All Forum Posts by: Matt Skinner

We do this very successfully in CA. Your title insurance agent can pull title for you (for free) or many will just give you an account on their database so you can run your own title searches. Title will often be able to give you alternative mailing addresses to mail, call, or door knock. We also subscribe to a skip trace service that helps us locate Sellers.

Definitely get the purchase & sale agreement along with any other documents you would need to close (as if you were going to close tomorrow) with your Seller/Optionor while everyone is happy and signing documents anyway. I have done maybe 2 dozen lease options (purchase) and have never gotten the PSA signed at time of the lease/option. After making payments on time every month for 2.5 years one of my lease options has appreciated over $100k. When I notified the seller of my intent to exercise my option last month they refused to sign and I had to sue the Seller for specific performance. I'll keep you posted on the outcome. Wish me luck. **don't learn everything the hard way like me. : )

Investing out of state has it's challenges. First, getting your investors to go with you (not physically but financially) was a real challenge at first. I had to sell them on the market first - after all most Californians are pretty ethnocentric. But I bought 144 units in Texas for $2.2m about the same time I bought a 23 unit in LA for $2.7 Larger assets are easier to manage because you have onsite employees and a management co. But I'm still willing to jump on a plane at the drop of a hat. As to never buy anything site unseen: 100%. Never. I spent 8 months flying back and forth to Texas getting to know the market and putting a team together before I pulled the trigger. I started watching Phoenix in 2010 and just started investing there 2 years ago. "Ya gotta know the territory." And the map is not the territory.

We're in LA and we build/develop locally and buy cash flow in Arizona. (It used to be Texas but that market is overheated).

Ah... Deal structure is the most fun part of a deal. I like putting together the capital formation even more than I enjoy structuring a deal with a seller; both can be as creative as you'd like it to be as long as everyone understands and has reasonable expectations. In my apartment syndications we form a single purpose LLC for each deal. I find the deal. Put the deal structure together (I love seller financing). I do all the due diligence and share everything with my investor members. My partner and I qualify (sponsor) the bank financing. Then we raise the necessary equity. To keep things simple, let's say we raise $1M with 10 investor members putting up $100k. Let's say that $100k contribution buys 5% ownership. We give the investor members an 8% preferred return - meaning the 1st distributable cash flow gets paid out 100% to them until they get 8% on their investment each year. Then we split cash flow after they get their preferred return. For management purposes we do quarterly distributions. When we sell or refinance (like someone mentioned above- we tend to refi our principle out in about 16 months or less on reposition deals) investor members get their principle back and net profit is split prorate according to ownership percentage. This structure is attractive to a lot of investors because it's simple and ties my reward to the overall success of the project.

Solid questions Samantha. And... Paul Timmins is a ROCK STAR!! Get the license. There's no downside to having it (unless you are marketing yourself as an agent). In fact get your CA brokers license; then you can pool up to 10 California investors without SEC regulation. You will also be able to broker hard money and list your aunt Nelly's house for her... Wholesaling is a good place to start. Picking a niche is good advice. Wholesaling apartments is an under served market in my opinion.

Some very good points there Bill. I guess there's a reason they call them bandit signs... The fact is they work; especially for finding buyers. In LA County you can post them legally for 48 hours then you need to take them down or be fined $120. Definitely heed Bills warning and check your local ordinances. So the question is: does size really matter?? I'd go with 12x18 or smaller as long as it's legible. Black Sharpie on cardboard pulls better (for some reason) over yellow chloroplast.

As a buyer use cap rates the same way you use comps on an SFR. A cap rate is a ratio used to compare two like and kind properties, in comparable condition and location. People ask me what cap rate I am looking for and I have to respond that it is subjective to where (and what) the asset is. For example in my local target market of North Hollywood a 5 cap for a C property would be a smokin' hot deal. Not so even a few blocks north in Pacoima, though. Cap rate is really only relative to the market you're dealing in (unless you plan to purchase unlevered). Knowing your market cap is similar to knowing that a bread and butter 3+2 in a certain area is worth X amount of dollars; you can ball park a value based on the market but it's still subject to condition, location, and any other factors. When wholesaling apartments you can make a very sizable fee by tying up a deal for a few tenths of a cap rate below market and then flipping it with a complete due diligence package. NOI= all income - expenses Cap = NOI/price NOI = price x cap Value = NOI/cap Great post Roy.

When signing contracts with sellers or brokers what perception do you want to communicate to the people you're doing business with? You have the opportunity to communicate your mission through a name. Trust. Integrity. Gravitas. Experience. Speak to your target market. And Patrick... Your post was awesome! (Pierce & Pierce... Yes!)

Okay @Robert, I did not mean to come across condescending, and I would agree that price tags are not a measure of financial savvy but ones ability to earn an income commensurate with the ability to afford a more valuable home certainly indicates something worth taking note about when evaluating a market.

Would you suggest there is an equal opportunity to wholesale houses in a higher priced market targeting city slickers (ha ha ha, I love that one!) as there is in a lower priced area?  Why or why not?  

After all, that is the question I was raising.