All Forum Posts by: Taylor Shields

Would love to see you there!

@Chad Duncan 

DUDE! I love the initiative but you need to take those goals and start asking yourself why you can't do that in the next 2-3-4 or 5 years!!!! Maybe less! Think big baby!!!!

How much time do you spend per day on your real estate education? Right now I would recommend as much as possible. It is clear that you need more education and a deeper understanding of RE. Also, find every single RE networking group in your area and start going to them and getting to know people. 

Also keep in mind, strategies that work in the mid-west and east coast might not be as viable in the Portland market. Work on gaining a thorough of your market along with real estate as a whole. 

@Chad Duncan 

@Chad Duncan

What area of PDX are you talking about?

You need to get familiar with Portlandmaps dot com right now. Thats where you will find mailing address info.

Some of the advice you have here is complete garbage. This is a very effective way to build a list in portland. I just drove the Brooklyn neighborhood and wrote down every single SFR and Multi that had any kind of deferred maintenance. Ive got a list of at least 80 properties and will likely get a deal out of that 2 hours of work. Forget about finding out anything about the homeowners, their age, ect ect. Send them all letters, and then follow up with a door knock if the mailing address is local and then get back to work chasing other opportunities. 

You need to start asking yourself, "Is what I am doing right now revenue generating?"

DON'T SPEND ANY TIME FINDING COMPS BEFORE YOU HAVE TALKED TO THE OWNERS AND YOU HAVE A MEETING SET. THIS IS NOT EFFECTIVE OR EFFICIENT.

Why would you buy fix and rent for ten years in the PDX market especially if you are going after historic homes? 

How would you be financing that?

Might want to rethink your strategy and get plugged into a networking group here in PDX

@Corey Westermann 

Welcome!

1-The LLC question is best for an attorney but several of my colleagues around the area create a new LLC for each property.

2-Learn about involving the seller in financing and other creative options (See 3rd paragraph). By structuring your own terms you can create cashflow in PDX. You might also consider getting into the 2-4 plex business. Its expensive but in PDX we have appreciation and much better tenants=) 

3- Check out the Rarebird Investor Network. 3 meetings a month at the Lucky Lab in Multnomah village. I try to make it every week. Best real estate education you will get in the portland area and you will get great follow up answers on your cash flow and getting a license questions. There are several full time investors that also have a license there. Meetings cost but you can come to a couple for free to see if you like it. You might also consider Northwest Real Estate Investors Association. 

4- If you get your license you are going to have to disclose, disclose, disclose. If you send out letters, you will have to tell them that you are an agent. I think the upside outweighs any negatives. I want to get licensed by the end of the year. 

@Isral Konopa 

I love this question and I think it shows that you have tremendous character. I believe the essence of a successful negotiation is when everyone gets exactly what they want. A true win win.

You need to find out the true wants, desires, and needs of a seller. Be hyper aware of them and observe everything. This is done asking good questions and also hearing what's not being said. Most investors don't do this. Find out how many kids they have, where they want to go, what they would do with the money from the sale of the house, how much money they will need to do these things. Gather as much info about them as you possibly can. 

It's almost never about money. Find a way to help them get what they truly desire and frame your offer within those desires. 

There are some circumstances where they have just put themselves in a horrible situation and selling the house at an extreme discount is the only option. In those scenarios you shouldn't feel bad if you get a huge discount.

If someone is completely ignorant of value then the value of the home probably doesn't matter to them. Just find out what the desire is, what they need for that desire, then see if it works for you. That's a win win. 

I am very transparent with people. I let them know that they may be able to sell the house for more using a realtor (if that is true). However, I also let them know the benefits of selling to me and how "I can tailor a custom transaction for you that makes you feel comfortable".

I spend about 90% of the time talking about and asking personal things non related to real estate. I let them guide the conversation and I take as many off ramps as possible. I spent over an hour and half with a seller on saturday talking about world travel and looking at all the things he has collected over the years. I know how many children he has, all of their names, His cats names, what he wants to do with the rest of his life, what he wants to do with the money from the sale of the house, He let me try on his bulletproof vest, let me hold a piece of the berlin wall and a coin he had from Nazi Germany, ect ect. Do you think that anyone else is going to do this with him? Probably not. It's very possible that he might get an offer higher than what I made him because of the desirable area the house is in. However, It's also possible that he will sell to me simply because he likes me better than everyone he has spoken to. By gathering all of these puzzle pieces together I can put a deal together that's custom to him.  Everyone is different and no one should be crammed into a cookie cutter type negotiation or deal structure, thats when people get ripped off.

You should not "convince" someone to seller finance. Simply present it framed in whatever the sellers wants and desires are.

You're not going to get the seller to finance if he just wants cash in hand. If you do he is going to be a headache.

It doesnt sound like you have met with him. You need to do that NOW and find out what his true desires are. DON'T ASSUME ANYTHING ABOUT WHAT HE WANTS OR DOESN'T WANT.  

#1 question for seller financing: What are they going to do with the money from the sale of the property? The answer will determine if seller financing is an option.

Lastly, you need to get as un-emotional about this property as possible. How much of this are you doing because you want to help your co-worker? is this a property that you will love to hold on to? 

There is no question that if you buy you should be asking for market rent. 

I would tell my co-worker that they need to be out within 6 months of me purchasing the property. Regardless of how I feel about them. You don't want a renter as a co-worker. Can you imagine having the same job as your landlord?

ONE FINAL OPTION:

If the seller is open to financing this is what I would do. Interest only payments for as low as you can negotiate for as long as you can negotiate. Maybe amortized if you can make it work. I would then use an all inclusive trust deed (wrap note) to sell the property to the co-worker at higher interest than the note with the original seller. 

@Jay Hinrichs 

Wow! You must of had a good relationship with the bank. Haven't heard of this on that kind of scale. 

@Nick Deshotels 

Exemptions of Dodd Frank allow for most seller financing without headache. If someone is selling more than 3 properties with SF per year then they will need an MLO, in most states, but like Jay said, each state is different, so you better check for sake of your seller.

If your seller is an individual or trust and have will only be selling one property per year they can have balloon payments. If it is an adjustable rate then it must be tied to an index and must be fixed for a min of 5 years. Cannot exceed 2 points of increase a year. Cannot change more than 6 points from the original rate. Seller does not have to qualify the borrowers ability to repay.

If seller is an individual or trust and will be selling 2 to 3 properties per year or a buisness selling less than 3. There cannot be balloon payments or adjustable rates. Seller must prove borrowers ability to repay

Some other points:

In regards to presenting seller financing to the seller. Understand that every single seller is different and a deal should be custom to them. If you are wanting to avoid headache down the road don't try to cram people into a seller financed cookie cutter. 

You need to find out what they truly need and what they are going to do with the money from the sale of the property. Once you know those things then you will know if there is an opportunity for seller financing. 

Seller financing shouldn't be presented as "seller financing". It should be presented as them being an investor in your company with capital secured by real estate with monthly interest. 

You owe it to your investors (sellers) to have a high degree of real estate finance fluency. You need to be able to explain Notes and Deeds of Trusts and Maker/Beneficiary agreements ect ect...

I would suggest putting together some kind of credibility kit. A professional portfolio of some of the properties you have flipped, your credit score, qualifications, ect, anything that can make you more credible. 

Include in your Maker/Beneficiary Agreement a clause that specifies there are no prepayment penalties and a clause that gives you the first right of refusal to purchase the note if the beneficiary decides to sell it or is approached by a note buyer. In that scenario the note usually sells at a discount. Your attorney can help you with this. 

@Emilie Benn 

Ahh yes. That does not surprise with Phoenix. 

You will keep experiencing this type of frustration if you are looking for deals on the RMLS. Portland is not like the East. It is highly competitive and inventory is very low. Those factors combined with the RMLS will make for a very frustrating time. If there is a fixer property on the RMLS, its probably not a deal. Deals are made across the kitchen table, face to face with a seller. Not back and forth through realtors.

You need to find a way to start networking with wholesalers, lenders, and start marketing direct to sellers. Going to the Rarebird Investor Network is a good place to start. A lack of time is simply a lack of priority. If one of you can manage to take one day off (or more) per week to devote to yourself's and your futures then you should absolutely do that. 

Funding will come when a deal comes, make sure you don't use that as an excuse for non-action. Same thing with what you said about a fear of losing your assets. Are you going to be using a large portion of your own cash? You will find that in the near future as you stay in this business longer that fear will go away. If you feel like a deal is "Risky" then its not a deal. You do not need to be a risk take. In fact you should not be. If you are taking uncalculated risks then it is simply gambling or betting. Investing involves managing risk to an absolute minimum, calculating it precisely and NEVER risking your personal assets.  

As someone new to the business I would not recommend doing something complicated like a subdivision or lot confirmation. However, a good strategy would be to rent it as you do the lot confirmation as it will take 6 months or more. 

That JV proposition sounds like a horrible deal for you. A 15% profit share on most deals might be less than what you could get for a wholesale fee. Since you are new there is no problem with giving up some profit for experience and guidance but giving up 85% is not good. You and your husband sound much more qualified than the average person getting into this business. You are already ahead of the game. I would suggest an absolute minimum of 40% of the profit. Be EXTREMELY cautious of who you choose to partner with.

Also, one more note. If you do decide to keep looking for deals exclusively on the RMLS (please dont do that) then you need to build relationships with MULTIPLE realtors and you will definitely need to get your financing in order. Actually, we all should have relationships with multiple realtors regardless of our method for locating deals. 

Set some aggressive and achievable goals and be persistent, persistent, persistent, persistent.