All Forum Posts by: Paul Thompson

Step 1. Write a business plan out. yup I'm serious. It only needs to be a few pages but do it. I promise you in a year or two it will be wrong but... as Dwight D. Eisenhower stated "In preparing for battle I have always found that plans are useless, but planning is indispensable." 

Step 1. Join your local REIA if you haven't already

Step 2. Talk to a good accountant that knows about real estate investing (preferably one that owns property also). Share you business plan and ask for advice on how to structure your company(s)

Step 3. Open said LLC or Corporations with SOS website. Don't pay a service to do this. It is very easy. You accountant can give you general direction here. Generally speaking for earned income activities (flipping, rehabing, wholesaing) you'll create an LLC and have it taxed as a S-Corp. For rental properties which is investment income you'll create an LLC with the default tax status as sole-proprietor or partnership.

Step 4. Start shopping and make offers (know your numbers and know what you want a deal to give you ROI, CoC, Cash flow, Cap rate, risk, etc).

Step 5. Once you negotiate a serious deal and have something under contract (with contingency clause for inspection) share the general info with your now good REIA friends (don't include actual address unless they are REALLY good friends, on the BP community for review (don't include the actual address) or trusted advisers. There is safety in a multitude of counselors then ultimately do what you believe to be best.

Step 6. Get your inspection. Ask your friends some more questions.

Step 6. Line up your funding (this should be from your business plan)

Step 7. If it's a big deal (like an apartment complex) meet with a real estate attorney (preferably one that owns real estate investments). This way he can give you business advice instead of just legal advice. Both are valuable.

Step 8. Close!

Best of luck to you!

That's an interesting situation. Congrats to you for even thinking this way at your age. Depending on your financial situation in general I suggest pooling your cash position up as an emergency fund (at least 3-6 months worth of expenses) then keep adding to that as your cash down payments while you study like mad on all the ways to invest in Real Estate. You can acquire/control property in a variety of ways (leases, options, lease/options, seller financing, purchase and sale agreement for cash assignment, wholesaling, or traditional purchase). 

An interesting situation for you is where will your residence be, or will it switch every time your change locations? For someone with a flexible situation like yourself ... young investor who doesn't have family entanglements the house hacking approach is a wonderful idea (either SFR or small MF). Just keep in mind what your long term plan would be. I'm not specifically familiar with any of the markets you mentioned. But keep in mind there is a bit of a craze brewing now and when people start saying a market is hot it starts making me cautious. Remember the goal is to buy low and sell high ;) Don't buy into the craze and assume appreciation is a given.

I'd suggest you write down what your investments goals are and share them with the community so everyone can give you more specific advice/opinions on whether you're looking to buy/hold, fix/hold, fix/flip, or how you want to property manage. I'm reading between the lines and assuming you want to buy and hold. Whatever you choose I suggest you invest in what you understand the most which for most people is a market they are in and SFR. Then spend your time learning how you can acquire and shop around to buy below market. Learn how to analyze a deal to see if it cash flows and/or if you're really getting it below market.

Best of luck

Texarkana is my home town. I might be able to help. PM me

Hey Brandon, PM me and we'll see what we can do

I'm a fan and a customer of insurance companies that specialize in real estate investors.

I use http://www.nreinsurance.com/

They recently rebranded themselves as REIguard

here's a thread from a few years ago about them:

https://www.biggerpockets.com/forums/92/topics/109793-national-real-estate-insurance-group---want-to-know-how-legitimate-they-are

In my experience they are very responsive. I've never had a claim so the jury is still out on that front. I've gone into a closing having forgotten to establish insurance and had the proof of insurance before I left the closing table (15 minutes later)

The other big one I know of is http://www.apiaprotects.com/ but i don't use them b/c I'm already so happy with REIguard.

I've also heard many people swear by Shelter Insurance.

I'm always shopping insurance. In fact just got a quote for Don Holt in Little Rock from Farmer's Insurance yesterday.

Yeah this is an interesting topic. It is against the real estate commission rules in Arkansas to act as an agent with out a license (like most other states). So when "wholesaling" with out a license you have to do it in a very specific way. You must act as a principal and NOT an agent. So you do not represent anyone but yourself and all of your verbiage, disclosures, and conduct cannot be construed as acting as a agent. Specifically you must disclose your are offering your equitable interest in a property and not the actual property itself because you don't have title and do not have the right to act as an agent for the seller who does have title. So you are offering to sell your contract, which gives your equitable interest. Moreover, you cannot effectively bird-dog for a wholesaler without a license. So paying a postman $100 for pointing out a vacant property on his/her route is in effect having that postman act as an agent in the Real Estate Commission's eyes. So by paying that commission you aren't actually acting as an agent. But I wouldn't want to defend myself to anyone about paying those fees to unaware "helpers" when you should know how to operate ethically and legally because you're in the business. Furthermore, this raises a bit of a distinction I'm not fully clear on. As I understand it, violating this would be a civil affair and not a criminal action so therefore isn't really "illegal". It is just in violation of the real estate commission rule book. This is not a point I know for certain but maybe someone else who has delved deeper into the subject could expound on.

Bottom line: you can wholesale in Arkansas if you do it the right way (at least as of right now). 

** I'm not a lawyer and I'm not giving legal advice. This all comes from other wholesalers who have discussed this directly with the Arkansas Real Estate commission which I learned about second hand. **

@Matt Turner. I think this is a wonderful idea. I honestly wish I had done that on my own personal residence in the past. 

I recently heard a quote "Flipping houses can make you rich, holding house will make you wealthy"

Maumelle is a strong rental market. Houses actually aren't selling really strong out there right now. It's been a little stagnant for reasons I'm not clear on. I suspect it's a temporary phenomena. Regardless, you can hold and rent and enjoy cashflow, amortization, depreciation and hopefully appreciation over time. 

Buy smart on the next property and do it again. There is a local central arkansas real estate investor association (CARREIA). the website is www.carreia.com. It's a great place to learn and network. 

All the best

paul

@Carl Latting who is your property manager?

I find the debate over long distance investing very  intriguing. This is not my personal strategy (at least not yet). I'm an investor in the Central Arkansas Market. Which to my absolute delight is a strong cash flow market (as are many of the metro areas in "midwest" states). 

I'm a big advocate in investing where you understand. So if you have insight into this market and happen to live in Las Vegas I think it makes sense to invest where you have connections or the ability to create connections without much effort. I know the big players (hedge funds and big, established investors) invest outside of their backyard. I just suggest caution unless you are experienced and/or have solid local connections.

With that being said I'm starting to be warmed over to the concept of investing outside of your backyard provided you have the appropriate experience, local contacts, and scale.

To that end I know of a couple local investors and private money contacts (including myself) in the central Arkansas you can connect with. My question is how are you finding your deals by being remote??

I frequently get the question from sellers where are you? Are you from here? When I can say yes I'm a local investor I develop a little bit better rapport. I suppose saying you're from here or have connections locally you could assuage some sellers fears of being a long distance investor.

I think when investing remotely finding a good property or two is the most important team member. I know of several local property managers. But so far I've chosen to self manage b/c I haven't found that local partner that has the experience and systems that blow me away. I really like for property managers to also be real estate owners/investors as well. So far that has been in short supply in this market. But I'd be happy to refer you to those I know who are established or are owners/managers. 

Hit me up if you have further questions on the central arkansas market. I recently visited Memphis and Nashville as a reconnaissance trip to learn those markets better. They are getting significant interest as "hot" markets. Too date I'm full up with my back yard. But some day that might change....

Paul

I hear from other investors that Shelter is a very good company. Both rates and service during claims are very positive. I have no first hand knowledge.

Another option to consider is the less well known providers that specialize in real estate investors.

The two I know of are:

http://www.nreinsurance.com/ <-- I currently use this provider. Their rates and service are very competitive. I have not yet had a claim. Internet forum searches indicate service and claims are on par with competitors.

http://www.apiaprotects.com/

Let me the community know your experience