Well, real talk, I am not out of the woods just yet, but I did reason with myself, that I do need to do something if I'm going to meet my goal of having 5 houses by year's end. [ and I can do it, you never know ] With that said, I pitched hypotheticals to "friends", who secretly are my list. I'm sure I made mistakes on the pitch and since they are "friends" they aren't going anywhere. I'm passive aggressive anyway, so no one ever knows what I'm doing to them.

I have a list of 50 houses I am looking at. I made about 10 calls off of that list. I got 3 calls back. of that 3 I got 2 calls that were of any importance. 1 was from a lady that is out of her mind, but I'll call her later, because the house is just sitting there, in the middle of a neighborhood that has nearly no passing traffic.

The other was from a realtor who spoke with me for a solid hour, 30 minutes of which he kept returning to how he works with investors ... I think he was trying to get me to admit I was an investor. Thanks to Ibrahim, I'm going to call him back and ask him to lunch and get his list of investors. He literally bragged about his investor list for a solid 30 minutes.

At this point I need to refine my pitch so as to completely overwhelm my "friends" with an offer they can't refuse, but not one that would render me in no better position that I am now. [ I am pretty smart at times ]

This is how I handle most things. I'm a circling shark.

And, yes, I need encouragement, and sometimes a swift kick in the pants. Understand neither of those is equal to a beat down, which is what most Americans and worker drones do to each other. And, I give as much as I get. I cheer on those I think just need cheering. I critique those I think are slacking. I encourage those that just need a nudge. [ in subjects I know a lot about, and this is not one of them. ]

Curt Davis that is exactly what went through my mind when he offered to give me advice. I was a bit taken aback.

On a deal like I said, how would I generate the 10%? I would hope to have a nest egg buffer, since I'm starting from zero. I would have to find a house that's ready to move in, with deep discounts, which sounds like an oxymoron to me.

I'm just not understanding this thread. Is he saying he is buying a thirteen hundred square foot, four bedroom, one bathroom house? And, offered to pay one thousand five hundred dollars for it?

Did I Blow It?

So there I was all psyched up, because I had been watching about 5 hours of rental videos on youtube. The last video I saw before going to dinner with my friend, was about an investor on here, who had helped his best friend, buy and rent out, his first house.

I thought I'd run the deal by my retired friend, since we were going to dinner. I hop in the car and say: "Bill, what if I bought a house for $80k with only $6k down and a cash flow of about $300 / month, over and above costs, i.e. profit." He says what are you giving the investor? I says "I'd pay them back the downpayment with interest and the rest of the term would just be mine basically."

Mind you, I have virtually no idea what I'm talking about. I am just talking to a friend.

He says it's not a good deal.

We pull up to the restaurant and he brings it up again, "how much interest." I say 4%- 5%.

I have no idea what I'm saying and it doesn't dawn on me he is still thinking about the deal.

He says again, "that's nothing."

After dinner we are going to karaoke, because I should be a professional singer and this is mainly why he hangs around me. Again, he turns to me and says, "that interest rate is bad, I can make 8% on the stock market." I say, fine 10% then.

Still I have no clue what I'm talking about and it STILL hasn't dawned on me that he is bringing this up.

We left it at that, and we haven't talked since then. Mind you I don't even have a house in mind, nor have I even searched for such a house.

My tiny brain is doing this calculation:
1. I have no money.
2. if i could find someone, like Bill, an angel investor
3. Bill could put both our names on the contract,
4. Bill could pay the down payment
5. I would be responsible for getting Bill the down payment plus interest back
6. I would take care of the house / tenants by myself after that

That's what I presented to Bill and it seems, although he immediately said no, that he would go for it. And, if Bill would go for it, then maybe someone else would go for it right?

I have no idea how to make such a thing attractive to an angel investor, or any other investor for that matter.

I am still in the learning phase. I am a bit ... how do you say ... neurotic ... retentive ... perfectionist, I have to know everything before I venture into actually doing something. Mind you, that does not mean that once I know it, I still won't do it, like others. Once I know something, I will do it in spades. And, I don't mean expert level. I just need to know it to a degree I feel comfortable with not seeming like a fool in front of people.

I am sorry if this is already somewhere. I did look, and did not find it.

I was perusing my documents folder, to see if I had left something undone that I was supposed to do, which happens all the time. I ran across a document I had obviously copied and pasted, Entitled: 12 Steps - How to Flip Houses? Or How to Wholesale Houses? No MONEY DOWN.

I punched that into google and it came up, of course. http://www.313realestate.com/blog/?p=999

Presented in full below. My question is, is this a good business plan, and is it really $10k that you are only making? I really don't know what to expect, since I have yet to wholesale one house, or any house for that matter. Regardless of the amount is this a good business plan / practice?

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wow I.S. you are full of ideas. That is an amazing idea. I was talking to a realtor the other day and he was bragging about all the investors he works with. Had I had your brain I.S. I would have snatched up his braggadocio and gotten his list from him. He went on for a good 30 minutes talking about it. But, I am sort of "blond" at times and I did not even think about it. I just politely listened.