All Forum Posts by: Brian Burke

I'm not an attorney either, but Wayne Brooks is correct, and the only way to get a deficiency on a non-exempt property is to foreclose judicially. Judicial foreclosure is rarely used in CA but it is an option. One expansion on what Wayne said, the non recourse statute does apply to refinances, but only rate-and-term Refis of purchase money loans. In other words, non-recourse protection is lost as soon as an owner takes cash out when refinancing.

Say what??! I've been in this business a long time, and even I don't understand all of that. Total overkill from someone selling legal services, in my opinion. There is no "one size fits all" ownership structure. Everyone has a different personal and business situation that, when the facts are examined collectively, dictate a particular ownership structure.

For most investors, just owning property in your own name, and carrying good insurance, is the best structure. For some, there is a compelling reason to own in an entity.

Mike,

Sounds like you are on the right track. I suggest that you take your calculated amount and multiply by at least 1.25 because the only certainty is that everything will not go according to plan.

Good luck!

Craig P., I've used mine many times. It's a great rate compared to other options. That being said, that's the ONLY advantage I get from it. The best decision I've made is to stop using it and use private lenders instead of the bank.

Why? I pay cash then refinance after closing. This makes my offers more competitive. My average hold time on a rehab is 110 days, and it took the bank anywhere between 21 days and 90 days to process the draw. If I wanted my leverage to be calculated off of my purchase price, I might get it in 21 days. But, if I also want to leverage the rehab cost, I have to complete the rehab first and then the bank orders the appraisal. In this case, the money comes in about the time I get the house in contract to resell, so the whole thing is just a waste of time.

With private lenders, I can get the funds in a few days, and get higher leverage because I am borrowing a percentage of the ARV vs. acquisition price. Now, instead of being levered for 25% of the hold period, it is more like 90% of the hold period, and that's a big difference.

You might get slightly better results if your bank does their own valuation, mine requires appraisals.

If your strategy is to use the guidance line to close the purchase, the timing of the cash is probably moot.

My results are interestingly mixed. I've sold fewer flips this quarter than I have in a while, 11 of them. Although, this quarter will be a record quarter in terms of net profit (from flipping) in 24 years of doing this. While final numbers aren't in yet, I expect that annualized return to my investors will also hit a new high.

Acquisitions are low too, at only 16 flips in Q1, so I hope that the low volume, high profit trend continues! Only bought 4 rentals, up from an average of 16, but that was because my previous fund was reaching full execution and I had just started raising money for my third rental fund. Now that the third fund is up and running, I expect purchases of rentals to increase in Q2 now that I'm no longer in "transition".

I analyzed over 50 multifamily properties in Q1, and all of that hard work is likely to produce results with a closing of a 140 unit deal in Q2 if everything checks out. Now I've got to raise money for that!

Today's market is so competitive that it is a waste of time to submit anything other than my highest and best from the very beginning. So when I get a call for highest and best, all I can say is, "you already have it".

Welcome to BP, Arron. I'm flipping a house in Berkeley right now, their building dept is a huge pain (even when grading on a curve with other CA city's building depts). Challenges like that keep this business interesting. Welcome to all of the fun!

JP, track record is a function of many factors, some of which:

1. Just showing that you HAVE DONE A DEAL
2. Before & after pictures of your rehab to show what you can do
3. A comparison of your projected ARV vs actual sales price to demonstrate your ability to estimate value
4. Making payments on borrowed money, and paying it all back when done
5. Showing that you are able to generate a profit

And many others. At the end of the day, your track record should demonstrate that you are experienced and trustworthy. It takes both quantity and quality to establish a track record, and the more of each, the better the track record.

For example, when I had a dozen deals under my belt I had a sufficient track record to attract people who already knew me to invest with me. As my track record built in quantity, and the quality showed, I became better able to attract investors that not only didn't know me, but had substantially more resources to invest.

Search around on the BP forums for recommended books, there are a lot of recommendations floating out there. I'm not much help here, I was reading books on topics like that 20 years ago so my book recommendations would be outdated.

Ideally, I'd like to have as much in reserve as possible.

When I did my first deal, I was 20 years old so what was possible then was "zero". Like Bill Gulley, I couldn't rub two nickels together after doing my first deal, and I put nothing down!

I'm so glad to be older, wiser, and wealthier, but you've gotta start somewhere.

Welcome to BP, JP!

I financed my first deal by getting a finance company loan, and having the seller carry back a second. I was in for nothing down. That's a little harder to do these days for a variety of reasons.

On my second deal, I bought the property subject to the existing financing, which was in default. I used a cash advance from credit cards to reinstate the loan, and used credit cards to finance the rehab.

On later deals, I used a wraparound mortgage (actually an all-inclusive deed of trust) or private money from a hard money broker coupled with credit card advances, signature lines of credit, and later an equity line of credit to bridge the financing gap.

All of that helped me build a track record that allowed me to do the next several hundred deals pretty much the same way: using equity raised from wealthy investors desiring passive income from alternative investments, coupled with either bank debt or private money lenders (at much better terms than when I started).

Good luck!