Should I tell people how I find my deals?

Question

John Thedford · Answer

Our local REIA groups motto is: knowledge withheld is knowledge wasted. A very good friend of mine that passed away earlier this year used to say: if you can't do something good for others what good are you? I believe in sharing. Others may differ.

John Thedford · Answer

@Jd Martin

Met with an investor a couple days ago. He WAY overpaid. No way to help the guy. According to him his agent stated it was a "good buy".

Joshua D. · Answer

That's a good point, I agree.

JD Martin · Answer

This is killing me locally. I have a pretty well defined demographic that I operate within, and houses have to fit that profile, and every Tom Dick and Harry thinks they're going to make a killing on anything out there. I'm just flat uncompetitive on some of these properties because of the dreamers, and so many of them are going to end up back on the market again - but that doesn't help me now. These guys are buying sub-100k houses that they're going to be lucky to be at .75% monthly on, with financing. They're going to get killed.

JD Martin · Answer

OK. Why do people locally give away their secrets? Half the time, because they're not secrets, and the other half of the time because they only work as a way of generating money off the info. I will be honest: I'm not going to help any of my local competition, unless it's something that I'm not interested in and know that it's a good fit for someone else, or it's a contribution amongst friends (yes, investors do have friends that they hook up with good deals). Otherwise, if I don't know you, and you're local, if you're not paying me for info, you're not getting any from me.

That said: if you're not local, I'm pretty generous with my advice, whatever it's worth, and helping people as much as I can. @John Thedford is right that no one is going to corner a local market, so trying is fruitless, but the more knuckleheads there are out there running around bidding up properties that have no idea what they're doing, the more expensive it is for me to do business in my local market. I can tell you for a fact that there are people out there in my local market that are buying properties at stupid prices and making the market more expensive for everyone else. Now, they will eventually fail, and I might get that property anyway, but in the meantime I'm seeing premiums at an expansion period - so no, I'm not helping any local guys that I don't know. Unless I'm being paid to do so.

But if you live somewhere else, you're golden :)

PS: John is right in that you never go wrong helping someone else. I just don't want to compete locally with those someone elses right now ;)

John Thedford · Answer

Hard money lending. It can have great returns.

Patrick Shawn Faherty · Answer

I'm not sure I follow you. Can you please provide more info? Thanks.

Joshua D. · Answer

@johnthedford what is HML? What are the benefits of that? I'd love to learn more.

John Thedford · Answer

@Taye Nguyen

If you are in CA, another poster stated you can do up to five a year without licensing. You need to double check that. Pull up your state statutes on mortgage lending and look for the exemptions. Without a doubt, you cannot lend for others without a license. You can lend your money within the parameters of state law. I am in Florida and we have no cap BUT I cannot lend for others, only myself without being licensed. I don't want all those hoops and regs to deal with. It is also important to have some understanding of Dodd-Frank and make sure you are in compliance. I wrote two loans in Dec 2013 from my hospital bed (open heart surgery isn't all it's cracked up to be):):)....right before DF kicked in Jan 2014. Those loans were to owner occupants. I no longer offer those because of the red tape regulations, qualifying buyers and their ability to repay, etc. I have written lots of loans post Dodd-Frank but made darn sure I was in compliance. You will see many HML's only want to write to LLC's or other entities just to help shield from Dodd-Frank. This is no guarantee you won't get sued, but you probably won't have CFPB coming after you as well.

Should I tell people how I find my deals?

Should I tell people how I find my deals?

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