All Forum Posts by: Victor Baronich

Michael, This will leave you with no income during the "down payment payoff" period.  This is not good.  Let me share with you what I do:

Criteria in buying a rental:   must cash flow $150 and up after all expenses.

Example of last house we bought:

Paid 38k.

Down payment: $7600.

Rent is $750. 

After Expenses that leaves $250 / month.

We used an investor that paid the $7600.  We are paying 10% yearly from the rent each month.  So 10% of $7600 is $760.  Divide that by 12 months equals $63 / month.  So each month the investor gets the $63 and we get $187.  In 4-6 years when you can refinance and pull out down payment the investor gets the money back.  Over 5 years this is a 50% increase.

This works well because making 10% on your money is pretty good for most people, and we get cash flow every month with NO out of pocket expenses unless we have to fix up the property.

We look for middle age people who are looking at their retirement accounts and are displeased with the 3-3.5% their annuities and other retirement instruments are giving them.  They are happy to get the 10% and you can attract quite a few people with that strong number, and the fact that the investments are generally low and come with monthly payments that are short term and long term capital gains.

We then have a spreadsheet where we add each individual investment per line along with the returns and timeline.  I show that to prospective investors to show our history, and add credibility.    It should be an easy "sell", the harder part is finding the houses that work.

I watch my score religiously, both with the bank we use (they offer free CS) and experian.com.  I can tell you with certainty that a "mortgage" or other R/E related inquiry from a bank or lender such as lima one , or loan depot will absolutely lower your score around 20-40 points for about a month.  In the second month the score will rebound generally half of that.  In the third month it will be at or nearly at the previous score.  I see this also with several friends of mine.  This is also reflected in what the banks see.  I had one bank pull CS in July,  then after buying houses and maxing that bank out I went to the next lender in about 45 days, and score was down about 15 points.  I do not miss payments, and the only thing on my score is the houses we buy and a cc that is always paid off and generally has no activity.

I hear all the time from lenders that it will not affect the score, but in the real world, for a short time, it simply is not true.

I cannot speak for other inquiry types such as car loans.

Hi, I have been reading as much as possible about real estate lately.  My goal is to get to $6k/month as fast as possible.  My current strategy is to by homes with $250/month profit and under $75k purchase price.  I currently have 4.  I need 21 more.  I am thinking of flipping a few to be able to have down payment money.  So far everything is going great, just slower than I'd like.

I was watching Kris Krohn on youtube.     This video:  https://youtu.be/VF-7E-f0y24

He says he developed 25 properties that averaged between $350 - $700 / month.  He did this in a little over 4 years to make over 10k/month.  The amazing thing is he says now that he knows how to do it, he could do the same thing again in 6 months using OPM!

How is this possible?  He offers the $1500 course, which I'd like to hear from someone who has taken it.  I have no problem with buying the course and don't expect to get that info for free here.  It does however seem to good to be true.  I have several investors who are willing to back me.  We have tried to think of every scenario of using the investors money for the down payment, but it never seems to be worth it.  It just takes too long to pay them back and you basically don't make anything monthly because of payments made to the investor.  I am currently preapproved for 7 more mortgages and have the investor backing, it just seems I am missing something that can put it all together.   He like lease options, and also pulling equity out to continue buying the next property, but all of those things take some time, I can't imagine how that could be done in 6 months or even a year.

Can someone shed some light on this for me.  Or maybe enlighten me on a scenario they use to use investors money for downpayments.  

Thanks, Victor.

Hey guys,  I currently have a very strong background building houses, and have never been apart of a real estate transaction.  I am wanting to get into wholesaling in order to make some quick money to pay down the mortgages on our rentals.  I am having some trouble wrapping my brain around a few concepts. I have searched for answers but can't seem to find my exact questions.  I have read Phil Pustejovsky's book and watched tons of videos. I am on the cusp of spending the $15k to join Phil's training program.  Maybe someone can point me to a post or video or just enlighten me on these questions and save me the money:

1.  How are you finding these "distressed" deals?  It seems to me that most people are putting out signs such as the "we buy ugly houses", or maybe a craigslist ad.

2.  Exactly what type of contract are you using, and what are you saying to a homeowner to "tie up" the house.  Why would someone sign a contract with you which prevents them from selling their home, while they wait on you to find an investor buyer?  Is there a catch that I'm not aware of? My guess is that if you can't find a buyer, you are on the hook to purchase the home.  What if you can't get the capital to do this?

3.  Where do I get this contract?  I have asked my lawyer and several real estate agents, and they said just download one off the internet.  These seem to be geared toward traditional transactions, and I can't see how they apply to the creative transactions.

Other than that, this is how I am thinking the flow of the transaction goes:  find the deal -> "tie up" with contract -> find buyer -> sell contract to the buyer for a profit.  let the investor close with the homeowner.

Is that correct?

I am very excited, and willing to learn.  This is just very new.  Thanks for any help!

Hey sorry, that is including the mortgage. The agent does not own any. They we're explaining what other investors are doing.

My PM has a 6% vacancy rate over all her clients, and I have never had more than 18 days in a row vacant. 

Hey! I was recently talking to a realtor and we were discussing homes I could buy for rentals. She informed me that she had several investors that were simply buying up whole streets of the big home builders neighborhoods (DSLD, Adams Homes, Etc.), and renting them for positive cash flow. I did a little research myself with homes for sale at retail on the MLS and found that for specific areas around where I live, it seems that for a home under $120k that is at or near move in ready, would cash flow around $400-$500 / month (after management, taxes, insurance).

This seems like a revelation to me?!  I have a great relationship with a local bank that focuses on investors, and we have done several deals together. It seems as though I could snatch up 7 or 8 properties nearly immediately and increase my monthly cash flow around 3k.  

I did some searching on this site and couldn't find a post on this exact scenario.  Is there anyone out there doing this?  Is there some hidden item I am missing?  It seems almost too good to be true.  I already have some rentals and with that extra coming in, I could start really paying mortgages off fast (<2 years on existing rentals), which would only free up that much more money.

Thanks for any insight!