All Forum Posts by: Don Konipol
Don Konipol has started 222 posts and replied 5498 times.
Post: The Downfall of BiggerPockets Forums?
#1 Innovative Strategies ContributorPosted - Lender
- The Woodlands, TX
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There were three times in the last 15 years I took a “vacation” from BP - those vacations lasted 6 - 24 months.
The first was early on when the site was inundated with newbies blindly parroting some particular guru - and attacking anyone who dared express a different opinion. And although similar has popped up over the years, the early BP was dominated by these posts. Once the “entertainment” value diminished (“reaching for the popcorn”), I retreated for the better part of 2 years.
The second “vacation” was when the site became a forum for “virtual” wholesalers who were direct to the guy who was second direct from the source and had a “mandate” to sell $6 billion of foreclosed property and wanted you to add 3 points as their fee to your offer. They also demanded you sign a fee agreement. I’m sure those of you who’ve been here 10 years or more remember those nuts.
My third much shorter sabbatical was when the insurance sales industry discovered BP and put forth there “infinite banking” nonsense. Those participants disguised themselves as financial advisors, financial planners, or financial consultants, never admitting that they were insurance salesman. However, their solution to any financial problem was to buy insurance.
I don’t think at this point it’s realistic to individually identify and ban AI generated posts. If (or when) an automatic “identifier” can be utilized to automatically identify and remove posts then that’s worth considering.
My one suggestion is that BP has too many categories, and alternatively some categories that should be independent are grouped together. Having 5 - 10 forum categories would provide easier use and forum participation.
Post: How I’m passively investing now - after 48 years as a real estate investor.
#1 Innovative Strategies ContributorPosted - Lender
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For most of my 40+ years investing in real estate I’ve stuck to direct investment in real property and direct investment in notes, with some limited partnership interests thrown in. The one kinda hybrid has been investing as a limited partner in my own syndications and funds - in which I am heavily invested.
Having a rather FULL perspective of private syndications, I see a real problem for investors in analyzing these investments. Even the syndications that comply with Reg D tend to provide less than enough hard information from which to base a decision. The fact that syndications tend to be for newly acquired real estate, often with a “plan” (as Mike Tyson said “everyone has a plan - until they’re punched in the face”) to “turn around”, “improve”, or “add value” to the subject property. But few sponsors are able to offer long term track records of success with the type of specific property and type of operation being offered.
A further problem is that Reg D requires NO ongoing reporting of financial, market, or operating information. And when things go south, communication often becomes nothing more than terse statements “approved” by the sponsor’s legal counsel. Add lack of liquidity, and investing in syndications can be like entering a fight with your hands tied behind your back.
Now that I’m seeing a near future of being less active in direct investing, I am more and more interested in investing in REITs. If one thinks of these as individual real estate portfolios rather than as speculative stocks, and therefore has the ability to ignore short to intermediate term market fluctuations, I believe they can offer a superior investment opportunity for passive real property investment.
I’ve eliminated all MORTGAGE REITs (mREITs) from my consideration because they’re much too speculative - they borrow 4 - 9 times their capital base. But that leaves 160 U.S. based REITs, and over 900 REITs worldwide.
The way REITs are structured nowadays, more than 90% of them are internally managed, eliminating the inherent conflict of externally managed REITs, and aligning the interests of management and shareholder to a much greater degree. Further, most REITs are specialized, investing in only one particular property sector, and often concentrated in a particular geographic area. A ton of information is available for each REIT, including net asset value, discount or premium to price, historical earnings and cash flow, projected cash flow, historical price movements, etc. I have put together a personal portfolio of 15 REITs covering apartments, industrial, healthcare, net lease, casino, infrastructure, and timberland. The average discount to net asset value is 36% (THEORETICALLY) I paid 64C for each $1.00 of assets); the average LTV utilized by the REITs I invested in is 30% (REITs with LTV above 50% are "suspect") and my dividend yield on the total portfolio is just over 7%.
I’ll let you know how it goes - as any investment risk is inherent.
Let me know what you think?
Post: Flexspace Warehousing Investments
#1 Innovative Strategies ContributorPosted - Lender
- The Woodlands, TX
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Quote from @Morris Layton:
My team and I are entering the flex space warehousing sector with a focus on long-term value creation. While this is our first venture in flex space, our group has extensive experience in warehouse design and construction. Our team includes a general contractor, subcontractors, and engineers which allows us to manage projects efficiently from concept through completion.
Our strategy is to develop and own flex space warehouse properties for at least one year, achieve 100% utilization, and then sell at stabilization to realize equity gains and reinvest in new warehousing/commercial developments depending on market needs.
We’re interested in connecting with individuals or firms who have completed ground-up flex space projects in Texas.
How did you structure your capital stack or financing?
What lessons learned or strategies helped maximize returns and minimize development risk?
Any insights or potential collaboration opportunities would be greatly appreciated as we move into this new space.
Thank you very much for taking the time to read this post. Any response is greatly appreciated.
Post: RedFlag Would you sign
#1 Innovative Strategies ContributorPosted - Lender
- The Woodlands, TX
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Quote from @Charise Manuel:
Would any of you move forward with a sale under these circumstances?
The buyer says in text messages that he is the actual buyer, will not list or market the property, and will not enter the property before closing.
However, he refuses to:
-
Add an addendum or put any of this in writing,
-
Modify the wholesale clause, and
-
Change the clause granting unlimited access before closing.
He keeps saying it’s a “standard contract.”
Would you proceed or consider this a red flag? Looking for input from experienced investors—thanks in advance.
Wholesalers can “come clean” and be transparent upfront by either (1) informing the seller that they will only close if they can find a buyer at a higher price or (2) enter into an option contract usually with an option fee commensurate with the option period.
Wholesaling has been “attacked” in many states on a number of issues. Brokering without a license, fraud, deceptive trade practices, and non disclosure see, to be the weapons of choice by regulators.
Wholesalers who fully disclose their role, may still leave themselves open (depending on state rules, laws, regs) to charges of unlicensed brokerage activity. But obtaining licensure may open an additional can of worms. Licensees are held to a different standard when engaging with the public, and making a “killing” on a deal may either alert regulators to charges of failing to disclose market values or private attorneys representing sellers to charges of failing to deal “honestly”.
Please note that we are in this arena of uncertainty because wholesaling (which is actually CONTRACT FLIPPING) looks very similar to being an INTERMEDIARY rather than a PRINCIPAL. If the “wholesaler” were to actually conclude the purchase and then sell to an end buyer, most of the “attacks” on wholesaling would be eliminated.
Post: RedFlag Would you sign
#1 Innovative Strategies ContributorPosted - Lender
- The Woodlands, TX
- Posts 6,271
- Votes 9,910
Quote from @Charise Manuel:
Would any of you move forward with a sale under these circumstances?
The buyer says in text messages that he is the actual buyer, will not list or market the property, and will not enter the property before closing.
However, he refuses to:
-
Add an addendum or put any of this in writing,
-
Modify the wholesale clause, and
-
Change the clause granting unlimited access before closing.
He keeps saying it’s a “standard contract.”
Would you proceed or consider this a red flag? Looking for input from experienced investors—thanks in advance.
Wholesalers can “come clean” and be transparent upfront by either (1) informing the seller that they will only close if they can find a buyer at a higher price or (2) enter into an option contract usually with an option fee commensurate with the option period.
Wholesaling has been “attacked” in many states on a number of issues. Brokering without a license, fraud, deceptive trade practices, and non disclosure see, to be the weapons of choice by regulators.
Wholesalers who fully disclose their role, may still leave themselves open (depending on state rules, laws, regs) to charges of unlicensed brokerage activity. But obtaining licensure may open an additional can of worms. Licensees are held to a different standard when engaging with the public, and making a “killing” on a deal may either alert regulators to charges of failing to disclose market values or private attorneys representing sellers to charges of failing to deal “honestly”.
Please note that we are in this arena of uncertainty because wholesaling (which is actually CONTRACT FLIPPING) looks very similar to being an INTERMEDIARY rather than a PRINCIPAL. If the “wholesaler” were to actually conclude the purchase and then sell to an end buyer, most of the “attacks” on wholesaling would be eliminated.
Post: Did Brandon Turner really lose $14M of investor money while pocketing $4.4M???
#1 Innovative Strategies ContributorPosted - Lender
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Even on a $66 million purchase, pocketing $4 million upfront seems excessive.
My personal bias is that a sponsor should collect no profit upfront - covering direct costs may be okay, as well as the sponsor having an affiliated entity collecting a fee for services rendered.
As an example of the ladder, in our syndicated EQUITY deals (most of our syndicated deals are debt investments not equity investments ) a separate entity I own holds real estate brokerage licenses in three states. When that entity acts as broker it accepts a broker fee. However, we discount the broker fee to two points if we are on one side of the transaction. Any thing above that collected from the counter party is credited to our syndicated investment LLC.
If syndicator in this case received $4.4 Million upfront for say putting the syndication together, this would be pretty extreme. Sponsor will usually accept “promote” in “units”, in other words equity participation, sometimes only collectible AFTER passive investors receive all their investment back. Sounds like Mr Turner decided that putting together and raising the capital was sufficient to reward himself $ millions regardless of the ultimate success or failure of the investment. In Jersey the Sapranos would refer to it as a “no show” job.
Just to be clear the same goes on with public corporations all the time.
Post: Advice on entering the wholesaling world full time
#1 Innovative Strategies ContributorPosted - Lender
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Quote from @Joseph Kirk:
Hi everyone, im looking to take wholesaling seriously and become my main stream of income. Over the past month or so, i'd occasionally cold call by myself, with the only paid software of propstream. I'd export lists, look up the numbers, and call on my phone. At this point, im looking to do this full time and 100x more efficiently.
My thoughts:
-I want to hire 1 VA for cold calling and tracking everything and whatnot.
- I want to keep propstream for specifically pulling lists (i think?)
- I want to get REIsimpli for CRM and use that for staying organized and also considering using their dialer, instead of something like Mojo Dialer so its all on the same platform?
- Would also like to do direct mail, and even text message campaigns. Not sure what software but ideally would like to use a total of 2-3 softwares so im not all over the place.
I feel like im at least slightly knowledgeable with this, but I'm just lost on how to go about it all and get started with the proper steps and software.
I would really appreciate it if anyone who's currently successful in the industry could give me some pointers on:
- the most efficient software to use
- the proper order to go about all this, if there even is a proper order?
- If im thinking about this properly or if im missing something?
1. You are entering a full time business - not “investing”. Entrepreneurial, managerial, technical, and operating experience, knowledge and talent is paramount for a successful small business.
2. You have not mentioned INBOUND Marketing as one of your marketing strategies. The absolute best lead quality is someone who contacts you directly. SEO for your website / landing page leading to a first page GOOGLE search result based on gearing toward a very narrow specialized niche.
3. The above supplemented with pay per click advertising program to generate sellers meeting your parameters, in other words QUALIFIED leads.
4. Capitalization - the successful wholesalers I know spend $10k per month on marketing. They tell me anything less doesn’t allow them to obtain “critical mass”. Since it will probably take minimum of 6 months before approaching break even, and you’ll need to pay up from for website design, initial SEO, etc., you would need at least $75k capital (some of which will remain in reserve as a “cushion”) to have a decent shot at success. The people I know who attempted to “bootstrap” there way into wholesaling ( in the last 10 years) ended up either quitting in total failure or working two years for about $5 / hour and creating nothing of value.
5. Although wholesaling is a business, there is no typical business “exit strategy” as I know of no wholesaling businesses that were sold for anything close to what another type business would sell for.
Post: Loan discrepancy. I think i overpaid into my property!
#1 Innovative Strategies ContributorPosted - Lender
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Quote from @Daryl Allen:
Ok to start things off .
Im buying my raw land for $30k. Paid $15k upfront to initiate the contract. Heres where it gets fun. It’s at a 7% amortized interest rate. Signed on april 2022. Ive been making monthly payments of $265 at the least. My required payments were $235. However for the first 5 months i was able to pay via zelle with no fees. Then i get asked to switch to terra notes and have been paying through them since sept 2022. I noticed after about 1 year of app paying they never applied my zelle payments. So i ask for them to update it so it reflects correctly. They never did. So i continue to pay via requested app to today still. Well the other day i noticed still no update, and the extra i have been paying towards principal has been being taken as a service fee. So i compiled a list of these service fees and some taps a $60.75 mark. Well. All the service fees add up to $1318.76 that wasnt ever applied to my principal. So that leaves the $1300 from zelle payments and the $1318.76 from fees that should have went to my principal. Ran it through the usual Google machine and a paid chat gpt and both said i should already be paid off and entitled a refund . Can a Human please help me? I am living off of 366 a week of unemployment for the time being so i cant afford a lawyer
Post: Tenant Lawsuit Over “Equity” and Right of First Refusal – Looking for Advice
#1 Innovative Strategies ContributorPosted - Lender
- The Woodlands, TX
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Quote from @Paul Schmidt:
Hey everyone,
I bought a duplex in Dayton, Ohio in Sept 2024 that came with an existing tenant. The inherited lease had a strange clause:
- The tenant had a right of first refusal to match any bona fide offer before lease-end, and
- Rent and upkeep expenses (like mowing) would count toward the purchase price if he bought the property.
In Nov 2024, I told the tenant I wouldn't be renewing the lease (ending April 2025). Instead of moving out, he sued me and my LLC (pro se), claiming:
- Breach of contract, promissory estoppel, specific performance, declaratory and injunctive relief,
- Plus $15K in “equity”, arguing that rent and expenses made him a tenant-in-common.
He also claimed a right to renew, though the lease clearly said renewal required mutual agreement. He initially added a Fair Housing claim (based on me seeing menorahs in the unit) but dropped it later.
My attorney filed a motion to dismiss, but it was untouched in court for 5 months. The tenant then amended his complaint, forcing us to refile. Meanwhile, my attorney recommends holding off on eviction until the civil case wraps up, since the eviction would likely be stayed anyway.
Legal fees are around $5K so far, and the tenant’s messages have become harassing, including threats like:
- "If I have to sue you and your Llc, it will tie you up in court for 1 to 2 years. You can avoid this by working with me and being sensible. What are your thoughts on this? You can either be a man and work out a deal or be foolish and spent tons of money and time and lose control of the property all for your ego... You can either sacrifice a little money or let me stay for another year or get tied up in a 1 to 2 year court battle that you can't win."
- "Be a man, Paul, not a weakling. Discuss this with me like an adult. Come to a win win or fail. Maybe you don't get it. I've worked in the law profession for over 20 years. I know my rights and how to protect them. Do the right thing Paul, or face the system."
- "Don't trust your Legal Shield attorney. She is incompetent.... Her law school testing results were awful."
Questions for the group:
1. Would you wait on eviction or file anyway?
2. Any chance of recovering attorney fees in this type of case?
3. Would a counterclaim or declaratory action help clear this up faster?
Appreciate any insight — especially from Ohio landlords or anyone who’s dealt with a tenant turning a lease clause into a lawsuit.
So this is a perfect example of how what’s merely day to day operations for a large organization is a time consuming, aggravating all consuming issue for the small investor.
Post: property assessed improvements but no idea why
#1 Innovative Strategies ContributorPosted - Lender
- The Woodlands, TX
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Quote from @Simon Davis:
Hello
I am asking this for my neighbor. She recently lost her husband and is taking care of all the finances herself which the husband used to do. She showed me her property tax statement and was surprised the tax is so much. I read the statement and it says she bought the condo for $x which she agrees with. But then there is something called improvements, and the improvements is just as much, making the assessed value $2x. she has no idea how this could be. She says she remodeled her kitchen a long time ago but never got a permit from the city and there is no way the city would know. besides, based on my preliminary research, remodeling a kitchen doesn't cause a reassessment anyway. There has been some work done on the building over the years, nothing major. The hoa supposedly improved the elevator (which made it worse by the way), they painted the exterior. Nothing that would really improve the lives of the tenants. Could these be why city is assessing $x in improvements? She was going to pay it but I told her let me research this for you. I think it's ridiculous. what can be done? if we fight the city, is there a risk that they will assess even more ("we investigated and realized not only is the improvements worth $x, it's actually worth $x + $100,000").
Actually, the improvements portion of a tax bill represents building value, the base portion represents land value. In real estate terminology anything built and a fixed to land is called improvements.