All Forum Posts by: Matt Skinner

Most states that are worth investing in are appreciating right now so it would serve most smart investors to tie up properties (with or without equity) for as little money as possible and hold for appreciation - specifically if the rent will service the debt.

I'm not sure what "anti-guru" means but I will say that investing in my education has resulted in the best ROI over any other investment I have ever made.

And I would never have thought that offering someone thousands of dollars worth of legal documents (when that is what he asked for) for free would ever be misconstrued as an "under the radar" solicitation.  

I thought we were here to help each other.

Thanks for the comments @Bill G.

Next time use red ink when you grade my paper - it makes it easier to learn from.

Stay frosty.

So my post was edited for advertising (above).  

And I appreciate the spirit of the rule and i would just say that I have no dog in that hunt.  I am not affiliated with any lender or anything like that.  Was just trying to help Jerry out.

There are some pretty cool loan programs for apartments right now because the gov't wants investors to invest in them.  

Although I don't know the laws in PA (truthfully I can't even spell your state...) I buy or acquire houses with no equity or that are even slightly upside down all the time. One house I tied up 2 years ago the Seller called me about doing a short sale. I saw the property was in good condition and the value then was about $350. Then I found out the loan was $355(ish). I told the Seller she didn't have to short sale that I would give her $5000 down for a lease with an option to buy for the payoff amount of the loan. 2 years later I am in escrow with a buyer for $425 and the payoff on the loan is about $340(ish). I love these deals! This is actually our primary target in SFR. We call them Deltas because there is no delta (an engineering term for difference between two values) between the loan and the current market value. Feel free to hit me up about this. I'm happy to share my paperwork and experience with you so you can do some Deltas too.

Brian, being in Los Angeles I have struggled with the age old question for a decade: Is the grass really greener on the other side? Entry level homes here are about $400k and there's always a market to sell them to. I have often theorized that a person who can afford a $400k starter home would be more financially savvy than someone who has lived in an $80,000 home their whole life. One could speculate that someone who lives in an overcrowded and over priced big city knows he lives in a high demand market and what he can get for his house, no matter his luck in life. (Besides, everyone in LA is an actor or a real estate agent - or plays both on tv...) I don't know if that theory is true or not but I have often wondered if I would be more profitable at wholesaling (due to volume) if my market was in Phoenix like Sean Terry, or Jacksonville like Ron LeGrand, Memphis like Kent Clothier, or even Tampa like Preston. I'd love to hear if you (collectively on BP) think I just answered the age old question of "will it work in a big city" by rattling off that list of trainers and their target markets. We do some wholesaling in Los Angeles. But it is extremely competitive to find a good deal. It's also extremely easy to sell one.

FHA has a 40 year am, 40 year fixed, 80% LTV. I got mine at 4.5% I know, sounds too good to be true. I thought so too. Works best for refi because it takes about 6 months to underwrite.

Originally posted by @Ali Boone:

Awesome @William Holly ! And yep, very much a night crawler :) Almost 3am here. I have way more energy late night than any other time.

Love your website.  I just signed up for you newsletter.

Yes @Jay Hinrichs

We have used several different Reg D 500 series offerings (506 I think allows only accredited investors but allows you raise unlimited funds... ). We form a single purpose LLC for each asset we purchase and then divide up ownership percentages based on contribution. So if you own 10% you get 10% of the cash flow, tax benefits, appreciation, and depreciation.

We use this model for buying apartments and for doing development projects.  

Consequently, this is how Magic Johnson (and associates) raised $2Billion dollars to buy the Dodgers.   Same type of private offering.

Buy a list of your target, mail them and door knock them.  Everyone hates doing it but good ol' fashion "belly-to-belly" sales is the most effective marketing out there.

Unfortunately the only way I have found to create a list of junker houses (assuming this is what you want to wholesale or buy) is to drive neighborhoods and make the list by sight (or have a bird dog do it).  We pay $10/house for these lists and just run an ad on Craigslist to find the worker.  No RE experience necessary.  

Originally posted by @Eric Fernwood:

Hello @Cassandra Boyett ,

Buying turnkey can be an excellent purchase method but remember that this is only a purchase method, it does not assure you that you are buying in a “long term good” location, getting a good property or that you are going to get good tenants.

You have heard the old adage that the three most important things to consider in real estate are location, location and location. This is still true. When you are considering a property in any “location” you need to think long term. Do your homework and make an informed guess whether the state/city/area is still likely to be a good place to own a property in 15 or 20 years? What is happening today or this year is almost irrelevant because real estate is a long term (multiyear) proposition. Some of the key indicators you should consider are:

• Population migration - are people moving in or out? If they are generally moving out of the state/county/area then the value of your investment in 5 or 10 years is going to be much less than today. Here is a page that provide population shifts by city.
• The value of a property is no better than the jobs around it. This does not mean just that there are jobs, the earning power of jobs needs to be stable or increasing. For example, if the state/county/area trend is from manufacturing jobs to lower paying service jobs, your rent is going to go down and the value of your property will fall.
• Property price trends - If property prices are trending down in an area, that is because there is less demand. If there is less demand to purchase, then there will likely be less demand for renting in that area too. And, if property prices are going down, rents will also go down and even if you decide to cut your losses and sell you probably can’t even sell the property at break even.

The following two points are not criteria but something to keep in mind. 1) As long as you buy in a good area (see all the above), all but the worst mistakes will be corrected over time through appreciation, inflation and rent increases. However, if you buy in a bad (or trending down) area, there is little or nothing you can do to make money over the long term. 2) To quote a former president, "Trust, but verify"; never take others claims at face value. With the internet, you can validate any claims made by others. The data is there and all you have to do is to spend sometime and the claims will be either validated or you will know that you need to find someone else to deal with.

Below is the process model I recommend. The property profile and profitability are explained in details in this thread - http://www.biggerpockets.com/forums/12/topics/1527...

Best Wishes,

Eric Fernwood

Great post Eric.  

While I would agree that location, location, location is very important, it is even better advice when considering investing into a turnkey operation, an equity fund, or a syndication that you pick your PEOPLE, PEOPLE, PEOPLE, first and foremost.  

You can't do a good deal with bad people.  

A smart alternative to buying little green houses in states you would never want to visit is to invest in a syndicated apartment complex (think: red hotels).

Apartments are better investments than houses because of the economies of scale: maintenance is cheaper, occupancy and therefore income is more stable, the number of units you own = the amount of diversification you have, and banks love to lend on them.

Keep in mind, apartments are one of the most stable (read: safe) investments an investor can make.  That is why pension funds and insurance companies LOVE to invest in them; because theirs is an ultra conservative "can't lose" strategy. 

Apartments are a great hedge against inflation.  Banks love to lend on them, Uncle Sam gives all kinds of tax benefits, your tenants retire your mortgage and pay all your expenses INCLUDING maintenance and capital improvements, they cash flow, and they appreciate.

Most of my investors realize an 18% annualized return or better on the apartment deals  we do (**includes cash flow distributions, principle reduction, appreciation, and tax benefits) and never have to qualify for a loan or fix leaky toilets.

Smart investors have some kind of multifamily investment in their portfolio.