All Forum Posts by: Scott E.

Commercial wholesalers don't exist. I think this is due to a combination of:

1. Commercial property owners are generally more savvy and sophisticated than residential property owners. So they aren't going to be easily swayed to let some random 'wholesaler' put their property under contract for way under market value

2. The due diligence part of buying commercial real estate is a lot more intense than residential. A lot more needs to be reviewed, you get more time. This doesn't cater to the wholesaler model where they are looking for investors who can be quick and decisive.

3. Commercial property owners are already constantly getting hit up by local developers and brokers. Relationships are built with building owners over years or even decades. So when the owner is ready to sell, they already have more than 1 person to call.

Buy as low possible. Throw away the 70% rule or any other arbitrary rule. Just pay the lowest number that the seller will accept.

If they think $500k is fair and your numbers work at $500k, then pay $500k.

If they think $350k is fair and for you it's a home run if you paid $350k, then pay $350k.

You're running a business not a charity. 

How much did he buy the house for? 

What is the LTV on the current mortgage he has in place?

How much money does he need to complete this rehab?

What is the purpose of the property? Flip, rental, owner occupied?

We need more details. The answer is probably going to be that he should get a HELOC, call a hard money lender, or he should use a credit card. But the answers to those questions above will help to give better direction.

Is he asking for 20% down because that is the down payment requirement of the loan product, or because that is the amount needed to get the DSCR in line?

If you cash out that $25k 401k and you're not of retirement age, you're going to walk away with something like $15k at best after you pay the penalty and the taxes.

Not much you can do with $15k...

I'd leave the money where it's at and find ways to increase your income so you can save up $15k (or more) over the next 6 months.

There are plenty of people here who either paid all cash for their properties or have paid their loans off and now own those properties free and clear.

No names come to mind but I know they're out there, I recall some members talking about paid off properties.

I generally use leverage myself but I've done a couple of flips all cash as well so I might be able to weigh in.

What are your questions?

There is a trend in Los Angeles where 'vanlords' are buying used RV's, parking them on the side of the road around the city, and then renting these RV's out to homeless people.

The used RV's cost the vanlord between $2,000 - $5,000 and rent rates range between $600 - $800 per month (not a bad ROI!)

As of the last report there were over 4,000 rented RV's scattered around the streets of Los Angeles, with city officials seeming to do little to put a stop to this.

A vanlord named Greg William who owns 15 of these 'rental properties' was interviewed and he thinks he's doing good for the community by providing homeless people a safer place to live (compared to living in a tent on the side of the street).

I can appreciate the creativity of these entrepreneurs but this is clearly not the solution to combat the homelessness problem.

Weird world out there in LA. What do you guys think about this trend?

Link to Article 

Crazy. Southern California doesn't make it easy on you as a landlord or a developer. But the appreciation out there is so good, I guess investors are willing to roll the dice.

My advice is forget about the 1% rule and any other arbitrary rule that you've read about on the internet.

Instead, start actually underwriting deals.

If you are looking at buying an 8-unit apartment complex, that is no joke. You need to learn how to actually underwrite this deal to see if the numbers fit your investment goals. Once you look at a handful, you'll be able to run numbers on an 8 unit deal in 5 minutes.

You're not considering commissions and closing costs. If you sell for $210,000 and your 1st mortgage is $162,000... you will walk with ~$32,400 in profit when you sell.