All Forum Posts by: Will Barnard

Mathematically speaking, it depends how much your personal debt is costing you. If the rate of your personal debt is greater than the rate of return you could get investing in an investment vehicle, then paying off debt would make more sense. If your rate of return in your chosen investment vehicle is greater than your debt % rate, then invest and use the arbitrage to pay down the debt.

Simple and quickest answer is - any beach city in So Cal will have appreciation over a 10 year period. There is only so much coast line and they are not making any more of it. In fact, with global warming, perhaps it is dwindling.

That said, LB is a huge up and comer but make no mistake, it does get above 80 degrees. San Diego is another great spot for your criteria. Santa Monica is yet another "silicon beach".

 How can you be certain you are getting labor and materials at cost? if you have no experience, it is very easy for any contractor to inflate costs and state it was his cost. Secondly, the $300k capital towards the purchase is certainly something and should be accounted for in your split. To know exactly how much of a % of ownership in equity the contractor should get for that, I/we would need to know what the total capital raise is, i.e. purchase price, closing costs, holding costs, rehab/construction costs, etc.

 I don't recommend this. First off, so many state that you can find a deal and the buyers part is easy. A lot of deals these days are thin so finding the buyer after the fact is not always so easy. Second, such a transaction would likely place you in the brokering without a license arena. I would certainly not suggest that people operate illegally to make a buck! Also, when you are new, figuring out the paperwork is no easy task as you really don't know squat at that point. Better to make sure your paperwork ducks are in a row BEFORE you start shopping for motivated sellers as a beginner.

Problem 1 - your buyer is not all cash. In wholesale deals like this, it is 1000% easier to accomplish when you have an all cash buyer.

Problem 2 - "getting paid on the side" for brining buyer and seller together is brokering without a license.

Problem #3 - you stated in your original post that buyer and seller are aware of each other, none have any problems and then in your last post you state that buyer and seller "don't seem happy with you earning anything at all". So which is it?

Solution for now and in the future - Line up your buyer first (it helps your cause when your buyer has cash) and create a new entity. Use your new entity name as the buyer (contract vesting) and then simply sell your shares of the company to your buyer for your fee. This way, your end buyer was the buyer all along, no marketing, no double closing costs, no brokering without a license.

 Your homeowners policy which should cover fire and theft plus liability protection for anyone injured on your property. Check with your insurance agent for more info.

You can't trust Zillow's zestimates (estimated values) or any other except a real CMA. That said, it was listed for $249k a few years ago and didn't sell. I don't know your area so I cant comment on value but it appears you have a comp in the mid $200ks and others in the $400'ks (although those are larger). It also looks more rural which lowers your buyer's pool at exit. Get with a professional (like a real estate agent who is investor friendly/knowledgeable) who can advise you on value and what is going on in this area.

To reiterate, ignore zillow values.

On a buy and hold, appreciation is the gravy and really should not be part of your initial analysis on your deal. That said, appreciation may or may not be important depending on your strategy and goals. Some buy for cash flow while others buy for appreciation (like CA). What you intend to do with the property is vital. You can certainly "force appreciation" through value adds like renovations, decreasing operating costs, and increasing gross incomes. Increasing gross incomes can come from raising rents or adding other income streams like covered parking, coin laundry, storage, cell phone towers, bill boards, etc.

There are a number of ways to find deals, driving for dollars, direct mail, SEO (with website), communication with all you come in contact with, etc.

As for "lipstick" deals, good luck. In this extremely hot sellers market over the last several years, it is very difficult to find a lipstick deal with enough spread to warrant moving forward with it. Expect to do more heavier rehabs to make your spread. You really need to add value to make a buck right now. This is generally speaking and of course there are the needles in haystacks out there.

Aside from what Wayne stated, if there is a wholesaler involved, he/she is likely getting paid a fee so between that and selling costs to the seller, if there is not enough to cover the liens/closing costs, seller will be coming out of pocket. Be careful on that and with the wholesaler. Do not give up any money direct to wholesaler and make sure you see an estimated close statement from escrow showing enough funds to clear liens and close the deal.