All Forum Posts by: Taylor Shields

It is most wise to set a monthly budget and stick to it rigidly. This keeps lead flow consistent. If you are dumping $1000 or more every time you do a deal things are going to be inconsistent and you aren't running your business like a business. Gradually increase your monthly budget as you accumulate more cash from profits. 

As far as saving a % of profits. That depends on what your goal is. How many deals to you want to do in the year? ect.. Just start somewhere and adjust accordingly. A good place to start might be 15% to get things rocking. 

I think this response is a great opportunity! I would call her back and thank her for her critique and then ask what a proper letter would look like. Sounds like a great person to have proof read your letters for you. If you aren't going to call her back, can I have her number?

In regards to yellow letters, I think they have simply been well marketed to real estate investors and that is why everyone uses them not because they actually perform better than other combinations of letters. I hate them and would throw it in the trash before reaching my front door. When someone receives your letter they should feel "oh, somebody loves me"

I would start looking for a lender that does 50/50 JV splits. They would probably take title to the property and then you would split profits 50/50 maybe even 40/60 in the lenders favor.

The fastest way to never find someone to do this is to say, "I'm a newbie and am looking for a 50/50 JV partner for my first deal".

You don't necessarily need to show a track record, you need to show competence. I would start by asking them as much about their business as possible. 

There are 3 points that every lender is going to want addressed and that you should ask about

1. Security

2. Return

3. Rate of return 

When talking to the lender I would first ask about these three things in their business then address them as I talk about my need for financing.

EX: I am looking to raise financing for fix and flips in (specific area), the capital would be secured by the real estate itself and the lender would take title. I'm looking for projects that would take 3 to 4 months and with a 50/50 profit split. Investor could reasonably expect a ____ percent return in that time. I know that my experience may be in question, if that is the case I would be open to any suggestions that would could help guarantee safety of capital. I have taken these steps (explain anything you have done or any colleagues that my be willing to check in on the projects)

 I would have a contractor lined up

Be prepared to explain how you evaluate a potential opportunity and what would qualify

If you take these steps and show that you are competent and hungry to learn you will find financing. 

Of course! Would love to know how it turns out!

@Cuong Thai 

I agree with what @Brandon Hall said about preformace. Just because he may have real estate investments may not make him savvy. That's why you need to ask a lot of questions. I would definitely be asking any paid professionals how much property they personally own and what they pay in taxes and how their investments are performing. You want someone that loves the business of real estate and has a significant amount of clientele that are real estate investors.

You may consider reaching out to real estate investors in your area and asking them who they use and why. You can do that here on BP and you can find a Real Estate Investors Association near you and attend one of the meetings. 

Most of all, Just ask good questions. "The quality of your life is the quality of your questions"

Are you assuming that they would only finance at high rate? or did the seller actually say that?

@Jay Hinrichs 

What did a typical equity participation look like when you were doing the rentals?

Could it be structured in a such a way that the owner or operator could buy out the investor along with interest on a portion of the properties using his equity. The investor could then sell the rest. 

For example: You do 6 properties like this and the owner operator has enough equity to buy out 3 of the properties and pay the investor his interest. He then owns them free and clear and the investor owns the other 3 free and clear which he can sell or rent himself.

I second what @Craig Jones said,

Some further rhetorical questions to get you thinking:

Are you wanting to make real estate a permanent part of your investment portfolio? Once you have answered that question then I think you will know what to do. If the answer is yes you can use the 1031 exchange down the road when you know more about real estate. If you have no interest then a 121 tax exclusion is your way out now.

Is there any reason why you would want to sell the property other than the tax issue? If you sold the property would you regret it later in your life?

My final question, IS YOUR CPA A REAL ESTATE INVESTOR? If not, I would be looking for a new CPA (especially since they didn't even tell you a 1031 was an option). Also, does your cpa have a financial bias in advising you to sell your property and help you with a 121 tax exclusion?  

Thank you=)

You can essentially decide what you want your payments to be. If she goes for it it sounds like you've got yourself a new office. Remember, you can structure the terms however you want. You could structure something like 5% interest only payments for the first five years, then it could change to an amortization schedule, essentially its whatever you can get the seller to agree to and how creative you want to be. Then lets say maybe down the road you have equity in another rental or rentals and could recollateralize the note using that equity and supporting payments. You would then own your office free and clear=)

YES you can absolutely buy fix sell on owner financing!! It's a relationship so I would assume that your seller would be aware of what you would be doing. 

You would want in your "Maker and Beneficiary agreement" to specify that the note will be moved to second position for construction loan.

This would be a hell of a lot cheaper than Hard Money

Then at the time of sale you would have 2 options. 1. Cash out the note or 2. Leave the note in place to be secured against another property you have or use the extra cash from the sale to purchase another property and secure the note against that one.

So lets say you purchased the property for 120,000 and sold it for 200,000. You did 30,000 in repairs. The seller financed 100,000 at 5% interest only payments for 15 years. To make it easy I will leave out the interest on the 30,000 in repairs.

You sell the house for 200,000 and you secure the note on your duplex that has 120k in equity and cashflow to support the payments. You walk away from closing with $170,000