Are Boot Camps and Power Courses Really Worth It?

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Are Boot Camps and Power Courses Really Worth It?

Curt DavisBusiness Member
Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes

Our company recently held a free educational seminar on real estate investing. After the seminar was over an older retired couple came up to me and asked me if what they were told in the seminar was true. I talked with them briefly and told them to call me on Monday. To make a long story short, they called me that Monday, I was able to get them approved for perm. financing and I was able to help them buy 5 investment properties, all with no money out of their pocket and in a few cases was able to put money into their pocket. I tell you this story b/c they told me that they spent over $40,000 in boot camps and seminars where they were always told if they wanted to " REALLY " learn what to do they would need to spend more money and go to another seminar. They met me, ended up buying 5 houses and didnt spend 1 cent. I think real estate education is important but you need to find people who are doing what you want to do and follow them.

Curt Davis - KAIZEN Realty538 Reviews
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  • Michael Smith
    Real Estate Investor · Modesto, CA · Member since 2008 · 13 posts · 0 votes
    17y

    That is great Curt. I wish I had run into you long ago. But it is good to hear others sharing their knowledge to help people. It just might change the tarnished image RE investors have (at least here in California).

    0Reply
  • James Hiddle
    Altus, OK · Member since 2008 · 2k+ posts · 690 votes
    17y

    Most boot camps and seminars are just ploys to get you to fork over more money for either more boot camps,expensive courses or high priced coaching which doesn't teach crap.

    0Reply
  • Michael Smith
    Real Estate Investor · Modesto, CA · Member since 2008 · 13 posts · 0 votes
    17y

    I agree with that and RoopDoran do their share of selling. What I have found that the quality of the products and the follow-up and implementation are far ahead of any others that I have purchased.

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  • Jim Kindred
    Investor · Saint George, UT · Member since 2008 · 10 posts · 22 votes
    17y

    I have found that you will pay for education one way or the other. You will either pay up front to attend a class or seminar of some kind (regardless of the quality of the class), or, you will pay for the education through the school of hard knocks. As they say, 'if you think education is expensive, wait to you see what ignorance costs'.

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  • Michael Smith
    Real Estate Investor · Modesto, CA · Member since 2008 · 13 posts · 0 votes
    17y

    I agree Jim. Be there and done that.

    0Reply
  • Account Closed
    CA · Member since 2008 · 277 posts · 11 votes
    17y

    Will you share with us, please, how you accomplished this?

    0Reply
  • Derek W.
    Investor · Kern county Riverside County, CA · Member since 2008 · 494 posts · 261 votes
    17y

    I second Caitlyn's motion. Yes, please! Share! Could we hear how you did that?

    0Reply
  • James Hiddle
    Altus, OK · Member since 2008 · 2k+ posts · 690 votes
    17y

    I third the motion :mrgreen:

    0Reply
  • Tom C
    Real Estate Investor · OH · Member since 2008 · 1k+ posts · 86 votes
    17y

    No they are not worth it.

    0Reply
  • Curt DavisBusiness Member
    OP
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    17y

    Here is how I was able to accomplish helping them get 5 properties with zero down. I have a local hard money lender who will do the loan for anyone who buys property from me. I had them get pre approved with a local lender I use. The hard money lender lends 75% of the ARV and charges 5pts on the front end and 1pt per month until the loan is refinanced. My clients had a good credit score, good income, low DTI. Once I received the approval letter it was just a matter of finding the right property for them. Now they have 5 properties that have 20% equity and positive cash flow and it was all with no money out of their pocket. If you or anyone is looking to invest in Memphis I can do the same for you. Thanks

    Curt Davis - KAIZEN Realty538 Reviews
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  • Michael Rogers
    Certified Public Accountant · Chattanooga, TN · Member since 2008 · 279 posts · 151 votes
    17y

    Is the 1 pt per month basically a 12% interest rate? ($100k loan x 1 pt = $1,000 per month or $12,000 per year) That seems a little high for someone who has good credit. Is this the "perm. financing" you were talking about or a temporary line of credit.

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  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    17y

    Its hard money. Short term until the property can be fixed up and refi-ed. 5 points and 12% is pretty good for hard money. 75% LTV is excellent.

    Have to find pretty good deals to make this work, but if you can do that, this is a good way to minimize the out of pocket costs. To truly be at nothing out of pocket, you'll need to cover the points, closing costs, rehab costs, and the monthly payments all out of that 75% LTV loan.

    Hopefully "positive cash flow" includes all expenses, not just taxes and insurance. I'd consider all expenses to include property management as well as allowances for maintenance, vacancies, and the inevitable bad tenant. To apply the 50% rule, rent needs to be 2X the P&I payment. From my research on Memphis, this seems very do-able.

    This strategy is getting more difficult, though. I'm hearing six months seasoning, even for a straight rate and term refi. I assume these are conforming loans, so getting five of them would be nearly impossible.

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  • Michael Rogers
    Certified Public Accountant · Chattanooga, TN · Member since 2008 · 279 posts · 151 votes
    17y

    Everyone is different, but a 5% origination fee, then 12% interest (with WSJ prime at 3.25%) seems high to me. Most loans I've done with my bank have had a ~1% origination fee. They typically lend 85% LTV. If I need help making up the difference I have a line of credit that floats at prime plus 1%. Maybe a line of credit with a bank might work better for someone with good credit.

    I realize that hard money lenders are short term funding, but we are setting the return bar higher by paying higher financing charges. The lower my expenses and debt, the less risk I have of getting in trouble during hard times.

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  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    17y

    Its not bank financing. If you can get bank financing, that's ALWAYS going to be better than hard money. That line of credit won't carry you very far if you're having to put down 20% on every purchase, and fund the rehab from it. Not to mention carrying the property while its being fixed up and rented. And, you'll have a hard time getting any bank to finance some of the REOs I've seen. The condition is just too poor.

    I've seen interest rates on hard money as high as 18%, though that was with just a flat $1000 fee. I've seen it as low as 12% and two points, but that lender will only go to 80% of purchase and 80% of rehab.

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  • Michael Rogers
    Certified Public Accountant · Chattanooga, TN · Member since 2008 · 279 posts · 151 votes
    17y
    I couldn't agree more.
    How many properties do you typically rehab at one time? I could see someone who gets a couple of these rehabs going at one time getting in serious cash flow trouble if they run into delays, selling problem, etc even at bank rates. Add to that they are paying 12% while they wait to sell it... That sounds risky.
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  • Josh Green
    Financial Advisor · Tampa Area, FL · Member since 2008 · 956 posts · 214 votes
    17y
    Originally posted by Michael Rogers:

    Everyone is different, but a 5% origination fee, then 12% interest (with WSJ prime at 3.25%) seems high to me. Most loans I've done with my bank have had a ~1% origination fee. They typically lend 85% LTV. If I need help making up the difference I have a line of credit that floats at prime plus 1%. Maybe a line of credit with a bank might work better for someone with good credit.


    Have you received your terms listed above recently? Is it a commercial loan?
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  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    17y

    If you're going to do fix and flips using hard money, you MUST account for that cost when you buy. The rule of thumb is that if you're using hard money, and anticipate six months from purchase to sale, you must have purchase plus rehab costs under 70% of the ARV. That gives you some wiggle room on the rehab costs and the sales price, and gives you, at best, a 10-15% of ARV profit. Plan that 10% of the 70% (purchase plus rehab) will be taken by the hard money interest and points.

    Whats the choice? If you can get a line of credit from a bank for a more reasonable rate, and you can get a big enough line to do a fix and flip, that would be better. Not easy to come up with lines of credit that big.

    Purchase with conventional financing? Not if the property is uninhabibatle. And the you have to have some other source of cash for the down payment and rehab.

    Money partner? With a typical 50/50 split, you'll end up paying more than hard money. If you do well, and your profit would have been 15% of ARV plus 10% of 70% of ARV (7% of ARV) for hard money, and you do a 50/50 split with a partner, you each get 11% of ARV. Better for the partner, not so good for you?

    No, that's not a commercial loan. Its a hard money loan. They do the same thing in commercial, though, at similar terms. Its called "mezzanine financing".

    If I recall correctly, Hugo Chavez made some loans to some other SA country, Ecuador maybe, at 15%.

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  • Michael Rogers
    Certified Public Accountant · Chattanooga, TN · Member since 2008 · 279 posts · 151 votes
    17y
    I believe what you are getting at is that banks are having a tough time lending at near prime right now. That's a good point. With prime at 3.25% it is impossilbe for them to make money when they are paying depositors 2% or 3%. The spread is just too lean.

    I just renewed my line of credit last week and the bank notified me they were decoupling from WSJ prime and using what they were calling their own "Southern Heritage Bank" prime rate until the Fed raises the Fed Funds rate back up. The Southern Heritage Bank rate is generally about 50 to 100 basis points above WSJ prime. So I'm basically paying prime plus 1.5%. Does that answer your question?

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  • Curt DavisBusiness Member
    OP
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    17y

    Michael, Our clients are buy and hold investors. The hard money loan is only a 90 day loan. If the client wants to sell the home or buy and flip they are still required to refinance it and pay off the hard money lender. The rates we charge for hard money are the best and easiest we have found out there.

    John, the new Fannie Freddie guidelines will only allow an investor to have 4 properties now so it would be easy to get any investor 4 properties assuming they are new and have no investment properties.

    Curt Davis - KAIZEN Realty538 Reviews
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  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    17y

    Curt, I'd still be curious to see the specifics on one of your deals. Also, are you seeing issues with seasoning? Do you have lenders that will still do a refi in under six months using a new appraisal?

    0Reply
  • Monte Kivo
    AR · Member since 2008 · 4 posts · 0 votes
    17y
    Originally posted by Curt Davis:
    Here is how I was able to accomplish helping them get 5 properties with zero down. I have a local hard money lender who will do the loan for anyone who buys property from me. I had them get pre approved with a local lender I use. The hard money lender lends 75% of the ARV and charges 5pts on the front end and 1pt per month until the loan is refinanced. My clients had a good credit score, good income, low DTI. Once I received the approval letter it was just a matter of finding the right property for them. Now they have 5 properties that have 20% equity and positive cash flow and it was all with no money out of their pocket. If you or anyone is looking to invest in Memphis I can do the same for you. Thanks


    What about in the Central Arkansas area?
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  • Michael Rogers
    Certified Public Accountant · Chattanooga, TN · Member since 2008 · 279 posts · 151 votes
    17y

    Thanks for the response Curt.

    In the case you mentioned above were these 5 properties in a condition that the bank would not make an in-house loan on them at purchase? Were they able to get the 5 properties into livable shape in 90 days? I was just curious what was different in the circumstances between "closing day" and "closing day plus 90 days" on this particular deal.

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  • Curt DavisBusiness Member
    OP
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    17y

    John, We have not run into any seasoning issues if the investor is using hard money. They will only have that problem if they are using cash or a personal line of credit.

    Michael, All of these properties usually need rehab so they are not in livable condition. The contractors we use can get the rehabs done usually within 2 weeks. Also, I did not do all 5 properties atone time. I did them 2 at a time. Not sure what you mean about the closing day. The client will close the properties with our closing attorney and then once the appraisal is done and into the lenders hands then they will refi with our closing attorney again and pay off the hard money lender.

    Curt Davis - KAIZEN Realty538 Reviews
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  • Joseph Vasallo
    Real Estate Investor · CA · Member since 2008 · 18 posts · 1 vote
    17y
    Originally posted by Mr_Investor:
    Most boot camps and seminars are just ploys to get you to fork over more money for either more boot camps,expensive courses or high priced coaching which doesn't teach crap.


    Is it really that bad? I am going to be taking dave lindahl's boot camp in April. He seems to have a lot of credibility. Does anyone have experience with his teachings?
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  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    17y

    I've seen Dave Lindahl's free pitch and have a couple of his books. I think he's one of the better gurus.

    You will be upsold at that boot camp.

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