Author Archive

Master Due Diligence

Posted on May 1, 2017 by

I have always been surprised by the lack of time investors, wholesalers and even real estate agents put into properly advertising an investment deal. They all invest an endless amount of time and money on contracting a deal, only to drop the ball on the advertising side. Many times you can take the numbers, CMAs, spreadsheets, etc. that are used to advertise a property and in a few minutes pick the deal apart. Maybe it is a lack of time or knowledge but unfortunately I feel most of the time it is an attempt to mislead or just make a paycheck. Sometimes the info looks so well put together and impressive that it might even slip by an experienced buyer. Therefore you must know your numbers.

If you are a wholesaler, investor and/or real estate agent you really need to know your numbers. There is not a day I do not receive a wannabe deal that looks good at first glance. However, once I take a closer look, it is as bad as the ones I just deleted. Let us start with the most obvious mistake, the numbers. So the very first thing I do is add the recommended repairs plus the asking price and divide it by the estimated after repair value (ARV). I like for this number to be between 70%- 75% loan to value (LTV). Nowadays, this number is 80%+ which is usually not worth the headache unless the property value is higher. But even then, I try to stay away from that high of a LTV. Heck sometime the property is marketed at one LTV when it is a completely different LTV.  Read More→

Doing Equals Results

Posted on April 3, 2017 by

A few months ago, I began learning about and got more involved in apartment investing. I wrote about the steps I took to make industry contacts while building credibility. Fast forward to now and my work is definitely paying off. In many ways, the results I was looking for are coming to fruition but there are also other results, that I did not expect, that are appearing as well.

Some results I expected from my efforts were credibility, partnerships, maybe a mentor, an actual deal, financing and much more that will definitely come with patience and more work. At the beginning I thought credibility was going to the hardest part but it was not. Because I had done my homework and took the time to learn this niche, the people who I spoke with respected the dedication. Another surprise was that all my single family investing actually carried some credibility of its’ own into the apartment investment crowd. From many articles, podcasts, videos, etc. I was led to believe that the multifamily crowd looked down on the single family residential (SFR) investors but it simply was/is not true. In fact, while SFR investing is not a prerequisite, there are many ex- SFR investors who invest in multifamily. These are the people that relate to my current situation and have been eager to provide information and guidance. These relationships have grown into discussions around partnerships and potential financing. While I have still not identified an official mentor I am treating all the assistance I am receiving from multiple investors as a mentorship. This also gives me the opportunity to discuss one aspect of apartment investing with multiple investors so I can then try and decipher which information is best for me and/or which information I personally want to apply. While I have not actually found a multifamily deal that I personally like, I have underwritten many properties. Just like SFR investing, it’s a numbers game.  Read More→

You Get What You Accept

Posted on March 6, 2017 by

If you ask my investors, private lenders, contractors, buyers, sellers, friends etc. to describe me, which I did, they will all tell you that I am easy to work with, a nice guy, dependable, hardworking and focused/ determined. These were the most common replies. To be honest I was a bit surprised. I expected the hardworking, dependable and focused, I was happy to hear nice guy but easy to work with was not on my radar.

Easy to work with was not something I would have used to describe myself so I decided to investigate. When I partner with other investors and/or private lenders I try to include in the agreement that I will be the final decision maker when it comes to renovations. Obviously, this does not always happen but I try. I do not do this to be controlling. I like it this way because everyone gives their opinions to me or the assigned person and that person makes a decision and executes. This keeps the project moving along smoothly. I’m also the person who actually reads through agreements and lender documents so if there is something that does not add up I make sure it is corrected and/or honored. There have been many instances where I have called the private lender to correct the documents his/her attorney sent that contained terms that were not agreed upon. I would have thought they would have said I was picky or a difficult partner or borrower but it was quite the contrary. They appreciated the fact that I was detailed and understood that I was simply making sure I got what was agreed. One person said that this actually made them even more comfortable with lending me money.  Read More→

Having met with numerous new investors and/or wholesalers, I am always asked, “How do I get more properties? Where can I find more deals? What kind of marketing do you do to get leads?” The questions continue with the same idea in mind. I understand that you are eager to start and begin marketing in order to get your first deal done, but are you truly ready? In most cases I would say, NO.

Marketing is not cheap and you may be throwing away money if you do not have a good foundation in sales, or better yet problem solving. Over the years, I have made more money solving problems than “selling” a person on selling me their property. In fact, I am rarely the highest bidder. I attribute this to being able to come up with the best solution to the seller’s problems. Most would assume that the property for sale is the problem but many times that is only the start. Usually a person is selling a property to get rid of a headache and/or to realize a profit in order to solve another lingering problem. Problems can be as small as not being able to repair the property to as big as being behind a year or more on mortgage payments. Let me give some examples to demonstrate what it is I am referring to.  Read More→

Know Your Guru

Posted on January 9, 2017 by

With the internet, fake news and social media anyone can create a persona and/or a story and have people believing it is true. With a great marketing plan, a website, paid likes, paid followers, a cheap book on Amazon written through research as a top seller and some know how you can be the next real estate guru. And who knows, maybe you end up knowing more IN THEORY than actual successful investors but it would only be in theory. Therefore, you should be cautious of who you are giving your money to and more importantly who you are learning from. Here are a few questions you should ask along with a few acceptable answers.

The number one thing to do is find referrals. I do not mean the testimonials on their website, unless you personally know of that person in your market area, but someone in your local REIA that has used that person and has hopefully had success. Ask them if the guru and/or their program provided what it advertised. However, also keep in mind that you have to ask detailed questions to find out if that person actually implemented the program. For this reason, you want to find as many referrals/users as possible. Eventually you will begin to notice a consistency that the program was not as advertised, good but lacked content, ok for a beginner, not worth buying, terrible or maybe so bad they will give you the content.  Read More→

Use What You Know to Grow

Posted on December 5, 2016 by

In the last article, I briefly discussed the beginning of my venture into apartment investing. I encouraged people to do some self-learning before going to networking events so you have a better idea about what is going on. While attending plenty of networking events and having a handful of meetings, I realized that you may have something the person you are looking to for advice wants to learn from you. This works out great because in all my articles I discuss the importance of win-win scenarios.

Let me explain what has happened in my pursuit in learning how to invest in multi-family. First, most multi-family clubs or gurus want you to spend $5,000-$25,000 for them to teach you how to invest in multi-family. The lower end is reasonable but you don’t get much and the higher end is crazy. I’d rather take that money and be a limited partner in an actual deal. Keep in mind I am referring to multifamily with a purchase price of at least 1MM and/or 50+ units. I have participated in much smaller multifamily properties. Luckily, I found some great people that I hope will be able to teach me what I need to learn to be successful. They told me it was not worth investing that much when they were willing to do it in exchange for my time and expertise.  Read More→

Self-Learning to Network

Posted on November 7, 2016 by

The last month or so I have been looking more and more into investing in apartments. However, I did not attend local MeetUps or other groups dedicated to apartment investing until this week. I self-educated as much as possible through books, podcasts, YouTube video and articles. I did this to prepare for the meetings and it paid off.

The reason I learned as much as possible before attending these apartment investing meetings was so I can understand what was being discussed. I have led single family investment groups in the past and caught myself speaking over many of the attendees. It was not done intentionally but because I had been doing it for so long I was doing it unconsciously. I have also seen other instructors and speakers do the same thing.  Read More→

Take Action Now!

Posted on October 3, 2016 by

For the last few years I have been giving out advice on how to invest in real estate. On top of that I have been giving out the content for free. However, there are a large number of you who have not or will not take action. At some point you have to take everything you have learned here and everywhere else and take action. Do not be another “paralysis by analysis” type.

The number one thing that you need to do is find a deal. A real deal that anyone would buy, finance and/or want to partner on. In most markets that I am in that magic number is currently 70% LTV minus repairs, sometimes 75% LTV minus repairs. Many would say that these deals do not exist but I am purchasing at least one on these deals each month. You do have to do due diligence on plenty of not so attractive properties but if you look at enough properties you will find a deal. When you find a deal, do not hesitate to write the contract and lock the deal up. Take ACTION! If you write an option contract you have nothing to lose but the option money, which can be as low as $10 but usually $100. This is where your negotiation comes into play. During this option period you will do more extensive due diligence and discover if you really do have a deal.  Read More→

Fall in Love with the Numbers

Posted on September 7, 2016 by

I’ve partnered with many investors and the one thing that I continue to see over and over again is the fact that the investor falls in love with the house. What I mean by that is they become attached to the property itself instead of the financials, which is not the ideal situation.

You’ve heard many people say in the past it’s just business and that’s exactly what it should be, just business. When you purchase a property to renovate and sell or rent, you should only be interested in the numbers and location. I hear many newbie investors and some seasoned investors comment that they really love an area or they really love a house but that’s not what they should be focused on.

As an investor you should first say I love these numbers, I like the ROI and/or I like the potential cash flow. If the numbers work then you can start deciding whether or not you like the area, feel comfortable going there to collect rent, or if you are flipping, would you consider keeping the home as a rental if it does not sell. More or less this should be your train of thought as an investor. If it is not, you may start getting into a little bit of trouble.  Read More→

If you are going to meet a seller you will inevitably hear objections to the first price you offer. You can be as little as $1,000.00 off the seller’s asking price and the seller will still look to get you to the asking price. It is in our human nature to try to look out for our best interest so do not get upset. All you simply have to do is prepare for the most common objections and get the seller to agree with you.

Here are the objections I run into the most and how I have been able to successfully overcome them.

  1. Your offer is too low. Usually before I make an offer I try to have them tell me their asking price. Once in a blue moon their asking price is what you can pay. Usually, however, the price is higher. Naturally, when I make the offer the seller’s response is that my offer is too low. If they have not given me a price I ask for it again. From this point you have to be good at math or pull out a calculator and explain the offer to the seller. Show the seller the closing cost, carrying cost, renovation expense, possible unknowns specific to their home, closing cost on the back end, agent commissions, marketing expenses, etc. I actually show sellers what I plan to make on their home and what it breaks down to in months and weeks. In most cases, they see I’m not trying to get rich off one house and realize my offer is a fair offer.  Read More→

Rehab Execution Is Key

Posted on July 11, 2016 by

Real estate investing is easy once you have an idea of what you are doing but there are many moving parts. The one gear that can make or break a real estate investment project is the execution of the renovation. You could have bought the property for the right price, this is where you make your money, but not properly executing a renovation can kill all the hard work done upfront.

Before I learned how to contract properties, wholesale and/or invest, I knew the cost of construction and materials. I was into DIY before it was mainstream. At first it was by force because my father had me helping him with projects around the house. Later in life it grew on me. It pains me still today to pay for items I know I can do myself but it no longer makes business sense for me to do those items.  I remember a contractor trying to charge me above retail prices because I was young, well dressed and an investor. After I explained the process of the work he was being hired to do, the cost of the material and the time it will take, I asked for a realistic price. Not to my surprise I received an amazing price. I still do this today when contractors try to overcharge and it usually works. In fact, they respect me more for it. While you are not doing the work you want to know what goes into doing the renovation. How can you hire a contractor if you do not know what he is being hired to do? Also, do not judge a contractor only by a finished product but from start to finish. I have walked projects that looked great but once I “looked under the hood” I notice the craftsmanship was lacking. Read More→

Details

Posted on June 6, 2016 by

Many people expect to learn how to invest in real estate from seminars, books, videos, etc. but until you actually pull the trigger and go all in you will not know how to invest in real estate. Yes, you will learn the procedure and steps involved but those usually do not go as planned either. As Mike Tyson once said, “Everybody has a plan until they get punched in the mouth.” Well, real estate is no different.

I know you heard this a million times but if this was easy there would be more people doing it, successfully. The amount of people that attempt to invest in real estate has increased drastically in the last few years. Suddenly, overnight, everyone was able to “BUY HOUSES CASH.” It might be due to all the new television shows, new investment clubs, one year old gurus, a volatile stock market, etc. but whatever the reason more people are giving real estate investing a shot. The best thing you can do when investing in real estate is to pay attention to the details. This can be the difference between getting punched in the mouth and moving forward or giving up because it was too much.  Read More→

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