All Forum Posts by: Shiloh Lundahl

@Chris John that's the color it was when we got it. My wife thinks that we should paint it so it's not so bright, however, I thought it looked awesome. In fact, this is how I wanted to do the kitchen but my wife wouldn't let me. She thought it would shrink the pool of buyers.

This thread is full of a lot talk and opinions. Let's look at actual data to see if it is a good time or not to get deals. Here are my last 2 deals that I purchased:

DEAL 1

I bought this house for 185k

https://www.zillow.com/homedetails/834-W-Cholla-St-Casa-Grande-AZ-85122/67430080_zpid/?utm_campaign=iosappmessage&utm_medium=referral&utm_source=txtshare

I put about 15k into fixing it up. The closing costs to purchase were about 7k and holding costs have been about 5k so far. I have it on the market for 275k for sale. I am also offering seller financing with 10% down or a lease option with a 5k option fee.

If it sells on the market with only 4% in closing costs then I make about 50k but I have to pay more in taxes because of short-term capital gains.

If I do seller financing then I get $27,500 up front I make about 56k over a 3-5 year period but I have no money left in the deal and I can get another deal with their down payment. 

If I do a lease with the option to buy I get 5k up front but I have to leave about 10k into the deal but I make about 98k over 3 years if they exercise the option. If they don't then I can do another lease option and make more or I can sell it on the market at that time and only make 86k.

DEAL 2

I bought this house for $206,500. We put about 15k into getting it cleaned up and replacing the carpet downstairs and painting the interior. 

https://www.zillow.com/homedetails/1649-W-Wilson-Ave-Coolidge-AZ-85128/71688582_zpid/?utm_campaign=iosappmessage&utm_medium=referral&utm_source=txtshare

Closing costs and holding costs were about the same as the other $12k and I have it on the market for $285,000. 

it is also on the market for sale or seller financing or lease option.

Sales estimated profit would be anout $50,000. 

Seller financing profit is estimated to be about the same as above 56k with no money left in the deal.

Lease option profit is also estimated to be just under $100,000 between the option fee, the debt pay down, the cash flow, and selling it 10% higher than today's value.

These deals were harder to find in my market a year or more ago. Now I have people calling me up asking if I will buy deals like this. 

I would say that deals are out there for those that have more experience and skill. But I would also caution against putting too much in the market right now because things may take longer to sell or you may need to switch strategies and hold on to the deal longer and leave money into the deal. So I would say whatever you decide to do, make sure you have enough money in reserves to handle things when they don't go as planned.

@Peter Tverdov how do you source your deals?

@James McGovern when I was new to real estate investing I used to think the same thing. But after purchasing hundreds of deals through wholesalers, I've learned that it is important that everyone gets paid and that I have a good relationship with wholesalers . It isn't up to me to determine how much a wholesaler gets paid just as much as it isn't up to them how much I make on a deal. If the deal makes financial sense I would say go for it regardless of what a wholesaler makes. Wholesalers have made me millions of dollars and they are a vital part of my business system. So I treat them as such. When a wholesaler send out a deal and I sent them a text back saying that I want the deal, I want the wholesaler to have the confidence in me to tell everyone else that the deal is no longer available even before I get the earnest money in. 

@Travis Timmons, Nate's reply to you is exactly what is wrong with new investors who want coaching but don't want to pay very much for it. When you basically offered to be his mentor for free he stated, "I may take you up on that  down the road." He doesn't understand what is being offered and he is undervaluing it. His response should have been, "Really, you'll take me under your wing and show me the ropes. I'll rearrange my schedule and do whatever it takes to learn from you." But his response wasn't that. It was more like, "Gee thanks Mr. I'll keep that in my pocket in case I need it in the future.

This is what I have learned by both paying for coaching and by providing mentorship and paid coaching. And I am going to separate mentorship and choaching. Mentorship isn't something that is paid for. It is something that just happens organically or spontaneously through relationships. It's looking up to someone and learning from them through proximity. There is no contract and no expectations that must be fulfilled. On the other hand, coaching is a specific roll with expectations and often compensation. The coach sells a student on what they can expect to learn from them during a specific timeframe. The student realizes or should realize that they are buying education, services, products, or experiences. There is usually a contract either verbal or better, a written contract defining expectations. 

With all that being said, most people who are willing to pay for coaching tend to take it more serious than those who don't because they exchanged a store of value (money) for another store of value (knowledge). Yes you can learn from what you read in books. However, books on real estate often provide you with the ingredients of a good meal, but they don't provide you with the directions on how to use the ingredients correctly in order for the meal to turn out the best that it can. And if you misuse the ingredients you may come up with a dinner disaster.  Having a coach his gone through the process over and over again is like someone alongside a student driver, helping them feel comfortable behind the wheel. Can you learn how to drive from a textbook? Technically, you probably can. But until you get behind the wheel, you're not going to know what it feels like to drive that car. And having three teenagers, I definitely see the value in having somebody alongside of them, helping them get the feel of how to drive.

Hey @Jeffery Barnes, this may be a pretty risky deal. Is that specific area in Apache Junction zone multifamily? Because if it's not, and if you're putting a lot of units on one parcel, then it will be hard to get the bank to refinance you out of your initial loan. Also, with regard to short term-rentals, Do you have a lot of experience in that field? I don't know anybody that is doing short term rental in Apache Junction. It's not really a destination place. I've owned probably 30 different houses in Apache Junction over the last 10 years and I wouldn't think of it as a vacation rental market. 

It's possible that they posted it on the wrong forum and it was removed by a moderator. What was it you were hoping for with the on-demand coaching?

@Ethan Tomlinson you don't have to have a lot to offer. Here is an idea, find some investors in your market that have between 3 and 10 properties. Reach out to them and say, my name is Ethan and I'm pretty young but I've been learning a lot about real estate investing. I was wondering if I could treat to to lunch within the next couple of weeks to ask you about how you got started investing in real estate. You will likely get a good response if you approach it this way. 

@James Wise I get the frustration of working with a newbie investor. They have read or listened to real estate investing information and have tried to piece things together to do a deal and make money. But their problem is, they don't know what they don't know. And then, when they start to see their profit disappear, and then their own capital disappear, they start to panic and go into survival mode of every man for himself or I need to stop the bleeding to save myself. They don't have the context of this is just one deal and that developing and maintaining relationships will bring a better ROI then burning relationships over one deal gone bad.

This is part of their learning curve and they are responding out of fear like most humans do in similar situations. I'm not saying it is right and clearly it is not the best way to handle the situation.

I think in order to not get strung along and then eventually dropped without getting paid for the services provided, it is important to define roles and go over expectations with new invesetors. Especially on what to expect if things do not go the way the investor hopes. 

This may just be a lack of experience and having unrealistic expectations rather than a fundamental flaw in personality. 

@Michael S. Of course it shows good manners to respond thanking the person who responded for their time. We're in agreement there. But honestly, it doesn't bother me when someone doesn't respond or show gratitude for my responses to their questions. When I post an answer to someone's question, I try to take the opportunity to highlight my experience or knowledge in an area for whoever else reads the thread. It helps establish credibility over time. Which in turn has created a good return on time invested for me. I would have to say that I have probably made millions of dollars through the personal connections that I have made though BiggerPockets. Whether it was from attracting private money lenders who have lent to me on deals so that they could learn while they earn interest on their money. Or from people who have paid me to coach them to on deals. Or people I have taken to lunch that have shared a nugget ot wisdom or a golden contact with me. So for me, when I make a post, this one included, it often has two purposes, respond and contribute to the thread, as well as establish credibility in the areas I offer services. That way, I never feel Iike it was a waste of time.