"We bought 100 properties without using any of our own money"
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Property Manager · Boise, ID · Member since 2014 · 160 posts · 192 votes
11yOriginally posted by @James DeRoest:
I go to an investment group and there is a bit of this about, but what I keep seeing is that the rehab flippers that supposedly do all these deals, keep going back to the bank.
Never underestimate the power of public records to call bs on someone.
And I don't understand why they keep going back to the bank.
If you are making $20-30-100k per deal, insert whatever amount you want, why do you keep needing investors? Why keep going back to the bank? You are banking some fairly serious amounts of cash and you should be able to keep hold of it, surely? And yes yes I know that people need to pay their own bills, but when I look closely at some of these flippers, they either have a major cocaine habit, or aren't quite as successful as they seem.
There are successful people out there for sure, but I'm not sure people on blogs bragging about it are those people.
Always ask yourself the question when you look at these people - where is the wealth? If you can't see it, they don't have it. People talk a good game.
I'll briefly address some of the above comments here:
I have personally found that anyone who decides "it would be nice to invest in real estate" begins calling themselves a "real estate investor." Time and time again, I have been approached by "investors" wanting me to loan them money. I'm an experienced business person - as with any business investment, I do my due diligence before pulling the trigger. As soon as I ask them to answer my standard set of questions, they come back and tell me they've never done a deal... but that they "have a friend" that has, who is helping them. As soon as I ask them to have their "friend that does" contact me in person so I can perform due diligence on them, they go silent.
I have personally found the experienced flippers I lend to tend to want to obtain 100% financing from a private lender like me. It takes me no more than 48 hours to fund a deal, sometimes sooner (as in zero hours - if we stay in touch and know what's coming up, I keep the cash in escrow even before the deal is signed). An accounting or finance major can tell you why these flippers don't use their own money - the rate of return on their investment is infinite, as opposed to fixed, while the risk/reward ratio is inverse. In addition, the ones I work with are busy using their money for purchasing rentals free and clear, while 100% financing their flips. They are money and business savvy, have a way of doing things which leads to maximum yield, know how to obtain maximum tax benefits, and have a realistic plan they execute. Above all, they do not spend their time in forums condoning others or calling "********" on their methods.
I have personally found that the majority of people, regardless of income bracket, have expenses that are commensurate with their income. Not everyone believes in nor follows the "Rich Dad, Poor Dad" forumula (especially given that the author declared bankruptcy and stiffed his lenders), and not everyone's priorities are the same. It is these innate differences that provide opportunity for others - those of us who are willing to make the sacrifices have a better chance of reaping the rewards (but there's no guarantee). Were it not for these people (in all walks of life - not just real estate), we would all be on equal footing and have no such opportunities. Thanks to these people, I can borrow money at 3.5% (prox) from a lender that is making 100% profit on that loan, then loan it out short-term myself and make 300% profit myself. It all comes at a price, however - I am willing to assume the risk, which applies to my estate.
I have personally found that few people are what they claim to be. "Investors" are far and few between, especially in real estate - most categorize themselves as such after reading a book on "flipping," joining an online forum, or attending a meeting group or seminar. The concept of "due diligence" seems to be lost on these so-called investors. It is my firm belief that both investors and private lenders should do DUE DILIGENCE on each other - specifically, they should VERIFY each others' claims, as that is the first step in establishing credibility and establishing truthfulness. Expect to be vetted out if you contact me about investing with you (because that is, in effect, what I am doing).
One more thing... a while back, I commented in a different thread about why investors don't respond when contacted. If you were in the business of risking your money on someone else, would you take them seriously if their first contact with you went something like, "Hello... do you lend money?" or "Hello... I am a real estate INVESTOR and I'd like to borrow money on my FIRST DEAL" (hint - you're not an investor if you have yet to invest) or "I have a property I am looking at - will you lend me money on it" (without providing an address - much less anything else). This is why people like me don't respond to certain queries - those who don't treat this as a business have broken fundamentals, while those who do (and have common sense) are worth talking to.
I sometimes participate on here (this forum) when I have leisure time and get tired of reading poor advice (of which there is plenty) from inexperienced people dispensing their wisdom (especially questions about LLCs and land trusts) or gurus screwing others over (I was instrumental - as documented on here by the victim - in their recovery of tens of thousands of dollars). I enjoy helping those who appreciate my help, and I abstain from helping those who place little value on my advice, or participating in threads that deteriorate into chaos.
I guess I'm from the old school, in that I believe people who need something should come ask for it - and if they're serious, they should persist. We are no longer children, where our parents attempt to anticipate our needs and spoon-feed us. Yet that is how so many beginners treat their new "investment" business - they expect others to come to them to solve their problems, or they're incapable of communicating at an adult level when reaching out. I can't imagine what would happen if they were managing a tenant, much less how they would attend to fulfilling their contractual obligations to their lender.
With that, I want to close by saying that we must all scrutinize strangers wanting to do business with us, applying due-diligence to the information they provide, regardless of their online reputation. I have a verifiable (via independent title company property profiles and affidavits from the licensed and bonded escrow company) track record, and I am not offended when asked to produce it prior to consummating a deal. I have the same expectation of my borrower/flipper - to provide me the documentation that allows me to do due-diligence on them (which only needs to be done once), prior to establishing an ongoing business relationship with them.
69 Replies
- Residential Real Estate Agent · Salt Lake City, UT · Member since 2014 · 156 posts · 50 votes11y
Their money is secured against the property and the deal usually has enough of a margin in it that if the deal were to go completely south, they could most likely take over the project and at least break even on it...
They are hiding next door... You never know who has money in the bank willing to lend out... Start attending your local REIA if you aren't already or reach out to local flippers who are doing these deals to get a referral
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
your right on Nat.. far and few between its US hyperbole to get you to read the blogs.
does it happen yes.. is it common place no...
- 11yNat C.Investor · Miami, FL · Member since 2013 · 807 posts · 475 votesOP
Originally posted by @Jay Hinrichs:
your right on Nat.. far and few between its US hyperbole to get you to read the blogs.
does it happen yes.. is it common place no...
LOL thanks Jay! I was thinking as such.
- Investor · Milwaukee, WI · Member since 2014 · 811 posts · 420 votes11y
Very good point.
Although, you should read @Jay Hinrichs latest thread that he just started in the BP Marketplace where he's offering to funds deals with no money out of pocket for investors. You just need to meet more people like him :)
- 11yNat C.Investor · Miami, FL · Member since 2013 · 807 posts · 475 votesOP
Originally posted by @Darren Budahn:
Very good point.
Although, you should read @Jay Hinrichs latest thread that he just started in the BP Marketplace where he's offering to funds deals with no money out of pocket for investors. You just need to meet more people like him :)
My word, that's very generous of Jay!
- Property Manager · Boise, ID · Member since 2014 · 160 posts · 192 votes11y
Originally posted by @Nat C.:
This statement is something I keep seeing again and again on the Bigger Pockets blogs;
people saying they flipped 100 properties using someone else's money.
They proclaim they had one of their investors pay for the purchase and renovation and they apparently have a deep pool of investors ready to throw hundreds of thousands of dollars at each deal. The blog theme is always tutorial, with the message that anyone can do this.
The unanswered question is, where are all these cashed up investors and why are they willing to hand over these large amounts for a non-guaranteed return?
I am one of those "cashed-up" investors, and I am one of those people who finances 100% of the purchase price, in addition to renovation costs. Over the past year and a half, I have completed 24 such deals (of which 23 are in FL).
I am here (in this forum), I am known by the escrow companies I've done continuous business with, and I have always been here for investors that take the time and effort to seek me out or ask around.
- Rental Property Investor · Rohnert Park, CA · Member since 2014 · 306 posts · 160 votes11yThis is great to know! When I get some experience, and find a great deal, I will look you guys up for funding possibilities. @jayhinrichs Lew Payne Thank you!
- 11yNat C.Investor · Miami, FL · Member since 2013 · 807 posts · 475 votesOP
Originally posted by @Lew Payne:
Originally posted by @Nat C.:
I am one of those "cashed-up" investors, and I am one of those people who finances 100% of the purchase price, in addition to renovation costs. Over the past year and a half, I have completed 24 such deals (of which 23 are in FL).
I am here (in this forum), I am known by the escrow companies I've done continuous business with, and I have always been here for investors that take the time and effort to seek me out or ask around.
Nice to meet you Mr Lew Payne. I will be in touch.
- Investor · Century, FL · Member since 2015 · 950 posts · 603 votes11y
Originally posted by @Nat C.:
This statement is something I keep seeing again and again on the Bigger Pockets blogs;
people saying they flipped 100 properties using someone else's money.
They proclaim they had one of their investors pay for the purchase and renovation and they apparently have a deep pool of investors ready to throw hundreds of thousands of dollars at each deal. The blog theme is always tutorial, with the message that anyone can do this.
I go to an investment group and there is a bit of this about, but what I keep seeing is that the rehab flippers that supposedly do all these deals, keep going back to the bank.
Never underestimate the power of public records to call bs on someone.
And I don't understand why they keep going back to the bank.
If you are making $20-30-100k per deal, insert whatever amount you want, why do you keep needing investors? Why keep going back to the bank? You are banking some fairly serious amounts of cash and you should be able to keep hold of it, surely? And yes yes I know that people need to pay their own bills, but when I look closely at some of these flippers, they either have a major cocaine habit, or aren't quite as successful as they seem.
There are successful people out there for sure, but I'm not sure people on blogs bragging about it are those people.
Always ask yourself the question when you look at these people - where is the wealth? If you can't see it, they don't have it. People talk a good game.
- 11yNat C.Investor · Miami, FL · Member since 2013 · 807 posts · 475 votesOP
Originally posted by @James DeRoest:
Originally posted by @Nat C.:
I go to an investment group and there is a bit of this about, but what I keep seeing is that the rehab flippers that supposedly do all these deals, keep going back to the bank.
Never underestimate the power of public records to call bs on someone.
And I don't understand why they keep going back to the bank.
If you are making $20-30-100k per deal, insert whatever amount you want, why do you keep needing investors? Why keep going back to the bank? You are banking some fairly serious amounts of cash and you should be able to keep hold of it, surely? And yes yes I know that people need to pay their own bills, but when I look closely at some of these flippers, they either have a major cocaine habit, or aren't quite as successful as they seem.
There are successful people out there for sure, but I'm not sure people on blogs bragging about it are those people.
Always ask yourself the question when you look at these people - where is the wealth? If you can't see it, they don't have it. People talk a good game.
You are quite funny and accurate. If you are making 10s of thousand per deal, at some point you have enough cash surplus to start doing your own deals!
I have never met a house flipper with a cocaine addictions who is snorting their savings away!
I disagree about 'looking like you have money'. In Miami you see people driving the most suped up cars (which they lease) and living in fancy condos (which they rent) and have no savings or assets. I have the cheapest car I could find and I do not spent money on manicures or other nonsense. I save every cent I can and put all my money into properties.
- Investor · Century, FL · Member since 2015 · 950 posts · 603 votes11y
Originally posted by @Nat C.:
Originally posted by @James DeRoest:
Originally posted by @Nat C.:
I go to an investment group and there is a bit of this about, but what I keep seeing is that the rehab flippers that supposedly do all these deals, keep going back to the bank.
Never underestimate the power of public records to call bs on someone.
And I don't understand why they keep going back to the bank.
If you are making $20-30-100k per deal, insert whatever amount you want, why do you keep needing investors? Why keep going back to the bank? You are banking some fairly serious amounts of cash and you should be able to keep hold of it, surely? And yes yes I know that people need to pay their own bills, but when I look closely at some of these flippers, they either have a major cocaine habit, or aren't quite as successful as they seem.
There are successful people out there for sure, but I'm not sure people on blogs bragging about it are those people.
Always ask yourself the question when you look at these people - where is the wealth? If you can't see it, they don't have it. People talk a good game.
You are quite funny and accurate. If you are making 10s of thousand per deal, at some point you have enough cash surplus to start doing your own deals!
I have never met a house flipper with a cocaine addictions who is snorting their savings away!
I disagree about 'looking like you have money'. In Miami you see people driving the most suped up cars (which they lease) and living in fancy condos (which they rent) and have no savings or assets. I have the cheapest car I could find and I do not spent money on manicures or other nonsense. I save every cent I can and put all my money into properties.
Thoroughly agree with you.
The cocaine addiction comment though is off the cuff, I have no idea if they have an addiction, but it's the only thing I can come up with with when people make $50k and still have to wander down the bank to finance the next house. The money is going somewhere. And it's not meth unless they are a stick insect and have spots on their face. And no one can do that amount of weed. So I'm going with cocaine.
And I agree about buying old cars (or trucks in my case). Wife wouldn't drive the last two we had as they were that awful. Although one did have an antique plate, and I'm told that if you break down in a junction people will help you more (girl in the dmv told me that). But it never broke down in a junction, just outside every church in north west Florida. Couldn't get past a church without it breaking down. And for some reason, if it was baptist, I was going to be there for an hour at least before it restarted.
One day the tree outside fell down, I was away from home at the time, wife lamented to the neighbor that the tree missed my (second) truck. He agreed it was lucky it missed, she looked at him, rolled her eyes, to which he quickly corrected himself "maybe it should have hit the truck". The first I knew about the tree going down was a message on Facebook "the damn tree missed your truck".
But alas, daylight burning, got to get to meetings.
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
of course I am the exception.. and to be fair I will only do this with a very hand picked group of folks like I have been doing for years.. this is the first time I have advertised for it ever.. however I have capacity to expand so I thought I would offer it on BP.
my comments were general in nature.. there are always going to be private folks and exceptions.. But you can't call me like I am a private lender and expect 100% financing. the deals I do again are with very trusted partners that in most cases have been with me for 10 to 15 years... so really its a partnership its just we don't end up owning the asset the ground partner does we just facilitate them getting the rental portfolio they desire.
Plus those I do this with this is their day job its a full time endeavor for sure. And I take pride when I travel to their towns and drive by all their rentals.. its a win win.
- Property Manager · Boise, ID · Member since 2014 · 160 posts · 192 votes11y
Originally posted by @James DeRoest:
I go to an investment group and there is a bit of this about, but what I keep seeing is that the rehab flippers that supposedly do all these deals, keep going back to the bank.
Never underestimate the power of public records to call bs on someone.
And I don't understand why they keep going back to the bank.
If you are making $20-30-100k per deal, insert whatever amount you want, why do you keep needing investors? Why keep going back to the bank? You are banking some fairly serious amounts of cash and you should be able to keep hold of it, surely? And yes yes I know that people need to pay their own bills, but when I look closely at some of these flippers, they either have a major cocaine habit, or aren't quite as successful as they seem.
There are successful people out there for sure, but I'm not sure people on blogs bragging about it are those people.
Always ask yourself the question when you look at these people - where is the wealth? If you can't see it, they don't have it. People talk a good game.
I'll briefly address some of the above comments here:
I have personally found that anyone who decides "it would be nice to invest in real estate" begins calling themselves a "real estate investor." Time and time again, I have been approached by "investors" wanting me to loan them money. I'm an experienced business person - as with any business investment, I do my due diligence before pulling the trigger. As soon as I ask them to answer my standard set of questions, they come back and tell me they've never done a deal... but that they "have a friend" that has, who is helping them. As soon as I ask them to have their "friend that does" contact me in person so I can perform due diligence on them, they go silent.
I have personally found the experienced flippers I lend to tend to want to obtain 100% financing from a private lender like me. It takes me no more than 48 hours to fund a deal, sometimes sooner (as in zero hours - if we stay in touch and know what's coming up, I keep the cash in escrow even before the deal is signed). An accounting or finance major can tell you why these flippers don't use their own money - the rate of return on their investment is infinite, as opposed to fixed, while the risk/reward ratio is inverse. In addition, the ones I work with are busy using their money for purchasing rentals free and clear, while 100% financing their flips. They are money and business savvy, have a way of doing things which leads to maximum yield, know how to obtain maximum tax benefits, and have a realistic plan they execute. Above all, they do not spend their time in forums condoning others or calling "********" on their methods.
I have personally found that the majority of people, regardless of income bracket, have expenses that are commensurate with their income. Not everyone believes in nor follows the "Rich Dad, Poor Dad" forumula (especially given that the author declared bankruptcy and stiffed his lenders), and not everyone's priorities are the same. It is these innate differences that provide opportunity for others - those of us who are willing to make the sacrifices have a better chance of reaping the rewards (but there's no guarantee). Were it not for these people (in all walks of life - not just real estate), we would all be on equal footing and have no such opportunities. Thanks to these people, I can borrow money at 3.5% (prox) from a lender that is making 100% profit on that loan, then loan it out short-term myself and make 300% profit myself. It all comes at a price, however - I am willing to assume the risk, which applies to my estate.
I have personally found that few people are what they claim to be. "Investors" are far and few between, especially in real estate - most categorize themselves as such after reading a book on "flipping," joining an online forum, or attending a meeting group or seminar. The concept of "due diligence" seems to be lost on these so-called investors. It is my firm belief that both investors and private lenders should do DUE DILIGENCE on each other - specifically, they should VERIFY each others' claims, as that is the first step in establishing credibility and establishing truthfulness. Expect to be vetted out if you contact me about investing with you (because that is, in effect, what I am doing).
One more thing... a while back, I commented in a different thread about why investors don't respond when contacted. If you were in the business of risking your money on someone else, would you take them seriously if their first contact with you went something like, "Hello... do you lend money?" or "Hello... I am a real estate INVESTOR and I'd like to borrow money on my FIRST DEAL" (hint - you're not an investor if you have yet to invest) or "I have a property I am looking at - will you lend me money on it" (without providing an address - much less anything else). This is why people like me don't respond to certain queries - those who don't treat this as a business have broken fundamentals, while those who do (and have common sense) are worth talking to.
I sometimes participate on here (this forum) when I have leisure time and get tired of reading poor advice (of which there is plenty) from inexperienced people dispensing their wisdom (especially questions about LLCs and land trusts) or gurus screwing others over (I was instrumental - as documented on here by the victim - in their recovery of tens of thousands of dollars). I enjoy helping those who appreciate my help, and I abstain from helping those who place little value on my advice, or participating in threads that deteriorate into chaos.
I guess I'm from the old school, in that I believe people who need something should come ask for it - and if they're serious, they should persist. We are no longer children, where our parents attempt to anticipate our needs and spoon-feed us. Yet that is how so many beginners treat their new "investment" business - they expect others to come to them to solve their problems, or they're incapable of communicating at an adult level when reaching out. I can't imagine what would happen if they were managing a tenant, much less how they would attend to fulfilling their contractual obligations to their lender.
With that, I want to close by saying that we must all scrutinize strangers wanting to do business with us, applying due-diligence to the information they provide, regardless of their online reputation. I have a verifiable (via independent title company property profiles and affidavits from the licensed and bonded escrow company) track record, and I am not offended when asked to produce it prior to consummating a deal. I have the same expectation of my borrower/flipper - to provide me the documentation that allows me to do due-diligence on them (which only needs to be done once), prior to establishing an ongoing business relationship with them.
- Investor · Milwaukee, WI · Member since 2014 · 811 posts · 420 votes11y
I certainly realize you are an exception and I think it is awesome you are offering your funding to qualified BP members. It certainly sounds like it can be a win-win for people who have the ability to locate deals, manage rehabs, and manage rentals. Something tells me your inbox will be blowing up in the next few days. Good luck.
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
good points... :) I remember when I first came on BP about 16 months ago.. I had never been on any on line forum before... so I just blurted stuff out.. then I realized that I was not talking to my peers in many cases... and one person in particular called me out... this guy went by he name of JOE GORE stating that many say they lend or have lent etc. and I was probably one of those just spouting. off... and he wanted me to prove it...
So I sent him just one of the letters of introduction from just ONE of my closings attorneys that I have used for over 10 years that states I have done 400 plus closings with him over the years. I use this and other bank reference letters when I am looking for construction financing for my new projects or bigger credit facilities.. well he never acknowledged it but he left me alone after that.. LOL and I am still here and he is gone !!
But your right many that are really rockin and rollin have little time to really engage on BP other than to pop in and out...
My typical partner is mid 30's wife 2 to 4 kids and is working very hard to get were they want to be... not spending hours on real estate chat sites.. my biggest players really don't even know about this site or if they do never come here.. as I state they are too busy making money and providing for their families.
But one thing is for certain there are many very capable and well established investor on this site.... make no mistake about that.
- Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes11y
Very surprised at the great content and players in this thread. I originally stopped in because my BS meter pegged 10. Thanks @Nat C.for starting this. Because of you I just connected with another fine investor out there making things happen when they choose.
Glad you are still here after wasting time answering to Joe Gore early on @Jay Hinrichs ! I may have bailed right away. Instead I met you early on because of you and a few others like you, chose to stick around. More than once I almost checked out entirely.
There are good and bad out there in every industry. Trust but verify. Follow your passion, your mission and your purpose and the good ones will find you!
- Investor · Louisville, KY · Member since 2014 · 74 posts · 46 votes11y
Originally posted by @Lew Payne:
I am one of those "cashed-up" investors, and I am one of those people who finances 100% of the purchase price, in addition to renovation costs. Over the past year and a half, I have completed 24 such deals (of which 23 are in FL).
What is in it for you? Do you invest for a percentage of the flip?
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
whats in it for anyone who finance's others activity... its either a rate of interest return. % of profit.. or combination.... just private people acting like HML is really all it is.
- Property Manager · Boise, ID · Member since 2014 · 160 posts · 192 votes11y
Originally posted by @William A.:
In response to @Lew Payne:Is this a serious question? I do it for the profit, so I can leave a legacy for my kids that will in turn finance the education of their (eventual) children, and that of my descendants (it's called a dynasty trust). I do it so that my wife and I can afford the finer things in life. I do it so that I can be free to choose who I do business with, who I don't, and on what terms. I do it so that I can diversify my investments beyond ETFs, oil and index futures, and mutual funds. Unless you're running a non-profit, most business is profit-oriented... I don't do it to purposely lose money.
As far as "do I invest for a percentage of the flip" - since it's my own money, I have the flexibility of evaluating each deal on its own merits, and drawing my own conclusions. I invest for a fixed rate of return, for a percentage of profits, for a percentage of cash flow and a different percentage of equity upon divestiture, or whatever makes sense given the parties and the situation. I don't invest in deals which don't make sense to all parties involved - I believe in partners, not adversaries.
I'm retired; managing my investments is my full-time job now.
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
that's a key point Adversary .. generally I think many borrowers look at lender borrower relationship as adversarial in nature... I like you want no part of that.. I only do business with trusted partners... then we figure out the dollars.
- Investor · Louisville, KY · Member since 2014 · 74 posts · 46 votes11y
Originally posted by @Lew Payne:
Originally posted by @William A.:
In response to @Lew Payne:Is this a serious question? I do it for the profit,
Well odiously you do it for the profit. Perhaps the question I should have asked was "How lucrative is this"? I read about flippers making 10 30, 50, and 100K on a flip. I was curious if a investor that partnered with a seasoned flipper could make some serious money as well.
- Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes11y
Equity partner is very different than lender as far as the way of compensation goes. And much more complicated. I would 'partner' with someone I knew who was investing in my area into something I could see and touch. I would take less of a guaranteed % in exchange for the potential profit later, as an equity partner. Gotta share the risk for a higher potential profit. All private 'lenders' are not the same. Just because the flipper who takes most of the risk doing the work and research gets most of the profit, it doesn't entitle the lender to it as well. They are compensated up front and on their rental rate of money.
Are you asking as a potential lender or borrower @William A. ?
- Investor · Louisville, KY · Member since 2014 · 74 posts · 46 votes11y
Originally posted by @Steve Vaughan:
Are you asking as a potential lender or borrower @William A. ?
I was asking as a potential lender.
- Property Manager · Boise, ID · Member since 2014 · 160 posts · 192 votes11y
Originally posted by @William A.:
In response to that smart-*** @Lew Payne:
Well odiously you do it for the profit. Perhaps the question I should have asked was "How lucrative is this"? I read about flippers making 10 30, 50, and 100K on a flip. I was curious if a investor that partnered with a seasoned flipper could make some serious money as well.You first need to understand my sense of humor in order to apply proper context to the answer I'm about to give. Here goes...
I tell everyone who's curious about investing in real estate, flipping homes, or investing in options or futures the same thing - it's extremely risky, and you shouldn't do it unless you are prepared to declare bankruptcy and leave your family destitute.
In evaluating my answer, you first have to understand that opportunity is the result of inequality - if all things were equal (we all knew the exact same things and came to the exact same conclusions on them), our world would be devoid of opportunity. It is due to the fact that we all have different risk tolerances, differing confidence in our abilities, differing skills, and different trust levels when it comes to dealing with others - it is due to the existence of these factors that OPPORTUNITY exists. The fewer the people who enter my field, the more opportunity there is for me. Now you see the sarcasm in my reply, yet it is sarcasm that is founded on truth.
In reality, I hate to see people enter into a new venture haphazardly - leaving a wake of destruction in their path (especially at the expense of others). If you don't have proper legal structures in place to protect your family against adverse risk and shield your excess equity, don't get into any risky venture. Do proper estate (IDGT with wholly discretionary distribution provisions) planning and business structure (separate holding, operating and management LLCs) planning before venturing into this. As with anything in life, there are exceptions to this - such as just starting out with your first or second property, and/or if you really have no personal equity or a near-zero net worth.
- Property Manager · Boise, ID · Member since 2014 · 160 posts · 192 votes11y
Originally posted by @Jay Hinrichs:
that's a key point Adversary .. generally I think many borrowers look at lender borrower relationship as adversarial in nature... I like you want no part of that.. I only do business with trusted partners... then we figure out the dollars.
Indeed, Jay. I get asked "what are your terms?" even before the person tells me how much they need or what the deal is (ARV, comps, etc). The "terms" are - what are we both comfortable with that results in an acceptable risk/reward ratio for us both - those are my terms. That's the beauty of doing ongoing business with trusted *partners* - if they make an error (it costs more to repair than anticipated), they are willing to accept responsibility and complete the deal (thus not impacting their partners) even if it means less profit for them.
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