All Forum Posts by: Van Blackman

@Jennifer Soelberg

Next time you see a vacant property, or any distressed property for that matter, get out of your car and knock on the door. Then, knock on all the neighbor's doors until someone has some info for you. Usually at least one of the neighbors will know how long the home has been vacant, who it belonged to, and what their number is.

Seriously, do it!

Hope that helps!

@Quinton Childs

Hello sir! You've got a lot of solid advice here.

My two cents:

1. I'm glad to hear you explained the offer to the seller. They need to know that it took time and careful consideration to come up with your offer. They need to understand that you didn't "low-ball" them for the sake of low-balling; you can actually justify your offer with your numbers. Do you have an iPad or tablet? If so, this should be your best friend. Take your tablet to every appointment you have with every seller. Don't TELL them, SHOW them the comparables of the homes that have sold in the area. Show them them the as-is sales. Show them the rehabbed sales. Make them truly understand that a home in x condition is only worth y, but you need to put z into it to achieve a resale value of a. It's difficult for anyone to argue with a comp if it's a truly comparable property that sold immediately across the street 2 months ago. You see what I'm getting at? All of this helps them understand that your offer, even though it's low, is justified, and that you're not an A-hole trying to steal their house from them.

2. You did great on this one, but now you need to go do it another 200x. Buying homes is a numbers game. If you can get to 5% or better (that means you buy 1 home for every 20 you offer on), you're in decent shape. At that rate you should be buying 4+ houses per month. 

3. 3rd cent - TRACK. I wrote an offer on a home for $100k below list price once, and eventually, after six months of tracking and being a rock in the sellers' agent's shoe, I bought the house. Get a CRM system. Be organized. If you're writing 20 offers per week, you're going to go crazy trying to remember all the little details on each potential deal if you don't have a system in place. 

Hope this helps! Keep offering!

@Tim Ivory

Good evening, sir!

Great question.

In all honesty, I think it would be best to develop a relationship with a lender that is local, if you can. There are plenty of great nationwide HML's out there, but no one is going to KNOW your market like someone who is FROM your market, or at the very least from a NEIGHBORING market.

My concern with out-of-state-lenders arises during the underwriting process. What happens if the lender is not familiar with the area you're trying to purchase in? I buy and sell investment properties in Chicago. Some of my clients have used lenders from California. Not a red flag by any means, but certainly not IDEAL. This is why: if your appraiser is having a bad day, and he or she comes up a little light on a property's resale value, the out-of-state lender is going to take that appraisal as gospel. The lender, then, could even tell the borrower that they're not going to do the deal. However, a local lender will be able to tell you IN A SECOND what they think of that particular property because they most likely have lended (or at least have been asked to lend) in exactly the same neighborhood you're trying to purchase in. Your local lender will have much more flexibility in their underwriting abilities on your deals due to their market knowledge and experience. Which, in turn, can only be positive for the borrower.

Another reason to work with someone local if you can: familiarity & relationship. Do you really think the guy in California who's seen your name on his computer screen a few times and had a couple telephone conversations with you is really going to be there for you if you need something on a Sunday night? Probably not. What about the guy who's from your market, who's driven to meet you face-to-face (several times), had lunch with you, and golfs with your dad every month? If something happened and you NEEDED to reach THAT guy, you'd get some answers ASAP, right? At least it's more likely. 

You should talk to several lenders. In-state. Out-of-state. All of the above. But try to spend most of time with people in, or just immediately outside of, your county. Having a local contact will be invaluable, with any facet of real estate. No matter if it's a lender, an attorney, a broker, etc. No one knows your market like the people within your market.

Hope this helps!

Hi @Mindi Rosser!

Great question!

I've been a real estate broker for a little over six years now, and I've got to say, I've put my car through it all! All the miles, pot-holes, construction sites, neighborhoods etc. that I've driven through have really put my office-on-wheels through a lot. That being said, I love my car!

Find something with good gas mileage (30+ miles p/gallon or better), easy to drive, and that is appealing enough for your clients and customers to feel comfortable in. I'm from Texas, but a giant truck really doesn't fit the bill 100% with this criteria.

I drive a 2011 Chevy Cruz. I bought it used for $18,000 in 2012 with almost 12,000 miles on it. Flash forward 6 years, and I have just under 150,000 miles on it, and she still does her job perfectly. It's by no means my dream car, but it gets the job done, it looks nice, and I can comfortably fit another three people inside if I need to. Hopefully I have another 50,000 or more miles to go before I get another.

In terms of reliability, I hear Honda and Toyota are great cars that have low maintenance needs. You can surely find something affordable with good gas mileage as well.

Either way, whatever you decide, think about your business first, rather than personal preference. Drive what you need to drive for the next 5 years so you can drive want you want to drive in the 5 years after.

Hope this helps! And good luck with your RE career! I'm right next door in IL if you ever decide to cross the state line!

@Michael Cavitolo

Good morning, sir!

This is a rhetorical question, so please don't feel the need to answer publicly:

Is your current income currently coming in from a steady job that you foresee retaining for quite some time? Is that yearly amount expected to grow in the future?

If so, that seems like a substantial amount that you are able to earn and save. That is awesome, congratulations!

Honestly, if that's the case, start acquiring rentals for your real estate portfolio now. If you search the forums, you'll find that most investors agree that if you truly want to build long-term WEALTH, then rentals is the way to go, hands down, over flips. 

You'll want to find property that is in distressed condition, fix it up, and refi out so you can get most of your cash back to reinvest in even more properties. You'll need to "buy right", though. Make sure you're purchasing in areas that have steady growth, thriving businesses, low crime, and good schools. 

And remember, substantial passive income doesn't come from one rental unit. It comes from tens and hundreds of them, so you'll need to buy more than one. Imagine if you start buying 2-3 rental homes per year. By age 30, you'll have close to 16-20 properties that should all be cash flowing, and most likely appreciating. Your tenants will be paying down your mortgages (which means your equity is increasing), and the tax benefits you can use will keep money in your pocket as well. Eventually you can trade all your single family homes in for a massive multifamily unit, or several! Or just keep your single family's.

Either way, I'd highly recommend rentals over flips, especially at your age, if you're looking for long term wealth and you have an excellent paying job. Flips are great, but most of the millionaire RE investors I know attest all their success to the buy & hold game.

Hope this helps!

@Jorge P.

Sounds like a good problem to have, sir!

Honestly, it all depends on personality here, but in my opinion:

Take the current offer and make your quick $130,000.

How long will your reno take? And who's to say you actually get $600,000 for it?

You bought it for 200k, you're putting in $180k, after closing costs, commissions, holding costs, etc. How much will you profit? Close to the $130,000 anyway? Not to mention the time spent, stress and headaches that come with managing a project.

Whatever you decide, it sounds like a good deal, anyway. 

However, if it were me, I'd do the deal today!

Hope that helps!

@Michael Clay

Good morning sir!

You'll absolutely want an inspection done, along with an appraisal done by a THIRD PARTY appraiser before closing. In other words, do not get one from your borrower. I would hire one out independently so that the results are not biased.

Secondly, you should absolutely get your borrower's financial information: recent pay stubs, last year's tax return, any other retirement accounts, or IRA accounts, etc. that your borrower can show. You'll also want to run their credit. More important than credit, however, in my opinion, will be their cash on hand. They should have significant funds of their own in case something happens. And make sure that the funds have been in their account for a while. That's called "seasoning". If all their money was gifted by a relative last week, I wouldn't feel safe doing the loan, if it were me.

Are you putting the borrower on a draw system, or are you giving them 100% of the loan up front? Most HML's do the draw. In other words, you'll provide 100% of the rehab amount, but your borrower will come out of their own pocket initially to start the repairs. As repairs are made, you will reimburse the rehab funds from your loan as needed. Make sense? If you give all your money up front, your borrower might just go buy a car with it.

It looks like you're getting a lot of great advice on this thread. Just make sure you think this through, and hire professional help. I'm sure there's a lot of money to be made as a lender, but you don't want to take a bath on your first go-round.

Good luck!

@Amber H.

Good morning!!

This is a good question.

You see seasoned investors purchasing homes at the auctions site-unseen ALL the time. However, I've always wondered myself: "How are they comfortably able to buy these things without seeing the inside?"

On the property that you're looking to make an offer on, is it vacant? Can you drive by the home? Can you walk in the back yard and inspect the exterior? Can you peak through the windows to get a better "feel" for the interior condition? If you can answer "YES" to these questions, that could help significantly.

Are there basements in Florida? If so, you're guestimating just got a whole lot more challenging. Potential foundation issues can usually be spotted from cracks in the exterior brick, but you'd really need to walk the house to see if you feel any sloping. If the home has a basement however, there are too many unknowns for me to buy site-unseen. Unless it was a hellofadeal, I'm not sure if I could do it.

My suggestion is: DON'T BUY IT. There should be plenty more opportunities out there where you CAN get access to the property. Unless you have crazy experience and know exactly what to look for, I wouldn't do it.

Hope that helps!

@Matthew Evans

Good morning sir!

Congrats on the upcoming baby! Sounds like you have a LOT of exciting things going on right now.

This question gets asked pretty frequently, and the best advice that I've heard, and that I can give, is that you should definitely start NOW. You'll never have the ideal conditions. If you start now, as opposed to three years from now, I think you thank yourself later.

Please don't rush out and buy your first income property NOW, however! Start with your local REIA, meet other investors that are having success in the same niche that you're looking to get into, and soak up their knowledge and expertise. Spend time with them. Be-friend them. But start now. After 3-6 months of that, you might be ready to pull the trigger on YOUR first deal. 15 years from now that income property could be your baby's college tuition? You can't do that though if you wait another 5 years before you start making the proper connections and building the proper knowledge.

Go to meetup.com. There should be plenty of real estate meetups on a daily basis in your market. Continue reading through the BP forums to learn. But I would definitely start preparing yourself to buy as soon as you can, assuming you have the right knowledge and mentorship.

Hope this helps!

@Daniel Vasilyuk

Hey bud, how are you?!

First off, congratulations on starting to take the first leap! That's an exciting time!

Sounds like you have some liquid capital, that's good. Maybe you should wait to get a little bit more though. The only reason I say that, is because most of the hard money lenders that I know of, may want to see just a little more in the bank, but honestly, you're off to a great start. If you're not looking to use hard money on your deals, you may want to refer to another answer within this thread. I'm not terribly familiar with transactions that are not financed by hard money, or cash.

Have you attended any meetups in your area? Typically there's anywhere from 2-10 per day, at least in Chicago. Check out meetup.com and sort through the local real estate meetups in your area. I guarantee you can find someone who's already doing exactly what you're looking to get into already in your market. Take them to lunch. Tell them your situation. Ask them for guidance. Offer to work for them for free somehow to sweeten the deal for them. You will find a lot of great info on BP about how to start, how to finance, etc., but until you meet someone face to face in your market that can act as a solid mentor, it might be difficult to actually pull the trigger and buy. At least it would be for me.

So there you have it! Go out there and meet some people. A lot of them! Find a mentor to help you out. You're right there.

Hope this helps!