I need some direction for my capitial.

Orlando, FL · Member since 2017 · 7 posts · 0 votes

Hello BP community!

I need some direction from anyone with investing experience. My wife and I are debt free, we have excellent credit. We own a mobile home free and clear that we are currently renting to a single mom with 3 kides. After expenses, we make about $150/month off of that property. That property is worth about 50K fair markey value. If the mobile home becomes vacant I can either sell it to purchase more buy and holds or I can raise the rent to where we would be cashflowing more like $650/month after expenses. What would be your suggestion for that?

We also have 60K cash and I want to know the best route to invest that money. I have been looking into turn key buy and hold companies. I'm not wanting to do fix and flips at this time. What would be your suggestions for the cash?

Any advice would be helpful!

Thanks!

Dave

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

David read the threads on Morris invest … you may change our mind about that company... MI is the gold standard.

and for pure passive being the bank in performing first trust deeds is about as good of mail box money as you can get.

As the herd floods to rentals.. being the bank is looking more attractive for those wishing to let this uber hot market calm a tad.

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Larry Fried
Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes
8y
It depends on how involved or passive you want to be. For a overview of some passive options in REI, I wrote a blog last year on Three Key Routes for Passive Real Estate Investing
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David Huegel
OP
Orlando, FL · Member since 2017 · 7 posts · 0 votes
8y
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Brian Garrett
Real Estate Investor · Palm Beach County, FL · Member since 2017 · 3k+ posts · 2k+ votes
8y
If you want to be as hands off as possible then turnkey, syndication or performing notes are your best bet.
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David Huegel
OP
Orlando, FL · Member since 2017 · 7 posts · 0 votes
8y
@Larry F. I read the info and probably should have added that my wife and I will be out of the country for the next ?? traveling. I just need a place to put my money where it is making some returns but not sitting in the bank. I def wouldn't mind tax benefits but they aren't too important to me right now. Perhaps when I get back and really start investing my time more. Also, I don't plan on touching the cash-flow, I plan on reinvesting it. Whether that be paying down the mortgages faster on rentals or reinvesting it in a crowdfunding/syndication.
@Bryan Garrett Thanks for your response! Do you have any good suggestions for turnkey companies? I have been talking with Morris Invest and Memphis Invest so far. What about Syndication sites/companies?
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
David read the threads on Morris invest … you may change our mind about that company... MI is the gold standard.
and for pure passive being the bank in performing first trust deeds is about as good of mail box money as you can get.
As the herd floods to rentals.. being the bank is looking more attractive for those wishing to let this uber hot market calm a tad.
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David Huegel
OP
Orlando, FL · Member since 2017 · 7 posts · 0 votes
8y
@Jay Hinrichs Thanks for the input! How do I go about starting in or investing in First Trust Deeds? I know zero about that. Is there a thread I can read or someone local I can speak with?
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @David Huegel:
@Jay Hinrichs Thanks for the input! How do I go about starting in or investing in First Trust Deeds? I know zero about that. Is there a thread I can read or someone local I can speak with?
there is tons of info.. but think of it this way.... for everything there is an equal and opposite reaction.. that's physics.
in real estate unless its a cash sale.. the same is true
for each transaction there is Equity and Debt Equity is the buyer Debt is the lender.. instead of taking the place of Equity the owner and all that involves become the bank.. its really that simple in concept..
now choosing correctly is like anything else you cant go out there with out some knowledge of what to look for.
For me its First position performing notes ONLY .. at least for the clients we have served for going on 3 decades .. they have capital preservation concerns first return second..
But if you want to hit me off line I can give you some ideas.
But there are exchanges as well FCI and others were you can pop on.. but beware those are much much more due diligence than a broker who has them brought to you in a turnkey pre vetted fashion ( which is what I am talking about) And those brokers exist in every market ..
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Lane Kawaoka
Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
8y
David Huegel do you want to be an operator of mobile homes? If so I would think you have a competitive advantage. So many people are in the over crowded apartment space and very little syndication deals make sense. I would network with other mhp operators to see if that is appealing to you.
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David Huegel
OP
Orlando, FL · Member since 2017 · 7 posts · 0 votes
8y
@Lane Kawaoka: Thanks for the message! I am looking to be as hands off as possible. I will be out of the country for an undetermined amount of time, so I don't want to get involved with anything that requires a lot of time. Perhaps when I return, I am not opposed.

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Ian IppolitoBusiness Member
Investor · Tampa, FL · Member since 2015 · 1k+ posts · 1k+ votes
8y
@David Huegel, I see you're not too far away from me (I'm in Tampa Florida). There are many, many options for generating passive income through real estate. The first question is: are you accredited or nonaccredited? (I'm guessing nonaccredited, but need to be sure before making recommendations, because they are two completely different worlds).
First trust deeds may be a good investment for you, but you will not want to invest in them on your own because of your requirement for a truly passive investment. The problem is that if the borrower defaults, you will need to be actively involved in triaging the situation (foreclosing, figuring out where they left of the rehab, most likely completing yourself, putting the property up for sale, etc.). A fund is a better choice, because the manager will handle all of that work for you, plus you will be instantly diversified into hundreds of notes. The downside is if you are a nonaccredited investor, there are very few choices for first trust deed funds.
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David Huegel
OP
Orlando, FL · Member since 2017 · 7 posts · 0 votes
8y
Ian Ippolito, thanks for the info! I'm nonaccredited. Will becoming accredited help me at all? How do you go about doing that? What kind of ROI do you receive from a crowdfund? Do the funds have to be tied up for a certain period of time? Can the returns be directly be reinvested?
Thanks for your time!
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @Ian Ippolito:

@David Huegel, I see you're not too far away from me (I'm in Tampa Florida). There are many, many options for generating passive income through real estate. The first question is: are you accredited or nonaccredited? (I'm guessing nonaccredited, but need to be sure before making recommendations, because they are two completely different worlds).
First trust deeds may be a good investment for you, but you will not want to invest in them on your own because of your requirement for a truly passive investment. The problem is that if the borrower defaults, you will need to be actively involved in triaging the situation (foreclosing, figuring out where they left of the rehab, most likely completing yourself, putting the property up for sale, etc.). A fund is a better choice, because the manager will handle all of that work for you, plus you will be instantly diversified into hundreds of notes. The downside is if you are a nonaccredited investor, there are very few choices for first trust deed funds.
this is the niche I have filled.. first trust deeds on fully rehabbed houses so no risk there.. and U don't need to be accredited since its one note one investor.. 2000 plus notes and climbing !!!!
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Ian IppolitoBusiness Member
Investor · Tampa, FL · Member since 2015 · 1k+ posts · 1k+ votes
8y
@David Huegel , to become accredited, you have to have over $1 million in assets not including your house, or make over $200,000 per year in the last two years if single (or $300,000 per year last two years if married). You don't have to be accredited to crowdfunding though, as there are about 15 or 20 options for noncredit investors as well. The ROI varies depending on the risk you're willing to take. Basically anything you can do on your own, you will find in crowdfunding (rentals, mobile homes, notes, etc.). The lockup period will depend on what you are investing in. Many times the notes are a very short lockup of maybe six months to one year. Equity investments can range from 3 to 5 years for medium-term investment to 7 to 10 years for long-term.
@Jay Hinrichs , that's a good idea to fill that niche. And fully rehabbed removes a lot of the risk. However, all loans have some risk of default. And David will be out of the country, and unable to intervene if that happens. Does your company handle the foreclosure and resale for the investor as well?
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @Ian Ippolito:

@David Huegel , to become accredited, you have to have over $1 million in assets not including your house, or make over $200,000 per year in the last two years if single (or $300,000 per year last two years if married). You don't have to be accredited to crowdfunding though, as there are about 15 or 20 options for noncredit investors as well. The ROI varies depending on the risk you're willing to take. Basically anything you can do on your own, you will find in crowdfunding (rentals, mobile homes, notes, etc.). The lockup period will depend on what you are investing in. Many times the notes are a very short lockup of maybe six months to one year. Equity investments can range from 3 to 5 years for medium-term investment to 7 to 10 years for long-term.
@Jay Hinrichs , that's a good idea to fill that niche. And fully rehabbed removes a lot of the risk. However, all loans have some risk of default. And David will be out of the country, and unable to intervene if that happens. Does your company handle the foreclosure and resale for the investor as well?
Of course.. you cant do 2000 loans and 60 million in business in the last 5 years and just tell the people they are on their own.
however we don't deal with defaults.. like your thinking.. we have had exactly ONE foreclosure and less than 10 that I had to work on a little bit.. If you write your paper correctly up front you can mitigate a ton of the risk.. These are NOT owner occ notes with all that drama.. they are on rentals and we wont do a deal that does not have at least a 2X DCR industry standard as you well know is 1.25%
nor will we go above 65% of todays ARV based on a third party appraisal.. .. 3 decades of doing this I refined this to be as little risk as possible for the investor and a minimal amount of work on our part for work outs.. You would be shocked at how efficient we are at this..
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
@Ian Ippolito rehab lending which I have done a ton of as well.. we always have ups and downs no question about that.. but the returns are higher.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
@Ian Ippolito but one thing is certain you buy off of one of the exchanges and your own your own BABY.. no help No support .. you best know what your doing.. we are turn key all the way through.. again a very narrow niche and as such.
our clients are generally all repeat..
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Steve K.
Honolulu, HI · Member since 2017 · 247 posts · 315 votes
8y
Originally posted by @Jay Hinrichs:

David read the threads on Morris invest … you may change our mind about that company... MI is the gold standard.
and for pure passive being the bank in performing first trust deeds is about as good of mail box money as you can get.
As the herd floods to rentals.. being the bank is looking more attractive for those wishing to let this uber hot market calm a tad.
to clarify what @jay Hinrichs said, STAY AWAY from morris invest
and when he says MI, he is referring to Memphis invest as the gold standard for turnkey
in terms of hands off, as jay says, notes are the most passive, next would be to find a great syndicator/project
aloha
steve
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Ian IppolitoBusiness Member
Investor · Tampa, FL · Member since 2015 · 1k+ posts · 1k+ votes
8y
@Jay Hinrichs interesting niche, and I'll contact you to learn more about your offering. I can see how it might be what many people would be looking for...especially non-accredited investors who can't really access notes in too many places (I think GroundFloor is the only national platform that offers to non-acredited investors).
Just so you know, if an investor purchases off a crowdfunding exchange or goes through a syndication or crowdfunding fund, the notes actually are almost always owner-occupied as well. The funds are also instantly diversified across hundreds of notes to eliminate geographical and property risk, which is something more expensive to do with single notes that have to purchased wholly.

The main advantage I see with your offering is that most of the competitors are rehab and construction loans and very rare to find one this is just pure acquisition loans. This will have a lower return, but also lower risk, which I think many conservative investors will like. I'm not understanding yet why you underwrite based on 65% ARV (after repair value) rather than LTC (loan to cost) if there is no rehab risk going on, but I'll talk to you about that directly. And another advantage with your offering is that you accept non-accredited investors.

>>one thing is certain you buy off of one of the exchanges and your own your own BABY.. no help No support .. you best know what your doing.. we are turn key all the way through.. again a very narrow niche and as such.
I'm not sure which exchange your're talking about, but on all the crowdfunding exchanges the investor does actually get full support (they don't have to handle a thing including workouts, foreclosures or resales making it 100% passive).

For this OP, he said he would not have the time to do the workouts or the foreclosure that you mentioned above have happened in the portfolio already. And since the entire record is during an up cycle, probably he could expect that if we have a severe recession there would be an increase in the default rate and require more for him to do. Maybe you may want to think about adding that to your offering.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @Ian Ippolito:
@Jay Hinrichs interesting niche, and I'll contact you to learn more about your offering. I can see how it might be what many people would be looking for...especially non-accredited investors who can't really access notes in too many places (I think GroundFloor is the only national platform that offers to non-acredited investors).
Just so you know, if an investor purchases off a crowdfunding exchange or goes through a syndication or crowdfunding fund, the notes actually are almost always owner-occupied as well. The funds are also instantly diversified across hundreds of notes to eliminate geographical and property risk, which is something more expensive to do with single notes that have to purchased wholly.

The main advantage I see with your offering is that most of the competitors are rehab and construction loans and very rare to find one this is just pure acquisition loans. This will have a lower return, but also lower risk, which I think many conservative investors will like. I'm not understanding yet why you underwrite based on 65% ARV (after repair value) rather than LTC (loan to cost) if there is no rehab risk going on, but I'll talk to you about that directly. And another advantage with your offering is that you accept non-accredited investors.

>>one thing is certain you buy off of one of the exchanges and your own your own BABY.. no help No support .. you best know what your doing.. we are turn key all the way through.. again a very narrow niche and as such.
I'm not sure which exchange your're talking about, but on all the crowdfunding exchanges the investor does actually get full support (they don't have to handle a thing including workouts, foreclosures or resales making it 100% passive).

For this OP, he said he would not have the time to do the workouts or the foreclosure that you mentioned above have happened in the portfolio already. And since the entire record is during an up cycle, probably he could expect that if we have a severe recession there would be an increase in the default rate and require more for him to do. Maybe you may want to think about adding that to your offering.
I am talking about buying a one off note off of FCI exchange.. not investing in a Pool.. but not sure about back end help just read the patch of land threads with all their defaults they have more defaults in one month than I have had in 6 years LOL.
Anyway I don't think we are allowed on the open forum to go into the nitty gritty of how we do business as it would be self promotion..
But yes this is a great niche for the VERY conservative investor and 90% or more of our investors use their SIDRA 401k solo etc.. that how I started the product line I designed a product for SIDRA investors and SIDRA borrowers.. And here we are.. perfect blend of yield and safety.
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
8y
There are many avenues to invest in notes that are not crowdfunding sites. Whoever you invest in do your due diligence on where your putting your money. If you have someone manage a note for you make sure you have references and a history of some deals they have done. There are a lot of people soliciting funds/JV partners (against SEC violations) on a lot of Facebook groups If your buying a note off an exchange like FCI make sure to be very thorough. Having looked at a lot of their notes posted many are overpriced, and have inflated BPO values. If you buy on your own make sure to order a title report, BPO and have an attorney review the title.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @Chris Seveney:

There are many avenues to invest in notes that are not crowdfunding sites. Whoever you invest in do your due diligence on where your putting your money. If you have someone manage a note for you make sure you have references and a history of some deals they have done. There are a lot of people soliciting funds/JV partners (against SEC violations) on a lot of Facebook groups
If your buying a note off an exchange like FCI make sure to be very thorough. Having looked at a lot of their notes posted many are overpriced, and have inflated BPO values. If you buy on your own make sure to order a title report, BPO and have an attorney review the title.
Chris is just cringe thinking of someone who has never bought a note and goes shopping on FCI :) its a crap shoot for sure..
its why I decided to create my own note product so I had vertical integration from day one top to bottom.. I know how the home was acquired I know how it was rehabbed and put into service I know the PM I know the operator etc etc.. very very tight niche and this flows down to whoever ends up being the bank.. its not hey buy this note and the trustor or mortgagor is someone you have no clue who they are and or if they have already defaulted .. this is a completely different business model.. and one that should not be attempted by those with zero experience in my humble opinion.. just like folks buy rental houses from Turnkey providers.. I like to think of Performing notes in our niche as turnkey notes fully integrated NO title issues ever as we have a fresh lenders policy in the NAME of the investor.. and all sorts of other controls..
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Alina Trigub
Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes
8y
@David Huegel You've got a ton of great feedback, especially from @Jay Hinrichs and @Ian Ippolito. I'd like to reiterate that at the end of the day, it is your personal decision as to what works best for you. It could be notes, TK, syndications or something else completely different. You have to weigh in on the pro's and con's of each to see which one strategy (or several) to pick for your family.
Also, here's a blog post I wrote on the steps to take to determine whether you're ready to invest passively: https://www.biggerpockets.com/blogs/10850/74883-wh...
Best!
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Ian IppolitoBusiness Member
Investor · Tampa, FL · Member since 2015 · 1k+ posts · 1k+ votes
8y
@Jay Hinrichs,

>>I am talking about buying a one off note off of FCI exchange.. not investing in a Pool.. but not sure about back end help just read the patch of land threads with all their defaults they have more defaults in one month than I have had in 6 years LOL.
Patch of Land is bad (or to be more accurate, the investors in it say it's bad, since the platform itself will not release the statistics. For example, one investor with 30+ notes has reported to me that 16% have gone into foreclosure ).
But it's also an outlier and it's not fair to paint a whole industry with such a broad brush. Many of them have an excellent record, and some of have (or claim to have) a similar or even lower foreclosure rate than you are claiming.

For example, platform Shares States has funded over $1 billion in loans and reports only one in foreclosure (< 1%), FundThatFlip is less than 2%, and Peerstreet is less than 1%. For diversified funds/pools, BroadMark is less than 2% and they lend in the much riskier space of construction notes (and the fund history is audited). Arixa Capital is less than 1% (audited). Wilshire Finance Partners has had no foreclosures and a 0% rate. (audited) Etc.
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James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
8y
Originally posted by @David Huegel:

Hello BP community!
I need some direction from anyone with investing experience. My wife and I are debt free, we have excellent credit. We own a mobile home free and clear that we are currently renting to a single mom with 3 kides. After expenses, we make about $150/month off of that property. That property is worth about 50K fair markey value. If the mobile home becomes vacant I can either sell it to purchase more buy and holds or I can raise the rent to where we would be cashflowing more like $650/month after expenses. What would be your suggestion for that?
We also have 60K cash and I want to know the best route to invest that money. I have been looking into turn key buy and hold companies. I'm not wanting to do fix and flips at this time. What would be your suggestions for the cash?
Any advice would be helpful!
Thanks!
Dave
The #1 reason to invest in real estate is the ability to stretch your dollar with the best financing. Mortgages are long term, fixed rate and tax deductible. Take that $60k & buy yourself two $90k duplexes. You'll quadruple your money at the very least while earning cashflow every year.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @Ian Ippolito:

@Jay Hinrichs,

>>I am talking about buying a one off note off of FCI exchange.. not investing in a Pool.. but not sure about back end help just read the patch of land threads with all their defaults they have more defaults in one month than I have had in 6 years LOL.
Patch of Land is bad (or to be more accurate, the investors in it say it's bad, since the platform itself will not release the statistics. For example, one investor with 30+ notes has reported to me that 16% have gone into foreclosure ).
Granted your right but we had a total of ONE.. but I have been doing this model 6 years going on 7 I am not sure that a lot of those new companies have had full cycles.. However I know no matter what there will be defaults.. it just is the nature of the business and I am astounded how well our portfolio has held up that's for sure. But like they say past performance does not dictate future events..
I am not so full of my self to think us as perfect.. there will be deals we have to work through no doubt.. and that's where my model in my mind Is pretty good we have a much better understanding usually with our collateral than over the counter got the borrower off the internet loans.. I know I was a normal mortgage banker for years making loans as getting on line apps underwriting them etc..
But when we chat I will fill you in..
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