All Forum Posts by: Austin Fowler

CFD or land contracts as they are called in some other states I believe had their start in the land flipping bizz when banks simply wont or very rarely will finance anyone for land purchases compared to how widely available bank money is for improved properties. Growing up in the land bizz we never did CFD we just did a Trust deed and note and deeded the property to the folks.. that was CA.. However when I got into land and timber in the PNW ( OR WA ) contract for deed or land contract ( same thing) was the preferred method to secure the seller on private sale.. I did buy a Columbia River Front home in Wa on a contract for deed a few years ago but in the same area I bought little rental house on a trust deed and note from a private seller.. So just depends.. land contract and CFD were used to circumvent foreclosures was one of the main benefits.. I think @Joe S. point about Texas is there must of been a ton of fraud and abuse with CFD and lease options is why Texas takes a hard line against them.

@Austin Fowler

Great conversation. I'm both an investor and an agent, and my passion lies in helping people enter the market through FHA financing—often by house hacking with a duplex to offset their mortgage. Beyond that, I love working with clients to scale strategically, with a goal of building 10 properties over 12–15 years and ultimately achieving financial independence.

This is the same strategy my wife and I have followed successfully. Over time, our target returns have become more conservative. Today, we look for a minimum 6% cash-on-cash returns, along with loan paydown and depreciation. We self-manage our portfolio and also guide our clients in doing the same. The approach is highly scalable, but ultimately depends on each person’s earnings, savings rate, goals, and timeline.

If we were fortunate enough to receive $1M tax-free, our plan would likely be to purchase three brand-new properties in Canyon County (Caldwell, specifically). Each could rent for roughly $2,000 per month, generating $6,000 in gross monthly income. After accounting for ~$3,500 in annual taxes and ~$900 in annual insurance per property, the net would be around $61K per year.

While that isn’t flashy, the benefit of new construction is minimal large capital expenditures for the next 8–10 years. From that $6K monthly income, we’d allocate 30% (~$1,800) to a capex reserve, leaving ~$4,200 in additional free cash flow for our family. On top of that, as active investors, we’d utilize depreciation to offset income—around $10,545 per home annually.

If additional tax sheltering were needed, we could explore leveraging two of the properties at 50%, buying four instead of three: two free and clear, and two with modest debt. That flexibility is the beauty of a conservative, scalable model.

All very valid points Joe. 

In my experience there is no shortage of person who want to buy on C4D, but those correctly capitalized, yes they are the diamonds in the rough. 

And that is the entire point of C4D, in my eyes at least, it's not for everyone. C4D is "a" tool in the tool-box. It has a specific purpose, and best use. When used wrong, like a pipe wrench to pound a nail, well let's just say "results may vary" is an understatement. 

My most ideal C4D buyers are self-employed, often in first years, especially when in a service industry. Think Electricians, Plumbers etc.. Where they have great enduring incomes, and immense write-off potentials. They commonly run into the problem of being told they need to take 2 years of hit's on the paperwork, use less write-off's, to more accurately show income to achieve the financing approval looking for. 

I don't use C4D for buyers seeking to gain what they can't actually afford, on faith and hope that someday in the future they will. 

In my experience about 95% of people first are not so welcoming or interested in C4D, and for good reason, it's lessor known and has been used and abused by nefarious persons way too often. If I get 10 minutes to discuss it, 95% become accepting. It's about doing it legally and thoroughly. I always have full closings and R.E. Attorney on every one. I encourage inspections and appraisals. Sunlight is the best disinfectant, right. 

I say DSCR just for simplicity of the paperwork. Key is more on using portfolio lending. When have such a relationship with a bank, and repetition, it breeds comprehension and security. To be more exact I'd, at whatever point, utelize a commercial financing "product", but as said portfolio, with a LOC. We would close via the LOC, then they complete paperwork to then roll that next purchase into the entire whole of the financing, and replenish that LOC. The actual account with the capitol would just sit in it's account, used just as eye-candy for the PA's, and warm-fuzzy feeling for the bank I'm working with.

One may wonder "but what about when you get ____ properties in there?". Keep scale in mind, there C4D's, they ideally finance out in 3-5yrs, so there is a natural churn to it all. And a person is going to do what, as-many-as 10 a year, maybe. 50 SFH's worth isn't really all that much $ in commercial finance terms.

If your concern on wrapping DSCR is on a what-if revenues get interrupted, I'd remind that by wrapping in a grouping you lower your risk exposure. 10 SFR's on a mortgage is much safer than 1, because loss of any 1's revenue is only a loss of 10% revenues, not 100%. Same way insurance works on risk exposure.

As for not needing the $1m, I know, I do these now, and have for years, hence why I can rattle on about them, because I actually do them and am speaking from experience not theory. 

Well..... except for scaling, that is theory, I am not at-scale on it, not at all, haven't tried to scale but have thought on it a few times. I don't market it at all, 100% word of mouth.... 

Your asking the wrong question Austin. You should be asking at what annual rate is the scalability. 

One can scale buying and doing standard rentals. But scaling will be measured in years and decades. The rate of capitol return is simply not something that lends to any significant self-scaling metric. Period, full-stop.     Those who say there C/D can scale so fast blah blah blah, there full of sh#t, or too new or clueless.       

The only "hack" is some form of hacking, as in house hacking, something of that nature and in that the scalability is created by the buy and build, not the operation itself. Because these strategies literally create equity. Equity that speeds up capitol recapture, so one has the capitol to scale. 

Scaling requires capitol. When talking real estate, it means sizable capitol. There is no passive or passive-like monetization of real estate that generates the kind of capitol required for any note worthy pace of acquisition. 

Cash-flow is generally measured in hundreds. Acquisition costs are generally measured in tens of thousands. The former does not lend to any rapid scaling of the later. 

 I like buying properties and having my tenants pay off the debt with their rent. I am passionate about making money. I do not do a good job calculating returns; I just try to buy good deals. I am pretty hands on. It is pretty scalable. I would put it in a money market account and buy properties as I come accross them

Ok @Austin Fowler you really want to know what I'd do if dropped $1m liquid in my hands and I gotta utilize it in Real Estate, even though all of 7 people on BP will comprehend it...... 

About $5k into website, 2 VA's and system.

From there 1 VA calls on active buyers agents in designated markets presenting pitch to fill my calendly.

From there I pitch my C4D program for "nearly financed" buyers. When the buyers agent get's leads, works em, and finds there buyers are oh-so-close to approval but not there, they can still earn that commission via my C4D program. 

Everything would revolve around "median" world of things. 

Required minimum down payment is 20%. No exceptions. Everything else, there would be guidelines but just that, guidelines and negotiable whereas down has 0-flex. 

All app's via website. Va#2 process's per training. 

Buyers get a pre-qual budget. Buyers agent then helps them shop for such. When they find the right one, buyers enter agreement and post held escrowed down with me. Buyers agent submits PA, myself as buyer. 

At end of day, it's infinite investing, because when closing is done and all $ has cleared I am personally $0 into any property, that $1m was simply used to launch the biz and then to leverage to landing the PA's. 

The tenant-buyers financed the purchase via there down, which I utilize to unlock financing on the purchase. I would be using portfolio lending on DSCR underwriting, cross securitized by, you got it, the giant pile of cash sitting in an account spinning round n round.

Now being C4D buyers there is 2 spreads. First is on purchase price, second is interest rate. 

I only have to capitalize risk exposure, overhead and profits because I have $0 invested capitol. Thus a small spread can equal sizable returns. 

Now if you understand the math here, buyers doing 20% down on a buy price that has a profitable margin built in, then you understand how it would be more then 20% on my actual purchase. Probably more-so 30%. 

In summary, I wouldn't deploy 90% of the $1m, I would leverage the lions share of the $1m to unlock infinite returns via OPM. 

And I am now well liquid to cover any potential default issues if such were to occur. But being "median" focused and with C4D buyers who put 20%+ down aka significant skin into it, well one would have to chop off there own preverbal legs to give me a bloody nose. And I'd be well liquid to more then amply take care of any bloody-nose. 

My risk exposure would be less then that of standard landlording, as the tenants would have far more securitization. So risk wise, it's a low-risk strategy in real estate. 

And end of day, everybody is winning, the agents win, the end buyers win, and I win. 

The trick to it all is setting and keeping good fences. 

100% of C4D's I have seen blow-up have all had the common component of neglect on behalf of the investor. Selling to persons they shouldn't have, under securitizing, not keeping strong fences. 

There ya-go Austin, that's what I'd do. And I'd dedicate as-much-as 20hrs a week to it. I'd fund my va's for 90 days and from there forward I'd require the venture to self-fund all operations from revenues. And that would be my "stop-loss". The moment it stops self-operating, I'd end it, regardless of a causation. 

Thus preserving my capitol. 

 You're the one raises capital then buys turnkey and "guarantees" 8% return if I remember correctly? I remember this as I joined this forum with fractional reserve banking.

Is this a disguised thread to raise capital again?

Two chicks at the same time, man.

It just depends on where you're starting. Someone nothing that doesn't know money; better of paying all consumer debt, buying a house cash, and living simply with any leftover in some form of equities & gold. Someone with a REI background, likely lower LTV higher quality properties in areas they like.

I don't "chase" return percentage. You don't control the outputs, just the inputs. Focus on that. 

As lenders, we broker most of what we do, but we will lend on shorter-term, lower-LTV deals or transactionally fund with the capital, provided we can get comfortable with the property, the parties, and the closing agent. Again, we stick with lower LTVs on that and the "c-buyer" has to be in place and they have to wire their EMD in to the closing agent "hard" prior to us funding. As investors, we originally did a lot of flips, but most of what we do now are higher-end ground-up spec construction. We don't buy and hold unless we can sell a property in a reasonable time period. Not that there's anything wrong with it. We've found we're just really good with the ground-up spec between $1 million and 3 $3 million in as-completed value.