All Forum Posts by: Dave Schmidt

@Trace J. Learning what Will mentioned above is a game changer! You spend SO much less time looking at properties and are able to quickly analyze deals. That being said I bought a pre-built spreadsheet for less than $100 bucks somewhere and it seems to work ok, they all seem to have strengths and weaknesses. 

We personally keep track of all expenses through a Quickbooks account, creating a P & L by Class (Class being the property address) and keeping all paper receipts in a physical folder while also scanning them into a folder on the computer. I recommend this method because at the end of the job we are easily able to figure out what we have in the deal.

Great insights here from @Bo Bond! One thing I would highly recommend is speaking with someone locally that has worked with real estate investors. They will become an intricate part of your team and over time you will learn a ton of lessons from them regarding the intricate and often confusing world of insurance. I "interviewed" a few local companies when I first got started and found one that worked with an actual local insurance company to underwrite policies. They are extremely flexible and are available via a quick text or phone call.

@Lami Dantata I second what will mentioned above. I don't see any reason that your lender on the re-finance would require a down payment, usually your built in equity should be enough for them. I would call around, ask your hard money lender if they have any references for portfolio lenders that are familiar with financing deals like yours. Right now there is a TON of money on street and a lot of people looking for deals just like yours. If I were you I would spend a good amount of time hitting the phones trying to connect with as many re-fi lenders as possible.

@Ciro Cuellar The answer to your question is that it all depends. If you look at your local market and see the availability of affordable land and can partner with a reliable general contractor to build the houses then it may be the right move. The unfortunate part about my market is that it has been incredibly difficult to find affordable land coupled with rising material prices for the last 12 months, we have not started any more new construction projects since we sold our last project in March. Our last project was painfully difficult to get permits and approvals on because so many of the state and local governments were shut down due to Covid, in some of our municipalities the offices are still running remotely and working extremely slow. Another issue with new construction projects is that they can be harder to finance then a more straightforward cosmetic rehab.

In regards to flipping you are going to have a lot of competition for deals and will have to spend some time hunting down deals. Look at what the most popular price point is in your target market, where you think there are the most buyers (typically first time homebuyers in the more affordable range - for my market it is around $200k-$250k) and find houses that all fixed up will sell in that price range. Read some articles or watch some YouTube videos on how to finance flip houses so you understand the 70% rule that many lenders follow. 

Each approach is going to have its hardships it is just a matter of you figuring out what is more appropriate for your market, how long you want to have your money out of pocket, how much risk you want to be exposed to and how much stress you want from each deal!

@Joelle Parker It sounds to me like you have a decent deal here, I can appreciate the fact you are being conservative with numbers and time (most beginners don't do this and it creates huge issues for them). I agree with @Will Barnard about having things on paper with your contractors especially if you have never worked with these contractors before, be sure to include something about penalties for finishing late; it is not uncommon in my experience for contractors to take on more jobs then they can handle at one time and then they put your deal on the back burner.

In regards to the partnership, I think it really comes down to what the money guy wants. Does he want to have a say in case things take a turn for the worst? Or does he want a completely passive position where he receives "mailbox money", although this a lot riskier mailbox money in my opinion because he is in the second position. I think this really comes down to what the two of you agree upon, I have had both equity partners in a deal or a second position. If I was there person bringing the money in this case I would want some equity in the deal with the ability to oversee the person managing the job just in case things went wrong, but that may make your job harder then you would like it to be.

Hope that helps...

@Ben McPhail All of the responses above are great and I agree with them. It looks to me like the deal is too weak to begin with and you should either renegotiate or wait for a better deal. You mention that this property is going to cash flow $800 per month, is that BEFORE or after all the expenses associated with owning a rental property are paid? Typically you can get a loan for the acquisition and rehab but it will be short term and you will need to refinance the loan into a longer term product with a lower interest rate.

As mentioned above you could just act as lender and record a mortgage/deed of trust with promissory note and personal guarantee from all parties in the deal would be the cleanest way to structure the deal.

Another option which could potentially yield higher returns on your money is to become an equity partner in the deal, this could put your money in a riskier position and in the case of a default or failure to perform of other partners. 

Something to decide on now is how passive of a roll you want to play in the deals. Becoming some type of equity partner may mean that you have to be a little bit more active then just lending the money.

@William Merone we have used a couple different CRM's in the past. Currently we are using something that is a bit more advanced called Active Campaign. It allows for what is called a deals pipeline, allowing you to assign value to certain deals and enables you to see everything on your plate at one time.

One thing I would HIGHLY encourage if you are not currently doing, is to consistently follow up with your leads for at least one year. We have pulled deals from Sellers that we have messaged for over a year. Also, when dealing with people selling their house we have personally realized that using a personalized text message seems to get the best response rate.

Hope this helps...

@Tristan Beavers Congrats on becoming a realtor!

Everything mentioned so far is true. It is extremely difficult to find deals on the MLS at the moment. If you want to get into the investing game you may want to start by hitting some auctions, and putting some miles on your vehicle. Connecting with other investors may help because you might hear about an off market deal that would be suitable for your client.

I would recommend starting to learn as much as you can about investing and finding off market deals, because this is something you will want to perfect if you are going to be working with more investor clients.

@Srikanth Vadlakonda Any legitimate lender should be willing to give you their contact information and be even more willing to speak over the phone or in person.

The oldest scam in the book is fake lenders charging ridiculous up front fees and then blowing off the customer. Remember that you are a new to real estate so you may be more of a riskier borrower in the eyes of legitimate lender, anybody that is guaranteeing 100% financing with the cheapest rates you have ever seen and minimal points up front, is likely full of BS. Try connecting with a local agent or investor club to see if you can find someone local to your area, or ask around on here.