All Forum Posts by: Matthew Lee

Long time no talk Wendell...Hope all is well!

@Wendell De GuzmanJust sent you an email...Look forward to seeing you

tomorrow...

@Tony Ortiz Cash Out Refinances for Non-Owners is usually limited to 75% of Appraisal Value...

About the best you could do is to get your Mother In Law to do the Cash Out Refinance, assuming she is Owner Occupant...

Otherwise this is tough situation...I work with investors that are buying Cash Flow Rental Properties, and I am very clear to them that Equity is a Long Term Play, and in most cases not worth doing a Cash Out Refinance because of the closing costs involved...I help investors focus more on Cash Flow...Your Market could be different...I'm in Chicago...

Alternative could be to consider Unsecured Business Lines of Credit, which is personally guaranteed...these are generally connected to a major bank credit card...You only pay interest on the balance that you use...Most of them offer 0% Interest the first year...

Just some thoughts...

Top Ways I have found deals...

1. Bandit Signs

2. Other Bird Dogs

3. Other Wholesalers

4. MLS/Realtors

5. Personal Network Referrals to Sellers

6. Craigslist

7. FB Forums - People post deals

8. FSBO Signs

9. Professional Network other RE Professionals

A Few pieces of Advice...

1. Determine the overall goal and objective of all of the partners in the group first to make sure everyone is on the same page...How long are you looking to invest? What ROI's are you targeting? What is considered a "Good" market to purchase in?...These are just a few questions to get you started.

2. A good entity is the LLC...you can use this Entity for holding Properties in...also a Series LLC is very good for Rental Properties...Talk to a CPA about that...an LLC is a "Flow Through" Entity, which means the income(or losses) flow through and get divided up to each individuals Tax Return...so essentially the LLC doesn't pay taxes...

3. Find a good Property Manager where you intend to invest at. Generally a PM that has a lot of Rentals in the area you are going to be buying in...They will know a lot about the area and the do's and don't's for purchases because of their experience managing properties for other clients in that area.

4. You may even want to buy a few Turn Key Rentals first to get the hang and experience before venturing out into buying properties on your own, and having your PM fill the properties with Tenants.  There are pro's and con's to each. There is a lot of Great Info here on BP for that research.

Good luck Bro...Hope that helps!

@Kevin Hart In this market I think is best to have multiple Exit Strategies...especially if this is your first rehab...

By getting pre-qualified for the refinance up-front it will help you look better for any hard money lender because they will know that you can refinance them out of the deal...Always go into every deal calculating your cost of holding and Hard Money into your deal ahead of time so they are accounted for and your Profit is built in.

Since this is your first rehab a couple things to keep in mind...Every market is different for Hard Money, Market Times, Resale Value, Appraisal Values, etc...

Know your long term objective 3-5 years from now...try to find other successful investors in your local market that may mentor or coach you through the process...I have been in your shoes...there are 100 different obstacles that can come up during a real estate deal and a rehab there is even more...not every scenario will occur on every deal - maybe 5-7 of them will happen...When you're new to rehabbing everything seems like a big deal - sometimes they are, but many times they are not...but you don't know the difference when this is your first few times doing a rehab and therefore you may have to rely on contractors or realtors...the problem with them is they are not totally objective in their advice and therefore may not give you the advice that is in your best interest...or worse they are giving you the advice that will put the most amount of money in your pocket...Generally a Contractor or Realtor is not a good coach or mentor(unless they are investors too), generally if they are making enough money investing they are not contracting or still working as a Agent...There are always exceptions to the rule...

In my experience one mistake for a beginner can cost you a ton of money and even put you out of the rehab business. Or it makes you tentative about doing more deals...

There is no way you can learn all the mistakes you must avoid by reading a book or taking a 3-day intensive training program.

Also keep in mind the experienced investor will have tons of relationships in place that you will be able to leverage that will save you 10,000's in time, money, and trial and error. They may not volunteer all these relationships to you, or will these people treat you like the experienced investor, but if you are willing to create value for this investor or mentor(ie. pay them, or whatever other arrangement you can make with them to help them out) there is a chance they will be more open to having a relationship with you based upon the experience of the other investor.

There is always risk in investing from my experience there is more risk in doing nothing at all and learning through trial and error...but when I can learn from someone else that has already learned through the "School of Hard Knocks" I am glad to find ways to create value for them in exchange to have access to their experience.

Hope that helps...

PS The best thing about a investor/mentor in your local market is a great mentor will know the market well enough to know a deal without having to use a ton of guess work, they typically understand the little differences in neighborhood that might cause a radical drop in house values of homes that might look like deals, but are really "Money Pits". Good Luck Bro!

@Diron Binns  @Gerald Harris  gave you some great steps for wholesaling the deal...

I would say the most important thing is to "know your objective"...and to be as clear as possible on your objective as possible, so people can give you advice on how to help you reach that objective...

There is a lot of great info and advice on BP, but ultimately we are all making "shots in the dark" as to the best option for you because it's our perspective NOT your Perspective...

This info is still valuable, but can become very confusing because you don't know each person's perspective...

MY Suggestion are the same to most beginners starting out...first step is to know your goal over the next 3-5 years...

I will let you know a little about my perspective...I am a Rehabber and Have Been Buying and Rehabbing over the past 8 years in Chicago...I've been in your shoes...I wanted to accelerate my learning curve and do as many deals as I could as quickly as possible. I had Little to No Money & No Experience but a few REI Boot Camps- basically No Experience...To say I've had a lot of Failures during my 14 years of being involved in studying REI is an Understatement...

If I was starting all over again, and my objective is to be able to build a robust REI Biz that can allow me to rehab 6-12 homes a year, wholesale 2-3 properties per month, and build a rental portfolio...I would first focus on getting good at one objective first...

Generally most people start out wholesaling because it doesn't require the money or experience rehabbing or landlording requires...

I would start with Wholesaling...go find 5-10 very good rehabbers and find out their Criteria for a Great Deal...Commit to building Value for them and ultimately a great relationship.

With this you will already have buyers lined up, you know what areas to look for properties in, and you can research public record and see what they are paying for properties on the acquisition(and also ask them, but keep them honest by researching public record)...

At this point become the best wholesaler to these rehabbers...you will learn a lot just in this process alone...How to evaluate Comps, Repair Values, Neighborhoods, etc...Which a great wholesaler will know how to do...It will make your deals easier to sell...

Ultimately I would see which one of these Rehabber will be open to the idea of partnering/mentoring me on how to get into that arena...They may even allow you to follow the progress of their deals...Every deal has its surprises and over the course of 10-20 deals you will get a real life idea of what those surprises are, and even understand the "reason why" you calculate certain contingencies into deals and also what are the most costly mistakes or repairs to look for and avoid on deals...The value of this Experience will accelerate your learning curve...

In my experience one mistake for a beginner can cost you a ton of money and even put you out of the rehab business.

There is no way you can learn all the mistakes you must avoid by reading a book or taking a 3-day training program.

Also keep in mind the experienced investor will have tons of relationships in place that you will be able to leverage that will save you 10,000's in time, money, and trial and error. They are not going to volunteer all these relationships to you, nor will these people treat you like the experienced investor, but if they know you have experience from working under that investor there is a chance they will be more open to having a relationship with you based upon the experience of the other investor.

Hope that helps...

PS The best thing about a mentor in your local market is a great mentor will know the market well enough to know a deal without having to use guess work, they typically understand the little differences in neighborhood that might cause a radical drop in house values of homes that might look like deals, but are really "Money Pits". Good Luck Bro!

The best advice @Carlo Palomino is to "test"...

Do a little research here - there were some great responses above...and then decide which Strategy seems the best one...and then test...

If you want to improve your test results - Split test...Divide List and try 2 different intervals to see which one produces the most number of deals...

In real estate its all about "Location, Location, Location" in Direct Response Marketing...It's "Test, Test, Test"...

What you will find real quick when asking around is there is No "Magic Number"...
Hope that helps!

@Tori Parker  

@Kris Taylor  & @Alberto Artasanchez make good points...be listed as occupant and be prepared to have your credit ran...

If you feel it is going to harm the situation...then let them know up-front and explain your credit situation...Most people in this country have had some rough credit bumps in the last few years...The biggest concern of the landlord is getting paid their rent, and making sure they are renting to good tenants that will take care of their property.

So when righting a letter explaining your situation don't try to make excuses or place blame on other people for credit blemishes, but explain what actually happened, and how your situation has improved now so you won't have this same issues going forward.

In most situations they will appreciate you being up-front. If they don't ask to run your credit than it shouldn't be an issue.

The only case where it may be an issue is if they receive multiple applications on the same unit, and they have someone that is more qualified.

Hope that helps!

Also to be fair to @John Montgomery since I am in the Chicago Market...I understand the market for Hard Money here in Chicago is very different from other markets...

The market would benefit from more competition because the handful of HML have their pick of the litter and can cherry pick deals...on average they won't even do a deal with a newbie rehabber, and if they will they will only fund the rehab portion to protect their interest and limit their exposure to risk.

Cook County is a much harder county to do foreclosures in, and that creates a lot more risk for the HML...

Finding a Good Hard Money Lender - matter of fact I wouldn't call most Rehab Lenders in Chicago HML because they function mostly like banks except for the interest rate and points...They want 20-35% of Investors Cash into the Deal based on Acquisition and Rehab...no matter what the % ARV is...Oh, and they still want 680 Credit Scores, and Full Doc Loan Submission...Not anything close to Asset Based Lending...

Any HML that are considering moving to a market where there is a ton of Opportunity, Chicago is a great market. There are a lot of Experienced Rehabbers that will gladly pay good points and high interest rate for HML for a lender that knows how to get deals closed and can be honest on their ability to fund a deal.

I've heard Horror Stories where HML in Chicago have come back to the Borrower and asked them to cross collateralize on a deal 2 days before closing...it was the HML being greedy...and nothing is wrong with it, but when you approve a deal, you shouldn't come back with crazy conditions 2 days before closing...

Best advice to John is also to consider that is the type of market you are dealing with in regards to HML too...if you don't know what you're doing a HML can cause you to lose your deal by offering "bait and switch" terms...

Good Luck!

@John Montgomery Congrats on getting close to negotiating your first deal...

I would say the most important thing is to "know your objective"...

There are a lot of great answers on this thread, but ultimately we are all making "shots in the dark" as to the best option for you because it's our perspective...

This is still valuable, but can become very confusing because you don't know each person's perspective...

MY Suggestion is to know your goal over the next 3-5 years...

I will let you know a little about my perspective...I am a Rehabber and Have Been Buying and Rehabbing over the past 8 years here in Chicago...I've been in your shoes...I wanted to be the Big Shot and rehab deals straight out the gate(Little to No Money & No Experience but a few REI Boot Camps- basically No Experience)...To say I've had a lot of Failures during my 14 years of being involved in studying REI is an Understatement...

If I was starting all over again, and my objective is to be able to build a robust REI Biz that can allow me to rehab 6-12 homes a year, wholesale 2-3 properties per month, and build a rental portfolio...I would first focus on getting good at one objective first...

Generally most people start out wholesaling because it doesn't require the money or experience rehabbing or landlording requires...

I would start with Wholesaling...go find 5-10 very good rehabbers and find out their Criteria for a Great Deal...Commit to building Value for them and ultimately a great relationship.

With this you will already have buyers lined up, you know what areas to look for properties in, and you can research public record and see what they are paying for properties on the acquisition(and also ask them, but keep them honest by researching public record)...

At this point become the best wholesaler to these rehabbers...you will learn a lot just in this process alone...How to evaluate Comps, Repair Values, Neighborhoods, etc...Which a great wholesaler will know how to do...It will make your deals easier to sell...

Ultimately I would see which one of these Rehabber will be open to the idea of partnering/mentoring me on how to get into that arena...They may even allow you to follow the progress of their deals...Every deal has its surprises and over the course of 10-20 deals you will get a real life idea of what those surprises are, and even understand the "reason why" you calculate certain contingencies into deals and also what are the most costly mistakes or repairs to look for and avoid on deals...The value of this Experience will accelerate your learning curve...

In my experience one mistake for a beginner can cost you a ton of money and even put you out of the rehab business.

There is no way you can learn all the mistakes you must avoid by reading a book or taking a 3-day training program. 

Also keep in mind the experienced investor will have tons of relationships in place that you will be able to leverage that will save you 10,000's in time, money, and trial and error. They are not going to volunteer all these relationships to you, nor will these people treat you like the experienced investor, but if they know you have experience from working under that investor there is a chance they will be more open to having a relationship with you based upon the experience of the other investor.

Hope that helps...

PS The best thing about a mentor in your local market is a great mentor will know the market well enough to know a deal without having to use guess work, they typically understand the little differences in neighborhood that might cause a radical drop in house values of homes that might look like deals, but are really "Money Pits". Good Luck Bro!