All Forum Posts by: Trevor Smith

@Erik Drentlaw

Hey Erik. Remember how we said that it's just more zeros? Those people that say that are looking in hindsight with fondness at their successful deal with more zeroes. They are not looking at the risk it had. And I don't think any of the people that say that actually do more zeroes to start with. They just tell other people to not be afraid of starting with more zeroes. But they didn't actually do it themselves. 
Don't listen to them. Try to make your first flip as simple as possible, at a price point that is not scary to lose on, and a rehab that is not too much either. And try not to use hard money! 

@Bill Gulley

Thank you. I agree with you, all of that makes sense to me. The fact is that my deals will not be unfair to anyone. I think I have made that clear. I had to turn down business with an investor yesterday because he wants to make as much money as he can off the buyers, and I told him that is not my goal. I actually do think a 10% markup is fair for a buyer that is getting the benefit of seller-financing, but you guys threw a big fuss about that, so I will apply the entire 10% down payment toward the purchase, and simply charge a flat fee instead. $2,500 from both buyer and seller is what I am thinking. 

I will allow my attorney to do all of the paperwork. 

What stops every person investing in stocks and other investments not to sue their brokers when there is a loss? 

What if I do each deal in a separate LLC? All he can sue me for is the profit I made on the deal, yes? And I will have to pay legal fees to defend myself, as Jay pointed out. And the cost of forming the LLC.

What should I do to minimize my risk of a lawsuit and mitigate the suit if it does happen? 

@Jay Hinrichs I am totally naive about the court system, tis true. How can someone sue me if I did nothing wrong? That is stupid. They should be fined for wasting everyone's time on a wrongful accusation and slandering my name. 

I am familiar with a release of liability form because I signed one when I did an obstacle course. I realize those are for physical injuries, but I can get an investor to sign a financial equivalent. They will hold me harmless. They could still try to sue me, and I would have to pay to defend it, but they will lose. I guess I am willing to take that risk. Sounds like a risk a land lord would have too. 

@Jay Hinrichs @Bill Gulley

Thanks guys. Just one last question. If I don't make any promises to the investor, and I disclose all the risks, and he signs something saying he knows all the risks, then isn't that risk of his legal eagles getting me moot? Once again, I solved your big scary problem with one sentence. Instead of saying it can't be done, I ask myself, how can it be done? 

I'll leave you alone now. Thanks for talking with me. 

@John Thedford Thanks man. Good watching out. Yes, okay, I will wait for kitchen. 

@John Thedford Yeah I may as well ask around. Couldn't hurt. If I could sell it without realtors, man that would save my neck. It should be painted soon. It still needs kitchen and bathrooms installed and landscaping. But it should look nice with the brand new painted walls. I will take some photos and put on Craigslist? Any other ideas? I'll put a sign out in the front yard too. 

@Thomas S.

Okay. I won't argue with the consensus. That is why I came here. Thank you all for your feedback. 

@Brian Adams

Thank you Brian. I am trying my best to hear. And I really hear much better when it comes in the form of respectful wisdom, instead of whatever Bill Gulley slings at me. So thank you. 

You say that you know no lenders that will allow wraps. I realize that, and that is why I made this thread. I want to know the best way to do these deals without having to have outright permission. I don't expect outright permission...that was my whole point. That was why I called it playing ball which apparently sounded flippant but I didn't mean it that way. The fact is that they may tell you they don't do wraps when you ask them, but that doesn't make it illegal if you do one. It just means you shouldn't ask them. The due on sale clause does not say anything about it being illegal. If the law says I have to inform them of the wrap, then I will. 

@Jay Hinrichs Of course you are right, one needs to be prepared to earn what they want. And you're right again that I will still be trading my time for money until the money becomes truly passive. And of course that is everyone's goal. Someday I hope to own my notes and the income will be passive. 
And let me clarify about "real money". Lol, perspective is everything. You know what real money is to me? I made $12,000 last year as a freelance artist. Real money to me is not having to stress about paying my bills, and you know what I need per month to pay my bills? $1,300. I only need $1,300 a month to be stress-free. Will I want more after that? Probably, but I think that is normal and healthy. And I will have to work for it when the time comes. 

But again, you guys haven't put forth anything that is actually illegal that I will be doing. Everything I am suggesting is following the letter of the law. The buyers need to be qualified? Done. The lender needs to be informed of the wrap? Done. The investor and buyer both need to be thoroughly disclosed and quizzed to make sure they understand? Done. The buyer needs to be double checked that they have bad credit for a good reason? Done. 

@Jay Hinrichs

NACA looks like an awesome thing. And I think Habitat for Humanity is awesome too. I would love to donate to them someday. I would actually love to start my own organization. I think what I would like to do most is have an organization with the influence to get all of the real estate investors on this site to be donating to those places. I can encourage and teach everyone to donate since it can be written off their taxes. I don't see why everyone shouldn't be doing it.

But you caught me. I want to make money. I don't want to work at a j.o.b. even if that job is helping people. Well, if it was really, really rewarding, maybe I would like it. But I want to make real money while helping people. Money to pay my bills and I don't have to be working 40 hours a week until I'm 65. 

So I learned I can make money in real estate. But then I learned I have to prey on the desperate to make any money. And the more desperate they are, the "better investor" one can be. I heard a woman stand up in front of a seminar and tell us how she could make another 100k on a deal. Wouldn't we like to know how to do that?? She said. And everyone says Oh yes, yes we would. Then she goes on to explain how she offered this old lady a subject-to deal, essentially offering to take over her mortgage and STEAL all of her equity. She could have offered fair price for all of that equity with a humble profit of 10% or 15% for herself. But no...the whole point of the story is, why leave any money on the table?? Isn't that amazing, she says?? Oh yes, yes it is amazing. Who wants to do that?? Everyone raises their hands and we all say We want to do that! 

So I learned that I could make money owner-financing for people that can't get houses. I could help people? And make some money? And the investors make some money too? And the bank is making their money? It sounds like a quadruple win to me. 

But I swear to god...the two of you are wearing me down. I did have another idea that would sit well enough in my conscience. And that was that I would hunt for the deals like everyone else, and when I found someone desperate, I would offer them a fair price, instead of bending them over a barrel. Instead of stealing all their equity, I would stick to my business plan, my oath, my brand, that I would offer them as much as I can, and not as little as I can like everyone else. It wouldn't matter if there was 100k in equity to steal, I would only take 15% profit at the most. And I feel okay about that I guess. But really, if I was to be honest with myself, it is still chasing around desperate people and putting a choke on them to make a living. Yuck. 

But even if I could accept it, there's one last problem. And that is that finding good deals costs 5k in marketing per month. There are about 100,000 other investors looking for the exact same thing. Investors with more money, more marketing, more experience, more of a machine running already. 

But owner finance? Owner finance doesn't require good deals because the buyer can buy a house for retail. 

I sure as hell don't want to be a realtor. That's just another job. So what's a guy to do? 

@Mark Holencik

Thanks for the encouragement. Really, I appreciate it. 

@Corby Goade

That is why I would need to refinance. If I get a new loan to pay off my current debt to my HML of 263k, the PITI is only $1,411. That is 30 years 5%.

But lets say it costs 3% to refi, that is $8,000. Let's roll that into my PITI of my first year of renting the house--that is an additional $657. $657 + $14,11 is $2,068. There should be no repairs since everything is brand new. Taxes are about $600 a month. Insurance is about $100 a month. So my total debt per month is about $2,751.

Does it follow the 1% rule? Hell no it doesn't. But I bet I could rent it for $2,800, and my renters would be paying my new mortgage for me.