All Forum Posts by: Shiloh Lundahl

@Tyler Garza disregard everything I stated. It's too complicated for someone who is new. Good luck. You got this. 

@Travis Timmons Do you think it would be better for me to explain how to actually do it for the benefit of him and others or just state that is is too complicated for him? 

@Tyler Garza the rehabbed credit is negotiated at the time you buy the property. For example, if I buy a house for $100,000 from a wholesaler that should have a market value of $200,000 after I finish putting in $50,000 to repair the house, then the appraiser and the bank penalized me by giving me a lower loan for getting the house so cheap. In fact, the appraisal may come in lower than it should and the bank will likely give me a loan for only $120,000 which is 60% of what the value should be instead of $150,000 which is 75% of the value.

The bank does this because the bank doesn't want me to get all of my money back out of the property. They bank believes it is more risky for them if I don't leave some of my own money into the deal as a down payment. So rather than buy the property at $100,000 and then put $50,000 into it in repairs, I may tell the seller that I plan on spending $50,000 on repairs to fix up the property and I would ask the seller to sell me the property for $150,000 with a rehab credit of $50,000. The end number for the seller is the same. But now when the appraiser looks to see what I bought the property for, it shows that I closed in the purchase at $150,000 instead of $100,000. So after I put the $50,000 into repairs the appraiser and the bank do quick math and and add $150,000 plus $50,000 and they look at the comps and then they give me a value of $200,000 and I get a loan for $150,000 without needing to wait for seasoning. 

This is a strategy that is used at the onset when the property gets purchased initially from the wholesaler. Amd in order for it to work, the seller, wholesaler, and the title company need to all be on board with it and an addendum to the contract outlining the change in price needs to be created and signed. The verbiage could be something like: "purchase price to be $150,000 with a $50,000 rehab credit,"

It is easier to have someone walk you through how to do this than to try it on your own for the first time. Unless you know what you are doing and have confidence in the process, it will be hard to get the buy in from anyone. 

@Tyler Garza a couple of ways of accessing wholesale lists is going to Facebook groups and searching for wholesale groups or real estate investing groups for the area you want to invest in. Then post something in the group saying "I am an investor looking to buy properties in (insert specific cities)." Then state, "If you are a wholesaler, please add me to your wholesale buyers list."

You can also go to Google and type in "real estate wholesaler in (insert specific city)." Then go to the different sites that come up and find where it says contact and then send them a message asking them to add you to their buyers list.

A wrap mortgage is an advanced technique that a title company that works really well with investors can help you create. It creates a new mortgage around an old mortgage. it's like seller financing when you have a loan in something. Then you get a servicing company involved to service both loans to make sure they get paid.

The buyer in a wrap mortgage is just as protected as a buyer in a regular mortgage. And if the buyer defaults and stops paying, then you just foreclose on them just as any bank would foreclose on a buyer who stops paying. You are still in the hook to make your underlying payments though.

The issue why most wives don't like this strategy is because they have to move into an ugly home that will be a construction zone for the near future and they have a hard time looking past that. Not all wives are like this though. Just most that don't have a real estate investing mindset. 

A good accountant can determine how to account for the 70k received in the best tax advantaged way that makes sense for the transaction. For instance I created a partnerships on one of my cabins and I sold two thirds of the equity to another investor who brought in $110k to purchase that portion of the equity. My accountant explained that the taxes for the receipt of that money will be accounted for at the sale of the property. I'm not a tax expert, but I work with them. So consult a tax experts who specializes in real estate on how you can account for the 70k in the most advantageous way. 

The additional bump of money at the end comes about because you have been paying your mortgage down for a few years so you are further along in the amortization schedule which means your mortgage will be smaller than the new mortgsge and when the new buyer pays off the new mortgage, then you get the difference. I stated 40k as an idea of what the difference may be. 

You get the hard money loan for the new house because you are buying a property under market value from a wholesaler. That's the money world. Regular bank money moves too slow and requires too much info from the seller. So you first buy the property in cash or with quick money like money from a hard money lender. Then you fix up the property and then get it refinanced. If you bought the property well, when you go to refinance the property you may get all your money back that you spent on the repairs. So you could theoretically get into a house and end up leaving very little money into it in addition to having created tens of thousands of dollars or even hundreds of thousands of dollars in equity. 

@Ryan Blake if you buy the property in a special way where you put a rehab credit that increases the sales price up to the appraised value minus rehab, you should be able to get the property refinanced without worrying about a seasoning period.

@Tyler Garza I can tell you what would probably be the most helpful thing, but most wives are not on board with it. I shared the concept with all of my friends, and not one of them did it. But this is what you do:

Get yourself on a bunch of wholesale lists and start looking at deals as they come to your email. Get familiar with price points in your market and what looks like a good deal. 

Start networking with other investors to increase your access to real estate deals.

Put your house on the market yourself on Zillow and Facebook marketplace and see if you can sell it yourself as a seller finance deal on what is called a wrap mortgage; especially if you have a low interest. Ask for a 70k payment and give them an interest rate that is 1 point higher than yours. For example, if your rate is 4% then give them a rate of 5%. They will be really happy because they can get into a house with a lower mortgage and you don't have to pay realtor fees. Because you don't use a realtor because most realtors have no idea what to wrap mortgage is. You can make the mortgage Have a balloon payment in 2 1/2 years so that you don't miss out on the IRS tax exemption rule of living in your primary home two of the last five years. Unless you're OK with paying taxes on the property eventually. Then you can just let it write out the whole length of your mortgage. You'll create cash flow every month and then at the end you'll get another bump of $40,000 or more depending on your loan amortization schedule.

With the 70k down payment buy a house from wholesaler with a hard money loan that is well below market value. Work with the hard money lender on the terms of the loan so you can get a 90% loan and the hard money lender will reimburse you for the rehab costs. 

You may need to have a family member or friend be the actual one on the hard money loan because there are stipulations with a lot of Hard Money Lender that they can't lend on a primary residence. If that is the case, then just have somebody else be on the loan with Hard Money Lender And then after you close on the property then add your name on title. You'll likely have to have your name on title for six months before you can refinance the property.

This way, your spouse can pick and choose the type of finishes that your spouse would like and then when you're done finishing the rehab in six months you can get the home refinanced and pay your family member or friend a couple thousand dollars for their willingness to be on the loan.  

When you refinance the property, you can likely get a lot of that $70,000 back If you bought the property well below market value. And possibly even more money back if you did some of the work yourselves.

So now you have a new home that you're living in that has probably 25% equity in it, you have a cash flowing seller financed property with no maintenance because you've sold it on seller financing and they're going to be taken care of the property because it is their property but yet you still benefit from cash flow because you are the bank. And you still have $70,000 to go buy a single-family home or multifamily home, and now that you're on a bunch of wholesale lists where you can source deals well under market value it is easier to find good deals. 

Hi Polina, we had a portfolio about 250 units in our portfolio under a few different businesses, and we were using Buildium to manage them. Buildium was really expensive and it was hard to get somebody dedicated to help me with my accounts which I didn't like. My partner, and I split the company and sold off some properties. I now have 64 properties, but that includes a couple of mobile parks and a commercial building so we have about 110 doors altogether.

We still manage our mobile home parks through Buildium. Our short term rentals we managed through Google Docs Excel, and the 40 or so rentals better just ours we manage through Stessa. My wife does all of the accounting through QuickBooks online. I too wish that there was a better software for owners that have multiple properties in multiple businesses two more easily manage their properties and prepare information for taxes.

Thanks for sharing your predicament. If you find something better, let me know.

@Jay Hinrichs so it sounds like you don't feel like you got punched in the face by real estate over the past couple of years. 

Is there anyone out there that feels like they did, or was it just me?

In August 2022 I was with a group of investors at a property we had recently purchased in Costa Rica. It's a beautiful property up in the mountains. We were there looking for another property that we could buy together on the beach that we could rent out as a short-term vacation rental.

We we're living it up and having a fantastic time zip lining, eating delicious food, and seeing the monkeys in the wild.

it seems like from the moment I returned from that trip in August 2022 the real estate market completely changed. Interest rates doubled within a six month period of time and property sales almost completely stopped. 

Rents started to come down and I had to leave a lot more money in projects that I was in the middle of.  And not only that, my cash flow on my new properties was low or sometimes zero. In fact, a couple of them became cash flow negative a little. People weren't renting properties as quickly, and there was an increase in vacancy. Luckily, I did have equity in all of my properties. And that is probably what has saved me over the last year or two. 

In 2020, 2021, 2022, And even some of 2023 We were closing on the sale of probably 10-20 properties a year from our portfolio and we were buying roughly the same number. But 2024 was a pretty big standstill year. I think we only closed on the sale of four properties and we purchased about seven or so.

The only thing that probably kept us afloat was the fact that we had a lot of equity in our portfolio, and I was able to sell some of the equity to raise capital to stabilize our portfolio. I think that's one of the reasons that I didn't post very much on BIggerPockets, it's because I was just trying to keep my head above water.

But now it's 2025 and things are stabilizing and I have a much more positive outlook on the future.

Let me know if any of you had a couple of difficult years recently and how you were able to turn it around if you did.

@James Hamling I would say my other post more clearly promoted my real estate strategies. 

This post was a sincere invitation to sell me on the benefits of the turkey strategy. Then I made a comparison between the average turnkey property with the average lease option strategy with a partner. 

Comparisons between strategies have been posted probably hundreds of times on this website. I don't know why this comparison would be any different or would draw controversy compared to other comparisons. 

Obviously, there are people that would prefer to buy turkey properties than other types of properties, otherwise turnkey companies wouldn't exist. And a few people who responded on this thread have outlined really well why some people would prefer a turnkey property over a different real estate investing strategy. So I have gotten my question answered pretty well. And I can better see the value that people find in turnkey properties.