All Forum Posts by: Dan Thomas

  I applaud the ambition!  Good for you to be thinking about these things at your age.  I personally would recommend saving money and doing a deal before getting a mentor or coach.  I would also caution you to really do your homework before giving any money to a "mentor" or "coach".  There are a lot of folks who are good at making themselves money but I question their ability to provide value to their clients.

  You will learn PLENTY on your first deal.  You can get that experience for the cost of the investment.  You don't need to pay someone else for that.  This website is also a great platform to learn.  I really think spending time reading through material that is free, and actually getting out and underwriting some properties and getting a deal done is a much better use of your time.

  If you are dead set on a mentor, I would suggest letting it happen organically, don't pay someone.  For example, you could start attending Real Estate meet ups, network with folks, maybe pick up a part time job working for someone you meet?  Surround yourself with folks that you aspire to be and you will eventually build an amazing network of friends who want to help you because they care about your success, not because you pay their living expenses.  It will take longer to build those organic relationships but I guarantee they will be more meaningful relationships.  Food for thought.

@Joseph Fenner

Good advice above. Even if you assume your goal is realistic, James makes a great point. I planned to retire off of STRs...had it all mapped out. I bought one and the first year was OK but I quickly learned I HATED it. You couldn't pay me enough to start another. I MUCH MUCH prefer long terms. There are people who will completely disagree with me. Everyone is different and until you try the first you will have no idea if you want to dedicate the next 5 years of your life to it.

What happens if you get the first one and the following happens

1. Contractor decides going on a two week vacation in the middle of the rehab pushing out the subs work who were already booked the next several months

2.Tenant stops paying rent. Still have expenses, but no income (hope you have reserves for a lawyer)

3. Despite rock solid comps the appraiser gives you a very low appraisal. How do you refi?

4. Interest rates go up

5. An anomaly happens in your personal life that consumes more money than normal. Wipes out your reserves.

That exact perfect storm happened on a brrrr deal of mine. Are you really going to stay this motivated under those circumstances. I bet realistically most people would stop there.

Is this the right section to ask about wholesaling arbitrage properties using none of my own money??

Maybe in Columbus Columbus Columbus?

@Michael Chalke

I like qbo...all bank accounts linked, I spend about 20 mins a day categorizing transactions (I have a small business, if you take that out it is probably 20 mins a month for my rentals) I pay a book keeper to reconcile monthly and a separate cpa to prepare taxes. Works out well for me.

JWB did a build I believe in Jacksonville FL several years ago.  They are around.  From what I understand they are not much cheaper to build.  What you may save in material you will make up for in engineering and architecture fees. 

I know where I live a project like this could be very difficult and expensive to get approved through local planning boards.  You would need to have a rock solid argument prepared for how community benefit (affordable housing?) outweighs the aesthetic of a bunch of cargo containers.

https://www.jwbrealestatecapital.com/shipping-container-apar...

https://dtjax.com/poi/ashley-street-container-lofts/

Looking for some opinions....I have forwarded this to my attorney as well so I am just looking for opinions from those experienced in private money transactions, I know that I should consult an attorney.

I own land that I am trying to build out a brewery on in NH.  I have struggled over the past year getting financing for this project.  I have worked with at least a dozen banks over the last year.  I hear the same story about how the general economy, my length of time owning the business, etc are reasons credit unions (same ones who were on board before I bought the brewery) are now not willing to finance.  They all mention that my business plan seems rock solid and they buy into my numbers.  The banks are just very conservative in this environment.

I met a gentlemen who came into my brewery (current location that I lease) and we got to talking about the general market and our plans to scale.  He mentioned he has a large network of private lenders and would be willing to help me out.  I sent him my business plan and he said his investors were interested.  He sent me a contract which if I sign will pay him a fee of 3% of the money secured.  The construction cost for the brewery / restaurant is ~2.4M.  He also wants $1500 up front and $750 a month until the financing is secured.  His estimate is 2-4 Months.

The red flags from me are:

1. He is not a lender, his contract is for "business advising"

2.  He didn't exhibit any of the concerns the credit unions / banks did.  Almost seems too good to be true to me.

3.  He mentioned that he would get a combination of SBA funding and private money.  I haven't been able to secure the SBA funding on my own so I questions his ability to do so.

My question is whether or not this is normal.  Outside of a few residential hard money loans I have never really used private money.  $81k seems like a very expensive fee....but I have not been able to get the financing and if he can get it done I question if it is necessary / normal?

Any input is appreciated.

@Kandi Sterling

Where specifically do you see these CONSISTENTLY renting at 190 a night on the east coast?

Can you share some links?

@David Cherkowsky

That doesn't sound like sound logic. Private Money (almost) always costs more. You can certainly offer that rate but it may be laughed off. There is probably little harm in trying and with a very low anchor like that it may help you shave a point or two off. The lender is taking on risk. People who take on risk typically expect to be paid for that risk. If you want a low interest rate, go conventional. If you can't go conventional pay more for private Money.

In my experience (new england) if rates are where they are today I have paid between 9% and 12% for private Money. My goal is ALWAYS to fix the reason for not being able to finance conventionally ASAP and refi into a conventional loan. As mentioned previously you will want to make sure your agreement doesn't have absurd prepayment penalties.

@Michael Baum

I agree. I assume you are trying to maximize profits.....if selling to another STR investor they will underwrite the deal to make sure their numbers work. Selling to someone who loves the home for an emotional reason will get much more money. I'm assuming if it is an str it is in a desirable area where you will get people who just want it and won't worry as much about how all the numbers work.

@Bruce Woodruff

I absolutely know what you mean. Rubs me the wrong way too!!