All Forum Posts by: Tyler Piciullo

Your cash flow projections take into account taxes, insurance, capital expenditures etc...?

If so then it looks to be a decent deal based off the information provided, it seems most people are struggling to get 200 +cashflow so to generate 4-500 +cashflow it looks good.

All the time.

What I have done in the past is for finding the deal around 10%. Finding the deals is a smaller piece of the puzzle when it's all said and done. 

Great question @Tyler Piciullo!

I think we all have to go through this realization as I know I personally had to.

Here is the realization I came to: 

Real Estate Investing is actually sales and marketing of a product called real estate.

What I mean by this is if you don't have leads to talk to you don't have a business. I don't care what industry it is you need to understand how to "make money" and the only way to make money is by investing what you have already or by selling something.

When I refer to selling something in real estate investing I am referring to deal acquisition and dispostion / cash flow. 

You need to become a master at marketing and deal structuring so you can learn how to put deals together where others can't. This will allow you to maximize every opportunity in front of you to create active income that will allow you to invest in cash flowing properties to create passive income.

BP has a great resource to help you become a pro at running numbers: https://store.biggerpockets.co...

I created a free 10 step training on my BiggerPockets blog to help you understand how to best create a plan: https://www.biggerpockets.com/...

I think this will be a great start and get you pointed in the right direction.

@Tyler Piciullo great that you are taking steps towards passive income. But a couple things jump out at me 1) flipping is not passive and not really investing, it is an active business. 2) what exactly is your coach doing for you and why are you listening to "some people" saying different things when you paid someone to guide you? 3) using your FHA loan to househack is a great way to get started in investing. If you can find a double, triple or quad the bank will let you use 75% of the potential rental income towards your DTI. Even if the rents don't cover all your living expenses if your monthly costs are around the same or less than your current rent then you are coming out ahead. 4) (take this with a grain of salt because I don't really know you) if you are having a hard time getting comfortable with a $450k purchase at 6.5% on a primary home then you may want to focus on some mindset podcasts or coaching - if you want to invest in more real estate you are going to need to be comfortable with numbers like that as long as the rent covers the expenses.

Quote from @Tyler Piciullo:

Quote from @Jay Hinrichs:

Quote from @Tyler Piciullo:

Quote from @Jay Hinrichs:

sure.. if they are unsecured loans..  Most HML dont care where the equity comes from just that there is some equity.  Also check to see if you have to pay all the closing costs and points up front that can make your down payment go up by 5 to 10% . so you really need 25 to 30% down and then for draws.. Most will only let you draw for work in place after inspection.. So normally you need to front the rehab and get reimbursed so this can be another 10 to 30k per draw you need in cash ..

Ok so “money in the account” would that be 20% down + the rehab costs?

typically lets lay it out for real here.

250k deal your buying..  HML wants 20% down = 50K

so they are lending you 200k..  they have points anywhere from 2 points to 10 points depending on lender etc.  so thats 4 to 20k you need to pay at close in points.. so lets just say 4 points  pretty common today..  thats 8k  now you have closing costs to third parties thats another 2k or so. Insurnace 1k and then lender junk fee's  admin doc review and any other way they can couch it that is normally 1k to 3k  on  top..   then U have to front the draws  lets say draws are going to come out at 20k per draw.

So cash needed to do a typical HML in todays market  for a 250k loan.

50k   DP
8k    Points
2k   3rd party closing costs
3k   Lender junk fee's which could include apprasial.
20k first draw  then U get reimbursed each draw
2k   per month for your payment @ 12% which is pretty common today many are higher So lets say its a 9 month start to finish you will need another 18k in payments.
2k  for utls law mowing etc.

Grand total to do a 250k HML would be about 98k in cash  plus some reserves for when the project goes over budget which is quite common.

So figure to do a 250k HML on a fix and flip you will need 100k in direct costs up front and 25k in reserves.

 I see. I mean hey when you put it like this then I am reading videos of "I did my first flip with $0 and all credit cards" or "I had 5K in my bank" it makes it seem very fishy lol...how do people even do that?

Money partner ..   off market sub too  or just plain  Puffing  Keep in mind there is 100% financing its all i do for my clients but we are JV partners I am the money they find the opportunities and execute the business plan.. Just like if you were going into partnership with a friend or relative. So for them it is no money out of packet..

I closed one last week for my Partner in Augusta GA..  went like this.

She is a very experienced agent and has rehab crews.. so check that box.

Starter home  that sold for 150k

I put up the 100k to buy and rehab.. she found it and did all the work.  She got a commish for buying it as well.  Then we split profits.. But she did not put up anything but her expereince and my partners have to pay the UTLS.. I cant be paying utls on 100 plus deals I have going at anyone time :)  She made over 25k plus commish and spun it in 75 days with ZERO of her own money and this is just one of 4 we have working and I am closing two more for her next 10 days .. bigger deals 150 to 225k each.. profits for her will be about the same 20 to 30k each.. I suspect with my money and her superior ability to find  rehab and resell she will make well above 250k with me as a partner for the year ALL WITH ONLY PAYING the Utilities  LOL.. so yes it happens we just dont talk about it on U tube.

Quote from @Tyler Piciullo:

Quote from @Jay Hinrichs:

sure.. if they are unsecured loans..  Most HML dont care where the equity comes from just that there is some equity.  Also check to see if you have to pay all the closing costs and points up front that can make your down payment go up by 5 to 10% . so you really need 25 to 30% down and then for draws.. Most will only let you draw for work in place after inspection.. So normally you need to front the rehab and get reimbursed so this can be another 10 to 30k per draw you need in cash ..

Ok so “money in the account” would that be 20% down + the rehab costs?

typically lets lay it out for real here.

250k deal your buying..  HML wants 20% down = 50K

so they are lending you 200k..  they have points anywhere from 2 points to 10 points depending on lender etc.  so thats 4 to 20k you need to pay at close in points.. so lets just say 4 points  pretty common today..  thats 8k  now you have closing costs to third parties thats another 2k or so. Insurnace 1k and then lender junk fee's  admin doc review and any other way they can couch it that is normally 1k to 3k  on  top..   then U have to front the draws  lets say draws are going to come out at 20k per draw.

So cash needed to do a typical HML in todays market  for a 250k loan.

50k   DP
8k    Points
2k   3rd party closing costs
3k   Lender junk fee's which could include apprasial.
20k first draw  then U get reimbursed each draw
2k   per month for your payment @ 12% which is pretty common today many are higher So lets say its a 9 month start to finish you will need another 18k in payments.
2k  for utls law mowing etc.

Grand total to do a 250k HML would be about 98k in cash  plus some reserves for when the project goes over budget which is quite common.

So figure to do a 250k HML on a fix and flip you will need 100k in direct costs up front and 25k in reserves.