All Forum Posts by: Swat Khan

Make sure that you have a steady number of deal flow and you're going for motivated sellers who are ready to do a deal ASAP. 

1. As others have said, find the "pain" first. Then your job is to be the one to solve this "pain" for them. You will be communicating directly to the needs of the seller. 

2. Often FSBO's work better or a property that can't get financed in its current condition.

3. I found the best way is to go in is to go with a cash offer FIRST, then when they negotiate (everyone negotiates in real estate) then you back into / counter with a seller carry as a concession. This also could be done after going into contract, when you get your contractor bids that show that there is more work than what the seller anticipated. 

So in other words, don't offer it right off the bat, but back into it later if the deal allows it. 

4. As a sidenote, make sure that the deal and cash flow of the property allows for you to cover the debt service. I know it sounds like a "duh" but I've seen deals with 100% financing that didn't have the cash flow even after improvements to cover the debt service + expenses + taxes + insurance to make it worth while. 

Good luck! 

Is it possible, yes. 

Will it take work + time, definitely yes. 

The key is that this is a relationship business. A human business. 

For 100% financing, you will want to demonstrate that you have management under control through your team. This includes any rehab construction and property management. To help your funding partner make a quicker decision, try using a credibility kit. Here's a good thread on how to create one:

https://www.biggerpockets.com/forums/87/topics/349...

Also, you can send a "sample deal" and ask, what do you think of this deal, and get their feedback. 

It is consistency of communication, so it may take a few tries, but start building up the relationships now with your lenders/partners. 

Post your deals everywhere and build up a list. There are lenders out there (especially moreso in today's market than 2008-2011) who are looking for trustworthy people who can make their money go to work. (See the book Rich Dad Cashflow Quadrant... I = investor, who wants their money to work for them). Your goal would be to service this group of individuals. 

I would also try to focus on motivated sellers who can do seller financing and get  your investor to cover the down payment or half of it, then use a business line of credit for the remainder. 

Have you thought about Hard Money? 

One way to handle it is using Section 8. 

I know a war vet that I originally met over at the Section 8 office who has 11 properties in C- neighborhoods and never had issues with his section 8 income, meaning he got his payments, and therefore was able to keep up his properties. Now, of course it wasn't passive income. 

When it comes to the rougher neighborhoods, you will be working for it and really have to stay on top of things but in return, it could be a great way to build up a cash flow portfolio and move up to less management invensive type properties. If you're going passive, I would avoid SFR altogether and try to find a multi-unit 4 unit and do Sec 8 and at least all your properties are in one area under 1 title.

Good luck. 

A lot of the previous answered covered the most. 

Just think of it as another tool to your arsenal. 

It's a great way to have access to additional capital when most of your capital has been invested. It allows you to grow your portfolio based on your mindset/experience. 

I've ran into quite a few experienced investors who still use HML and also guys who got their first break through HML.

It all comes down to the numbers and if you can prove to them you can pay them back (credibility kit, easy to work with, responsive, etc). 

Focus on finding a a good deal. Your offer would be: 65% ARV - repairs. Depending on your location and your relationship, you can get in with little to very little down.

Like investment properties, there are a lot of HML's, I would do a simple google search with "City + hard money lender" and try to contact as many as you can. Ask them for their terms and process of closing. Work from there. Good luck!

If you are looking at cash flow, this is a good price point, you will need to move quickly to identify the properties. 

From what I've seen there are several markets in the midwest (OH/IN) and some submarkets of TX and OK where this would work. I would go with what you're most familiar with and where you feel you can build a strong team. 

Good luck!

I agree with @Account Closed@danielchang

I found that it's more important to focus on the deals, get those closed, then figure out LLC's after. I've had 2-3 LLC's that were opened and never used for various projects in the past that ended up not being properly utilized since the projects didn't take off. Looking back, I would've focused on making the first $1 in revenue, then put the property into an LLC.

Down the road, there are a lot of benefits with LLC's (liabilities, getting credit lines, etc). So you're thinking in the right path.

My 0.02

Good luck!

A lot of good answers here. 

Personally, I would focus on a MOTIVATED SELLER and work with the following: 

1. Seller financing

2. Lease purchasing (lease a property and sublease it to students/tenant) 

3. If you need a loan -- Don't go conventional loan, go to a local credit union. 

Find a credit partner, structure LLC with 19% ownership, credit partner 81%, the bank won't look at your credit because it's below 20% ownership, then get the seller to carry a note for 10%. Then use a private lender for the remainder 10% or a business credit line.

4. Buy with a land contract (deed doesn't transfer at closing, deed transfers at payoff)

5. Buy with a land trust. (if this is your first deal, eventually you want to use this more often for asset protection).

6. If you want to get creative, trade a personal asset (car, boat, etc) for another property. 

7. Subject-to. 

I am probably no where near as sophisticated as a lot of the markets out here, but what I do is 100% focus on pocket deals or off-market deals. (Direct to owners, FSBO)

So having said that, the biggest challenge is to stay consistent. 

I always remind myself with a quote, "if you're not marketing, you're not in business". This usually wakes me up, and focuses me on spending at least 1-2 hours a day on marketing or spending time systemizing a marketing system that my team use. 

But always have deal flow and make offers. This will keep you from falling in love with a deal and you will always have another deal you can move on to. 

The money is in the consistency. In terms of, where/how/who/what should you market to, there are many different strategies, just focus on one and keep going.

Just my 0.02 cents.

Welcome to BP. There are a ton of people here from the DFW area. 

Set a solid goal with a deadline and follow the course until success. 

Wishing you tons of success. Good luck!

Good approach, it's important to set a goal and stick to it. 

Using 3.5% FHA financing is an awesome way to get into property.

If you can work with agents and get pocket listings / off-market deals, that would be ideal, this way you have less competition. You just need to follow up every week with the agent and keep track of it using a Google Sheets spreadsheet. 

Track your calls using a call log: 

Google Sheets Call Log

If I could start all over again, I would go this route if you can find a fourplex since Unit #2 / #3 / #4 can pay for your mortgage, expenses, insurance, etc and maybe give you positive cash flow (depending on your market)

I remember when I almost bought a $350K 4 plex in Long Beach with all 2/1 as my first property. I didn't pull the trigger as I had a lot of stuff going on at the time. This is double the value now and would've paid for itself (expenses and PITI) + the live-in unit.

Just make sure the numbers pencil out. Good luck!