All Forum Posts by: Wendell De Guzman

 Travis,

If you want to be more hands on, then take the BRRRR approach.

Buy-Rehab-Rent-Refinance-Repeat.

By doing so, your $150K can be leveraged across 10 properties.

Small multi's (2-4 units) are plentiful here in Chicago but you have to be careful which areas you buy them in. If you want to be more hands on then it makes sense to get back to the US. Otherwise, work with an active partner who is willing to put some skin in the game. I don't like turnkey investments necessarily because most providers do not put any skin in the game - they sell you a property at 100% of market value and they profit from you continually by doing the Property Management. In all these, the TK provider has ZERO RISK and therefore nothing to lose if he/she sells you an overpriced property and mismanage the property to the ground.

 Amiris,

Most people who start out as real estate agents FAIL. According to the post below, 87% of beginning real estate agents FAIL in the first 5 years.

87% of real estate agents FAIL

The article points out that these agents don't even make any money.

So the experience of your BROKE real estate agent friend is not unique.

Can the same be said of wholesalers? Probably.

What about rehabbers? Maybe.

Developers - yes there are many failures among them too.

Landlords? I'm not sure but I know there are landlords who fail miserably - I end up buying and then wholesaling some of their properties.

So...as you can see...in real estate, there are many people who fail.

BUT if I were you, I will not worry about all these people who fail. Instead, I will associate with SUCCESSFUL real estate people (agents, wholesalers, landlords, rehabbers, developers, etc) and find out why and how they succeeded.

Bottomline: success is not dependent on your specialty (it does not matter if you're an agent, a whoelsaler, landlord, developer, etc).

Success is not based on personality. I've seen extroverts or outgoing people succeed and I've seen them fail in real estate. I've seen introverts become extremely wealthy and I've seen a lot of them fail miserably. One introvert I know have done 600 deals. I trained him and he did more deals than I did (although I do bigger deals than him).

Success is based on developing HABITS that will lead you to success. For example, worrying too much is a BAD habit that will lead you nowhere. Hustling and willingness to network offline and online is a good habit that will lead you to success. Continually learning, and asking questions is another good habit.

So there...just pick one and just DO IT.

 Ooopps - I clicked "Post Reply" too soon. Here it is

To help answer your question, here's a question:

What does SUCCESS look like for you and your boyfriend?

What will make you say you're successful on your first deal?

Will it be:

1. Cash (profit) in your pocket; or

2. A property in a great area in your boyfriend's name with a HUGE equity, or

3. A property in a rental area in your boyfriend's name that produces passive income

Depending on which you choose, that will determine your focus.

Keep in mind that there are risks in any exit strategy and you have to know what you're doing. Also, exit strategies typically will give you one of the three benefits above but not all three.

Also, the time it takes to realize your success will be exit-strategy dependent.

Are you willing to wait...

1-3 years? Then rent to own or having a rental property are good exit strategies

6-12 months? Then rehabbing makes sense

30-60 days? Then you should wholesale

Makes sense?

 Good input from Sean. In some states, you have to be careful how you "wholesale". If you don't double close, you're practicing real estate brokering without a license. You need to check with an attorney in your state or a local title company.

Also, in some situations, assignment of contract is not allowed.

Here they are:

1. Buying properties from HUD

2. Buying properties from banks

3. Buying a shortsale

And I agree further that depending on your closing costs, it might make sense to just do the double close but transactional fee is needed for you to close your A-B transaction. I can point you in the right direction if you need transactional funding or any other wholesaling help since I've done lots of wholesale deals.

Tanya,

In general, the 1% rule applies in B, and C areas while the 2% rule works in C, D and F areas. Attached is how areas are classified as A - F.

Having said that, these rules of thumb are just that, rough guidelines.

Keep in mind that profit from a property comes not just from the cashflow but also from appreciation/ equity. In fact, equity is really where the BIG money is. Hence, it's crucial to buy a property below market in a good location where people want to live where you have strong sources of jobs and booming economies.

Hence, you might be satisfied with low cashflow (hence, lower than 1%) but if your appreciation is good or you buy it cheap enough, you will come out way ahead vs. investors who focus on cheap properties with good cashflow but too much hassle and no appreciation (in fact, properties in D & F areas have real NEGATIVE appreciation).

Thanks for sharing this Bevla.

I love Chicago for fix-n-flip and rent to own. I do, however love Cincinnati Ohio for buy-and-hold.

We are looking for a few good GCs in the Chicagoland area.

More specifically, we need GCs with enough crews to manage the renovation of 2 new houses a week. We're getting these projects in South Cook county - places like Homewood, Hazelcrest, Oak Lawn, Bellwood, Cicero, etc.

If you have the capacity to take on at least 1 new project a week with average renovation cost of around $30,000, please contact Timothy Foster, our Project Manager at [email protected]. Please email to him Proof of Your Previous Projects (e.g., before and after pictures, Scope of Work, etc). 

The GC we're looking for needs to fit the following requirements:

1. Can float the initial 20-30% of the project cost (why? because we sometimes get financing from hard money lenders and they give us rehab draws based on the work done so you got to front the initial cost)

2. Have enough crew members to handle the volume (at least 1 new project a week or 4 new projects a month)

3. Have enough crew members that can work quickly through projects because we impose a $100 penalty per day of delay based on project timelines (and we give a BONUS of $100/day as well for projects finished ahead of schedule)

4. Have high rehab quality while having competitive pricing

If you want your crew members to never run out of projects, working with PCI LLC is your best bet to do that specially as the winter months come along. Most of our projects are RENT TO OWN not fix-n-flips so the project cost averages around $30,000/ project (most projects are $20,000 and below). Average timeline is usually 5 weeks.

So, if you can finish a job quickly with the lowest possible cost and good enough quality, please contact Timothy Foster now at [email protected].

 Yup - definitely get a local attorney. I am not an attorney and below is not legal advice. I just have some experience in acquiring properties through Land Trusts.

In a land trust, you have to know/ get:

1. Who is the Trustee?

2. Who are the Beneficial Interests or Beneficiaries of the Trust?

3. Do you have the Trust Agreement copy?

To be able to be in control, the Beneficiaries of the Trust can sign a document firing the current trustee (I assume this is the guy who put this whole "mess" together) and assigning one of you or one of the attorneys as the Trustee.

You need to do this to ensure that you guys have the legal right to transact for the Trust which owns the property. You don't want the original guy to be in control because he is just ignoring this property now.

So that's Step 1: Control the Trust by appointing a new Trustee (that all 5 of you trust)

Step 2 is Find out everything you can about the property - what's going on with its insurance, back taxes, any unpaid utilities, any unpaid mechanics lien, etc? You can only do Step 2 thoroughly if you control the Trust.

Step 3: once you know the problems, come up with a solution or several solutions. 

What are the numbers? ARV, Repairs that are still needed to be done, unpaid bills, liens, etc?

Based on the numbers, you can calculate how much the property should be sold for to cover these. If you can't sell and breakeven, your Trustee can negotiate with all the lien holders and see if they're willing to give you a discount (example: if there are mechanics lien of $20,000...talk to the contractor owed and negotiate to give him $4,000 as full pay off so you get a $16K discount).

I know this is quite a lengthy answer but I hope this gives you a step-by-step framework for you to solve such a problem.

 I agree with Bob. For smaller residential properties (2-4 units and singles), their valuation is normally based on comparable sales analysis not income method analysis.

You can still analyze it based on the income method analysis but if you expect 8-12% cap for residential...specially in high priced, highly appreciating areas, then income method analysis will result in you missing out on a lot of deals.