What has kept you from progress? (And did you overcome it?)

133 Replies

Originally posted by @Jan Kerr :

@David Adamolekun There are a ton of Hard Money Lenders out there. They may all have similar policies, but they are all actually very different in what they will or will not do. Their rates and lending criteria are very personal to them and where they will lend is based on where they are licensed to lend. If you would like, I can send you a Hard Money Lender Profile Sheet that will help you create a profile on every lender you find so you will know at a glance what they will or will not do and what they want from you as a borrower. Please feel free to message me privately with your email if you want a copy of that sheet. I have found lots of lenders who have lower lending threshholds in my searches. There a website I can share with you that has a directory of lenders searchable by state. 

I agree with Jan. And also, have a back-up plan in case you don't find the right lender in time. Is there anyone you can partner with that could pay for the rehab part of it? Have you considered wholesaling it to a cash buyer for a fee? Is the seller motivated enough to consider short-term seller financing rather than lose the deal? Get creative!

 

Originally posted by @Nick Rutkowski :

@Lori Greene

I’m slowing my own progress. I have two left feet and I hammer my thumb instead of the nail. 2 + 2 = 5, I file my taxes on 4/16, and I say “yes” to the sellers terms.

Just kidding!

I really should hire people instead of doing the work myself.

You know Nick, that has been the main theme of this thread so far. Trying to do everything on your own instead of building a team to help you has been the biggest reason BP members have listed in this thread as to what has slowed their progress. 

@Lori Greene 1. My credit isn’t the best I don’t have enough of it to take out a loan against properties or anything so I pay cash but once I can finance things my business will skyrocket I can finally get my Heloc I’m going to pay cash for a four plex and then use that money to get more credit then take out a huge Heloc. I’m also hiring a credit repair company to take my medical bills off as well.

2. I’m self employed so I don’t show an income besides my rentals so it’s hard unless the lender is investor friendly but I found a lender with good terms who says once my score is above 700 then they will open up doors so I’m working towards that goal

Originally posted by @Ola Dantis :
Originally posted by @Lori Greene:
Originally posted by @Ola Dantis:

@Lori Greene I love @Michael Ablan said! 

Trying to do this all by myself in the beginning. It was my brain convincing that I could do it all by myself. 

When I started partnering with others and assigning tasks, MAGIC started happening!  

Ola, I know what you mean. I'm always trying to help investors understand how relationships can make the difference between success and failure. When in your journey did you realize this? What inspired you to start working with others or how did it come about? Who did you assign tasks to? 

 I guess when I started feeling super overwhelmed and realised that this can't be right? No one can be doing this successfully using this approach... That's when I realized. A mentor encouraged me to partner with others. As for tasks, we use VAs and other resources, paid or otherwise. 

That's awesome. A good mentor or partner can be invaluable. We sometimes use Virtual Assistants for digital marketing tasks. And we definitely love working with partners and relationships.

Originally posted by @Jermell Shavers :

@Lori Greene 1. My credit isn’t the best I don’t have enough of it to take out a loan against properties or anything so I pay cash but once I can finance things my business will skyrocket I can finally get my Heloc I’m going to pay cash for a four plex and then use that money to get more credit then take out a huge Heloc. I’m also hiring a credit repair company to take my medical bills off as well.

2. I’m self employed so I don’t show an income besides my rentals so it’s hard unless the lender is investor friendly but I found a lender with good terms who says once my score is above 700 then they will open up doors so I’m working towards that goal

Jermell, have you considered using hard money lenders and private money partners so you can do more deals before your credit score goes up and before you free up your cash? Or you can even partner with someone else who has a great credit score too. 

@Lori Greene . It’s hard finding a partner tbh I’d rather be on my own I’m not much for risk tolerance so far.

I have thought about private money or hard money but hard money is dangerous and carries more risk and it’s only a short term solution best used for rehabs and flips.

I’ll buy one more property in cash and once that’s done my credit and I come should be enough to finance things. Then I can keep my cash may pay for a duplex or another sfh

Originally posted by @Jermell Shavers :

@Lori Greene. It’s hard finding a partner tbh I’d rather be on my own I’m not much for risk tolerance so far.

I have thought about private money or hard money but hard money is dangerous and carries more risk and it’s only a short term solution best used for rehabs and flips.

I’ll buy one more property in cash and once that’s done my credit and I come should be enough to finance things. Then I can keep my cash may pay for a duplex or another sfh

Jermell, it's all a matter or preference. I can understand your preference to stay away from hard money. It's commonly used by investors but it's not for everyone. It's great that you have enough to buy another property with cash. Good for you!

For me it's been finding deals that numbers make sense.

I have funding

I have time

I have some experience

I have flipped 3 and held 1 in the last 2 years. We are constantly searching, like everyday. I have goals and am ready to pull the trigger on multiple properties but numbers are just too tight.

To overcome this we have been working on setting up a marketing system to hopefully bring in our own off market deals.

Originally posted by @Amelia McGee :

Hi @Lori Greene, i found a fixer upper near my house and analyzed it using the BRRRR calculator. But I'm not sure I put in the right numbers. Let me know if you can't see the image.

 

Yes, Amelia, I can see the numbers. Online calculators can be a time saver but I feel like people are too dependent on calculators. If you really want to make sure you are running the numbers right, you need to learn the formula's and run them yourself so you understand each part of the formula and why it's important. I have to run right now, but tomorrow I will take a closer look at these and show you some super easy quick formulas that you can run manually yourself as both cash flow and as a flip. 

Sometimes a property works well as a rental but not a flip and vice versa. I always let the numbers, the situation of the seller, the details of the property and the loan determine the best offer strategy and exit strategy. I will elaborate tomorrow.

Originally posted by @Erik Baumer :

For me it's been finding deals that numbers make sense.

I have funding

I have time

I have some experience

I have flipped 3 and held 1 in the last 2 years. We are constantly searching, like everyday. I have goals and am ready to pull the trigger on multiple properties but numbers are just too tight.

To overcome this we have been working on setting up a marketing system to hopefully bring in our own off market deals.


Erik, yes off market can be easier to get at a lower price because not as many people know about it and off market motivated sellers may be willing to sell FSBO or seller finance which also saves on costs. You also have to be very creative to run numbers in various ways to see what works out best. We are very good at this. Reply with the details of a property, including the situation of the seller, the loan (current or delinquent) and your numbers analysis. Maybe I can give a few pointers.

 

I'm on the market to buy a duplex as an investment. My concern is not having any reserve for future repairs if needed. The duplex itself has a new heater and is well taken care. I'll be covering DP and closing cost. Which will then leave me without the reserve I'd like to have. I'll be house hacking in one unit for about a year or so. After all said and done I will be cash flowing right away as there is a tent with a 1 year lease well into 2020. After calculating vacancy and repair/capital savings, it will be a 10% cash on cash return. Not a bad investment by any means.

My hold up is deciding wether it is smart of me to purchase not having the cash reserve for future potential repairs. 

Originally posted by @Jan Kerr :

@Nick Rutkowski Hahaha! Nice sense of humor Nick. Yes, you really should hire people to do the work. The minute you pick up that hammer, you are limiting your income potential. Let them do what they do best and get it done fast. Your time is better spent finding your next deal.

 Amen to that! Luckily, I have time on my side for now. My girlfriend and I plan on making that transition after our project we are on. We are at the point where "we know what we're doing and manage others to follow our vision" and "our bank account can only support us working on our own!" Hoping to change this by 2020! 

@Lori Greene

I think everyone is scared at first. If you aren't, then please share some of that courage with me. HA I started my journey with a SFH that I lived in, bought a second house, moved and rented out my original house. Thanks to biggerpockets.com, I was able to be a landlord and rent the place myself the first time doing it. After that, my interest grew stronger. I wanted to grow and see my money grow, but I didn't know how. I shared the same struggles that everyone on here shared. I needed funding, deals and a general understanding of what I was doing. I educated myself and got stuck in the analysis paralysis state and didn't move forward after educating myself. Now I needed deals and money. The next step to success was finding like minded people and going to meetups to network and hear their stories. I got to the point where I could recognize a deal and now I needed money. I educated myself on hard money loans, HELOCs, lines of credit and personal loans. Then, I found what fit best for me. At one point, I remember being so frustrated that I sat down and wrote in a note book, "What do I need to be successful, RIGHT NOW!" All excuses aside, WHAT IS IT? I outlined all the things I needed and crossed them out one-by-one. I called local lenders, contractors, attorneys, CPAs and established a team. I wrote emails telling people what I was doing and where I wanted to go. "I was looking to establish a reliable and credible team!", to make sure my deal would go through on my first shot. From there I HAD to jump right in..... I had all my friends interested and they wanting to do deals together. The money came to me...

My new journey will be apartment syndication... Is it scary? yes.. Do people doubt me? yes.. Do I sometimes ask myself, WTH am I doing? 100%. BUT, I know that if you truly want something and you invest yourself everyday to be 1% better, you will one day reach your goal. I also love to say that, "I want to bring everyone to the party" because as Warren Buffett says, "Its lonely at the top". Don't be alone. Network and bring everyone with you!!


Best of luck in everyone's real estate adventures!!

What has kept me from progress is not being able to save up enough money for my first deal. Also, my spouse does not believe REI is a good idea. So anytime finances become an issue he is quick to say I need to use my REI savings towards something else because it is not as much of a priority. Then I have to start all over again. Unfortunately, I have not overcome this yet.

@Michael Ablan Hi Michael, I’m real ok y glad I saw your post. I too am a lone wolf and would rather do everything myself but everywhere I turn I read things that say to get a good team behind me. I am nervous about getting swindled or things going south with someone. Could you please tell me how you got out of your comfort zone and got a team together? What were the steps you took?

Originally posted by @Lori Greene :
Originally posted by @Erik Baumer:

For me it's been finding deals that numbers make sense.

I have funding

I have time

I have some experience

I have flipped 3 and held 1 in the last 2 years. We are constantly searching, like everyday. I have goals and am ready to pull the trigger on multiple properties but numbers are just too tight.

To overcome this we have been working on setting up a marketing system to hopefully bring in our own off market deals.

Erik, yes off market can be easier to get at a lower price because not as many people know about it and off market motivated sellers may be willing to sell FSBO or seller finance which also saves on costs. You also have to be very creative to run numbers in various ways to see what works out best. We are very good at this. Reply with the details of a property, including the situation of the seller, the loan (current or delinquent) and your numbers analysis. Maybe I can give a few pointers.

 

One recent example...

cape style house legal 2 family by CO.  2br 1 bath over 2 br 1 bath plus. Basement access.

House was offered to me as a wholesale for $350k

$50k rehab 

ARV $455k

Taxes $13k

 Rental income $4300+/-

My plan was to hold this as a rental but I will always flip if needed. I originally offered $300k was willing to go to $315k.

I would have used HML to fund this. 10% interest only, 2 points, lenders atty fee of $2500.

other closing costs about $15k

Would refi out 4.5% over 30 years.  Keep 25% equity pull out remaining (if any) in cash. 

I now know wholesaler got contract for $281k.  They never assigned it, wound up flipping it themselves. Spent 35k in repairs (absolute bare mimimum) and sold for 455k.

Most of the deals I come across are very similar to this. The numbers are close to working but just not there. ESPECIALLY with HML costs. There is little meat on the bone even with any value add.

The flips I analyze are also very tight w numbers. Profit is generally $20-$30k on $450k ARV.

Originally posted by @Amelia McGee :

Hi @Lori Greene, i found a fixer upper near my house and analyzed it using the BRRRR calculator. But I'm not sure I put in the right numbers. Let me know if you can't see the image.

 

Amelia, I finally had a chance to look at these numbers. Without knowing all of the specifics of the property like sq ft, bedrooms, location, condition, how you arrived at your ARV and rents, etc., it's hard to know how accurate these calculator numbers are, but overall they seem fairly reasonable.

Here are a couple of numbers formulas to try manually as well. Get in the habit of running numbers manually to confirm what calculators are telling you. All of these numbers can be adjusted depending on the details of each specific situation:

Maximum Offer Formula for Flip or Wholesale Deal

ARV Minus:

  • Repairs/Upgrades (use $20/sq ft or get estimates on HomeAdvisor.com, confirm later with actual bids)
  • Holding Costs (Utilities, Yard Maintenance, Snow Removal, etc. during rehab)
  • Closing Costs (Agent Fees and Closing Costs to Resell, ARV x 10%)
  • Financing Costs (Annual Interest Rate x Loan Amount divided by 2 for 6 mo Rehab + Points)
  • Vacancy Insurance (Get Quote)
  • Your Wholesale Fee (don’t subtract this if you are flipping it yourself)
  • Profit You Want Flipper to Make (ARV x 15%)

Equals Your Maximum Offer

Cash Flow Formula

Projected Monthly Rental Income Minus All Monthly Expenses:

  • Vacancy Rate (VR% x Monthly Rent - Find both at BestPlaces.net)
  • Prop Mgmt Fees (10% national avg, even if you are managing yourself so it’s in the budget if you need it later).
  • Prop Tax (look up at the county or BestPlaces.net)
  • Insurance (research online or get quotes)
  • Maintenance (monthly yard care, landscaping, snow removal)
  • Repairs/CapEx (lifespan of appliances, property wear and tear, start with $100 per unit per month, adjust after property inspection)
  • Utilities (during vacancy, start with $50/mo per unit, per utility, adjust later)
  • Debt Service (mortgage pmt)

Equals Your Monthly Cash Flow



Originally posted by @Lenny Almanzar :

I'm on the market to buy a duplex as an investment. My concern is not having any reserve for future repairs if needed. The duplex itself has a new heater and is well taken care. I'll be covering DP and closing cost. Which will then leave me without the reserve I'd like to have. I'll be house hacking in one unit for about a year or so. After all said and done I will be cash flowing right away as there is a tent with a 1 year lease well into 2020. After calculating vacancy and repair/capital savings, it will be a 10% cash on cash return. Not a bad investment by any means.

My hold up is deciding wether it is smart of me to purchase not having the cash reserve for future potential repairs. 

Lenny, it would certainly be better to have money for repairs. If the property cash flows, then put that money aside every month to build your reserve. The main point of buy/hold/rent isn't as much about cash flow as it is about building wealth while the appreciation and equity grows as the principal is paid down. And let's not forget the value of the monthly rent you don't have to pay while house hacking. Rent saved should be seen as income that can also go towards building your reserve.

There's a great article on BP about why it is so important to put money towards CapEx which is short for Capital Expenditures meaning repairs on appliances and wear and tear of the property: https://www.biggerpockets.com/...

The article shows you how to figure how much you will need to set aside each month.

Building a reserve by setting aside monthly CapEx is important enough that it's a part of most cash flow formulas including the BiggerPockets calculator and the formula I posted in my reply above to Amelia.

Is there any reason you can't put some of your cash flow and money saved on rent towards a monthly reserve?

Originally posted by @Michael Torossian :

@Jan Kerr , hello Jan, mentor is what I’m also looking for. I’ve been dabbling in real estate with a few deals under my belt but have so much to learn. Do you provide mentoring services?

Michael, Jan is a great mentor. And we can also answer a few questions right here in this thread as well. What kinds of investing questions do you have? What has kept you from making progress? 

Originally posted by @John Hamilton :

@Lori Greene

I think everyone is scared at first. If you aren't, then please share some of that courage with me. HA I started my journey with a SFH that I lived in, bought a second house, moved and rented out my original house. Thanks to biggerpockets.com, I was able to be a landlord and rent the place myself the first time doing it. After that, my interest grew stronger. I wanted to grow and see my money grow, but I didn't know how. I shared the same struggles that everyone on here shared. I needed funding, deals and a general understanding of what I was doing. I educated myself and got stuck in the analysis paralysis state and didn't move forward after educating myself. Now I needed deals and money. The next step to success was finding like minded people and going to meetups to network and hear their stories. I got to the point where I could recognize a deal and now I needed money. I educated myself on hard money loans, HELOCs, lines of credit and personal loans. Then, I found what fit best for me. At one point, I remember being so frustrated that I sat down and wrote in a note book, "What do I need to be successful, RIGHT NOW!" All excuses aside, WHAT IS IT? I outlined all the things I needed and crossed them out one-by-one. I called local lenders, contractors, attorneys, CPAs and established a team. I wrote emails telling people what I was doing and where I wanted to go. "I was looking to establish a reliable and credible team!", to make sure my deal would go through on my first shot. From there I HAD to jump right in..... I had all my friends interested and they wanting to do deals together. The money came to me...

My new journey will be apartment syndication... Is it scary? yes.. Do people doubt me? yes.. Do I sometimes ask myself, WTH am I doing? 100%. BUT, I know that if you truly want something and you invest yourself everyday to be 1% better, you will one day reach your goal. I also love to say that, "I want to bring everyone to the party" because as Warren Buffett says, "Its lonely at the top". Don't be alone. Network and bring everyone with you!!

Best of luck in everyone's real estate adventures!!

YES, YES, YES!!! I love this answer John. That is a great story and such a common theme in this thread from those who have overcome their fears and perceived obstacles. You should be a motivational speaker.

I say perceived obstacles because an obstacle only has power if you believe you can't get around it. There is always a solution. All it takes is persistence and creativity and most of al, friends! Once you have a great team and great relationships, you'll have all of the help, resources and confidence you need.

Please share with us how you built your team? Was it mostly here on BP? Did you go to local meet-ups and auctions and ask for referrals? And describe a few ways that your team helped you accomplish things you wouldn't have been able to do without them? Do you feel like your team helped to squash your fears?

Originally posted by @Ashley Clements :

What has kept me from progress is not being able to save up enough money for my first deal. Also, my spouse does not believe REI is a good idea. So anytime finances become an issue he is quick to say I need to use my REI savings towards something else because it is not as much of a priority. Then I have to start all over again. Unfortunately, I have not overcome this yet.

Ashley, do you look for and analyze deals? If you do, you can already truthfully say you are a real estate investor because when you come across a good deal, you can refer it over to another investor for a bird-dog fee.

Do you think that if you were an experienced investor and someone dropped a great deal in your lap, you would be willing to pay them a small fee for it, maybe $100 to $500 if you ended up buying it? Of course you would.

So don't get lost in the fact that you have to have funding to start investing. Just devote yourself to finding great deals and building a network of other investors to pass them over to for a fee. Then work your way up to a wholesale deal where you get it under contract first so you can get a bigger fee, like maybe $3000.

Save up your fees for a down payment.

And all the while, start building a team of bird-dogs to help you find properties and a team of private money partners who will partner with you by funding the deal while you do the work.

Do this by getting into the habit of starting conversations with everyone you know and meet. Ask them about what they do for a living or how their job is going. Then tell them what you do, you are a real estate investor always looking to partner up and share the wealth.

Say, "If you know anyone who wants to make a good return on their money with a short-term note backed by real estate, let me know." And tell them if they spot a vacant or distressed property or know of a motivated seller, to let you know and you'll give them $100 if you buy it.

You don't need a bunch of money to find properties for other investors. And once you have private money partners, you won't need much money anyway. Don't let the perception of lack of money stop you from achieving your dreams.

Maybe your fiancé won't argue with this approach if you are not using your money or borrowing any money.

Read through this thread for tips on how to find and analyze properties. Ask questions.

Do you know how to find and analyze properties?

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