All Forum Posts by: Bob Floss II

I typically only deal with private mortgages and notes for purchase and rehab. Recently I’ve had a few requests for small notes to give rehabbers the funds they need to complete a property. Often they have a rehab escrow but are struggling to remain liquid to complete the work and get draws. 

Is this something any of you have done in the past? What terms do you give for this scenario? When evaluating a short term note for $5,000 to $10,000, the terms I use for my larger notes doesn’t seem enticing for an investor. 

@Joseph Harr VA might not allow you to close without verifying repairs. Normally in this situation I ask for credits at closing so buyer can fix themselves. With VA involved, you may not have a choice but tell seller they have to repair or walk from deal.

@Korey Scott This is a very common strategy when starting out. Newer investors that don't have a track record will offer up an equity position in order to attract private money. Once you build yourself up, you can take that off the table. The rate you are offering is very low so I wouldn't be too concerned.

@Suava Lomax What are you finding hard? It's not hard to find a contractor online. Are you finding it hard to find one you like, communicates well with you, or for the price you want? 

@Kindu Gaynor There's a few different ways to accomplish your goal, it really depends upon you and your investors. Don't try to put this together yourself, you have lot of responsibility and liability when you are taking someone elses's money for an investment. Talk to an attorney and do it the right way.

@Prasad Gupta What type of investment are you looking to make in Chicago?

@Doug Wade Yes, the attorney is saying another attorney shouldn’t charge you very much to do it correctly. 

Depends upon each market. I like @Jason Graves idea of buying in Kansas City, that’s an often ignored market with strong tenant pool. 

Here in Chicago the large multi family market has been picked over. Several investors are having success with converting their 2 flats into single family homes and selling. We still have a decent amount of cheap single family homes that we are either fixing up to rent or flip. 

I’ve lost a few partners to border hopping. Several are buying homes in northwest Indiana to chase cheap housing and the others went up to Wisconsin to get a piece of the Foxconn housing demand. 

@Dennis H. You are already way ahead of the pack by having your first property. Hope all goes well. Pick your tenants carefully!

I’m of the opinion we will experience a strong pull back and correction in the real estate market, but we will not experience anything close to another bubble or recession. I feel like people don’t fully understand what happened when the market collapsed. Far too many chicken littles are running around saying the sky is falling and trying to predict the next crash. 

Yes, prices will likely fall and we may see the real estate market cool for a time. No, it won’t be anything like last time and it may marginally effect residential properties. If any sector is going to get hit hard, it would be commercial real estate where apartment buildings are selling for upwards of double what they were worth three years ago. 

Last time, the market was pulled down by bad mortgages. This time the market will be pulled down by bad debt on the stock market. You can find good articles detailing the situation. Many of your favorite companies on the stock market are artificially inflating their stock price by showing cash on hand. The cash is not theirs, it’s borrowed money they are using to appear liquid and boost value. When the loans come due, many big companies could see a massive loss in stock price. Unfortunately, the stock market is a breeding ground for panic and may trigger sell offs, panic, and losses for investment and retirement accounts. That loss will likely trigger pull back in the real estate market as investors take losses.