All Forum Posts by: Don Konipol

Quote from @Dan Deppen:

I do something similar. My PERMANENT portfolio is my SDIRA; I try to buy more solid performing notes that I won't need to work on (although they haven't all panned out that way...). In my LLC I buy more sub-performing and non-performing notes with investor money, that's my version of the VARIABLE portfolio. That side of my portfolio is most definitely a business and not passive at all.

While the note investing world is a small niche, within that world is a wide range of different investment types. You can have 2 different "note investing" models that are entirely different sports.

I think that’s very similar to what we do.  

The general public thinks of “notes” as a passive investment collecting interest every month until maturity.  And yes, that’s half the type.
They miss the other half, which is not only active investing, but in many ways mirrors equity investing more than traditional debt investing. Especially since we try to obtain “equity like” returns on these higher risk, more active note investments.  

As you alluded to, sometimes a passive note investment purchased for monthly payments “goes south”, and becomes an active participation investment, with plenty of additional capital required for legal fees, forced place insurance, and property taxes. 

Quote from @Chris Seveney:

Quote from @Don Konipol:

Permanent vs variable portfolio.  IKnow, I know, NOTHING’S permanent.  But, for practicality, I divide my portfolio of notes into two distinct portfolios.  My PERMANENT PORTFOLIO consists of notes and my participation in note syndications that are held for income, collect interest on a continuing basis, and (hopefully) get paid off at maturity without any “drama”.  In other words held for steady cash flow.

My VARIABLE (note) PORTFOLIO consists of more active/speculative notes - non performing notes I purchased at discount to principal owed; notes I hope to "work" for enhanced ROI, real property I "purchased" with a leaseback option to repurchase, and defaulted notes I purchased planning on eventually taking ownership of the real estate, as well as notes I created that don't have current payments but provide a guaranteed return plus an equity "kicker" when the property is sold.

Seems to me my “permanent note portfolio is basically a passive investment, while my variable note portfolio is somewhere between business and investment.  

Wondering is 

1- Anyone else thinks of their portfolio in a similar way

2- Anyone else see advantages (or disadvantages) of “dividing” your note portfolio into these two different arenas

3- Anyone else distinguish between “passive” investing, “active” investing, the investing “business”. 

Please share your thoughts

 We have to go through an SEC audit so we have multiple categories forced upon us. So we have held to maturity and held for sale. What is interesting is our held for sale are the longer term notes as we do not plan to hold them for 10+ years. These are typically our non performers. These are active.

Then we have held to maturity are our shorter term loans which provide us direct cashflow for us. These are "passive"

I also own real estate as well but always put it under a PM so I will say that is quasi passive. But yes we do bifurcate our portfolio and manage it to make sure it’s well balanced as well and not teetering too far one way or the other.

Chris, I never knew about SEC audit. Can you explain further?

@Jay Hinrichs and @Stuart Udis

Both of you have provided great advice.  Maybe a few people contemplating spending their money and time on one of these ridiculous mentorships will heed your advice 

Why signing up for a “mentorship” is usually fundamentally wrong? 

Because, 98% of the time the student does not take into consideration if the tactic/technique/strategy being taught is a “fit” for the investors time available; interests; knowledge; experiences; abilities; likes; and ethics.

Let’s assume that the strategy being taught really does work - to the extent that many people “applying” themselves can achieve financial success.  And let’s assume that the requirements are going door to door and convincing “motivated” homeowners to sign a contract with you selling their property below “market” rate.  Well, 90% of the population don’t want to be salespeople, don’t “like” the selling process, and wouldn’t consider a job in sales.  Why then do they pay $35,000 to obtain what’s basically a sales position?  Because of (1) some fantasy that they are now real estate investors”? (2) some fantasy that they’re now “their own boss”.  (3) the belief that they “have” to do this to “get into” real estate? 

I was approached by a young man recently who was contemplating doing exactly this. I told him if this interested him he would be better off obtaining a license and joining a brokerage.  He told me he didn’t want to be a salesman.  What do he think wholesaling is? 

I can see where, IF a particular strategy being taught is a ‘fit” it could be advantageous. But my personal experience tells me that this usually won’t be found in a national program run by the real estate marketing boys out of Las Vegas or Provo, Utah.  It more likely may be found with a local investor/teacher doing “hands on” mentoring himself and not through an organization run like a production line. 

What do you think? 

Quote from @Grace Tapfuma:

As I continue to study real estate! I've realized that I'm not looking to start another full-time career. Although, I am very interested in learning about real estate full time but not willing to make it a business. My goal is to achieve financial freedom by age 36 and to understand various aspects such as investing education, strategies, business planning, properties, marketing, and exit strategies. I want to (willing to) learn everything I can but I do not want to start a new career but I 100% want to be in real estate!

Could you share some avenues I can explore that align with this approach?

There are lots of good responses to your questions posted on this thread.  Shows how many BP posters are willing to share experiences and knowledge - especially when the questioner asks “nicely”, LOL. We see too many posters turn angry when they don’t receive the answer they want…….

Here’s my bottom line.  To be successful as a real estate investor in any form - except maybe purchasing the Vanguard REIT index fund - an investor needs education, knowledge and understanding of real estate principles, real estate law, and real estate finance.  In the 4 states I hold/held broker licenses, all required this knowledge (in BASIC form) for licensure, so the required educational courses should provide a decent foundation.  Alternatives are college courses, textbooks, and engagement through web searches. 

Quote from @Brittany Olson:

Hi! I am thinking of paying for the Gator Method program through Pace Morby, who I recently saw at the Aspire Conference in Charlotte. Has anyone tried it and had success? If so- what would you rate your work effort (not afraid of work), and the time to close a first deal? I'm making some pretty big moves right now and changing my business plan in a new direction, so I don't want to die of shiny object syndrome, but this method really speaks to me.

@Stuart Udis has hit the nail on the head.  If you don’t comprehend what he’s saying (you Brittany obviously get it) you have no business being an investor.  It pays to know when to just hire an independent financial advisor and do what you do best.

In my 45 years as an active investor across real estate, businesses, commodities, and almost everything else I’ve developed a few “rules” that I believe should never be violated 

1. To have a chance for success in any particular investment type, the investor needs to understand the fundamentals related to that type of investment.  In real estate that means real estate principles, finance and law. 

2. NOBODY cares as much about your money as you do 

3. Many investments that seem to promise higher than market returns do so because of higher than market risk. It’s the risk ADJUSTED return that’s key.  If you don’t fully understand this you’ve got more education necessary before becoming an investor.

4. Direct participation, active investing, extensive time commitment, etc. are NOT the only way to successfully invest. For example, index funds could be a no brainer for investing in the stock market. In 2009 I determined the best ROI I could obtain with the least time spent and lowest risk wasn't direct investing; I merely purchased REIT mutual funds, and tripled my money over the next 5 years.

5. For 99% of the people, for 99% of the time “mentorship’s” are either worthless or actually detrimental to investing success. 

 Bonus rule:  this applies to any investment or business that even HINTS at being a scam, below board, or ethically questionable - If you don’t know who the “sucker” is, it’s YOU. 

Quote from @Ken M.:

The report is that prices are dropping rather substantially in Washington D.C. related to layoffs.

Article:
In November, the median home in the nation's capital was worth $699,000, according to Redfin.

By February, the median home value dropped 20 percent, bringing the price down to $560,000.

TKL found there are now nearly 8,000 homes listed for sale in the Washington, DC metro area, and almost half of them have been put on the market in the last 30 days.

The tax-collecting Internal Revenue Service is preparing to fire thousands of workers next week"

***************************************************************************

Comment: 

Save The IRS  - said no one, ever

In the last year of our marriage my ex wife spent $150,000 on clothes. The first year after our divorce she still spent $100k on cloths and added another $60k on cosmetic surgery.  She then met with her financial advisor, and immediately called me to complain that her future lifestyle was going to be “compromised” by the terms of our divorce. 
The bloated and wholly out of control Fed is long overdue for a “correction”.  If this severely impacts real estate prices all the better.  Maybe Trump’s initiative will not be successful, or nearly as successful as he wishes.  But IF it is, and if an investor built his holdings on government largesse, it may be time to reevaluate their portfolio. I sold the one 3N property I had that was occupied by a Government agency where the lease was up in 2026 when I read the Republican agenda for 2025.  
As a masters degree project 50 years ago I analyzed the Detroit real estate market in 1974.  Since then prices have fallen 95% in inflation adjusted terms. And nobody in the Washington elite gave a s__t.  Now that it’s hit home the entrenched deep state is in alarm.  As property investors we need to understand and adjust to the mega trends.  Don’t think people who bought homes 20 years ago in areas where the value of their home hasn’t risen will have much sympathy for people who are losing a small part of their 200% price gain on their ho,e purchase of 4 years ago.  

Quote from @Jay Hinrichs:

Quote from @Don Konipol:

Quote from @Jeremy Beland:

Sometimes, the best deals come from places you’d never expect. As wholesalers, we’re trained to look for distress—motivated sellers in tough situations, properties needing major repairs, or financial struggles forcing a quick sale. But that’s not always the case.

A while back, we came across a move-in ready condo in Atkinson, NH. No distress, no repairs needed—just a seller with a problem that couldn’t be solved through the traditional listing process. He was an older gentleman relocating for work, and his biggest concern wasn’t price—it was speed. He needed to close in three weeks and didn’t want to deal with showings, contingencies, or the back-and-forth of working with a realtor.

At first, we even suggested he list with an agent since he’d likely make more money. But he wasn’t interested. He wanted certainty and simplicity, and that’s where we came in. We negotiated a price that worked for both parties, closed within three weeks, and took the property down ourselves.

This deal was so clean, we didn’t even need to hire professional cleaners. All it took was removing a couch and a TV and giving the exterior a quick pressure wash. By Friday—just three days after closing—it was listed on the market with professional photos.

Over the weekend, offers started rolling in. By Sunday, we had an offer above asking price, and the deal closed about five weeks later (delayed slightly by the buyer’s timeline). When everything was said and done, we walked away with $50K in profit.

The Key Takeaway for Wholesalers

Most wholesalers would have completely ignored this deal because it wasn’t assignable at a high spread. Most flippers wouldn’t have looked twice because there was nothing to fix. But by thinking beyond the traditional wholesaler mindset and focusing on off-market acquisitions, this deal turned into an easy win.

Not all motivated sellers are dealing with distress. Sometimes, they just need speed and convenience. When you position yourself as the solution—not just someone looking for deep discounts—you’ll find opportunities others miss.

What’s the most surprising profit you’ve made on a move-in ready property others overlooked? 

Would love to hear your stories!

Jeremy, I hope you don’t take this badly…..
I noticed your posts don’t get much “traction” 
The reason is they read like slick marketing “puff” pieces you find posted on LinkedIn all the time, rather than personally engaged discussions, 

If you want significant engagement, just write something out, and don’t even “edit” it, just go with the first draft, giving the effect like a personal conversation with someone.  You’ll notice the people who do this started threats that “go viral”.  The ones that read like an advertising piece go nowhere. 

Best of luck 

Yup basically advertising for coaching services.. We seem to be seeing alot of those type of posts on BP these days.. 

 I guess it’s like free advertising.  While it turns off most BP participants, maybe a less experienced newbie will “take the bait” and “bite”. 

Quote from @Jay Hinrichs:

Quote from @James Wise:

Quote from @Jay Hinrichs:

Quote from @James Wise:

Quote from @Dawson Brewer:

Here’s why I’ve started using novations over wholesaling.

1. Sellers Get More Money

With wholesaling, sellers often need to take a low cash offer. With novations, I can offer closer to market value by selling to retail buyers, making it easier to get deals accepted.

2. Bigger Assignment Fees

Instead of selling to investors looking for steep discounts, I market to end buyers willing to pay market price. This means I make more per deal than a typical wholesale assignment.

3. No Double Closings or Hard Money

Since the seller stays on title, I don’t have to use hard money or worry about double closing fees. I just facilitate the sale and collect my fee at closing.

4. More Buyers, Less Competition

Wholesaling relies on a limited pool of cash buyers. Novations open up the MLS and conventional financing, bringing in a larger pool of buyers and reducing competition from other wholesalers.

5. Easier to Scale

With less reliance on deep-discount deals and cash buyers, I can scale novations faster than traditional wholesaling.

Final Thoughts

I’m not saying wholesaling is dead, but novations have helped me close deals I would’ve lost before. Anyone else using novations? What’s been your experience?

 What in the holy hell is a novation?

its just another method of flipping a contract..  

 So wholesaling but we changed the name?

basically you can google the definition.  there are some guru's teaching it these days.

Hey guys, it’s basic “guruism” 

1. Start with a technique or strategy used successfully by KNOWLEDGABLE, EXPERIENCED investors on a rather limited basis (because it’s only OCCASIONALLY applicable
2. Create a methodology which uses this technique or strategy in 10 X the number of situations where it’s appropriate, and only report the few successes, never acknowledging the failures or the risks
3. Write a book about it, utilize paid internet ads to drive book sales, follow on with YouTube videos, webinars, blog casts, on line tutorials, and sell a few one on one coaching sessions.
4. Partner with a real estate marketing company out of Las Vegas or Provo, Utah to market, promote and advertise the “mentorship” system consisting of the free seminar, followed by the modest fee weekend workshop, followed by the $15,000 - $40 000 full mentorship program.

Here are the usual results
1- 99% of “students” never earn back the cost, despite 1000s of wasted hours
2- students learn nothing of real estate principles, real estate finance and real estate law which are the necessary foundation blocks of knowledge necessary for a SUSTAINABLE career in real estate investment 
3- with hundreds or thousands of “students” unleashed on the real estate selling public they’re AT BEST an annoyance of trying to do “unrealistic” deals, AT WORST lead to a disastrous result for vulnerable homeowners.
4 - The career real estate investors, service providers, brokers, lenders, etc are so disgusted with all of it and the outcomes they see that that can’t even comprehend that the subject technique or strategy does have a legitimate use when utilized (1) by and experienced and well capitalized buyer and (2) full disclosure is provided all parties with legal representation.  

Governmental agencies do get involved, often very late in the game and often just having the guru agree to a "cease and desist" order. ( I did nothing wrong and agree never to do it again"). One particularly peculiar case involved John Beck. Full disclosure - I knew John back inthe late 1970s early 1980s when he traveled the guru circuit of those days as guest speaker at REI clubs selling "books and tapes" at the back of the room. He was a good guy" and his information on buying at tax or foreclosure sales was realistic and doable.
Fast forward 25 years later and John decided he wanted the riches associated with the gurus backed by the Vegas/Provo real estate marketing companies. But John got greedy, and went with a fly by night outfit because they offered him the “best” deal.  Anyway, the program was such an obvious BS fluff that an overwhelming percentage of students demanded their money back claiming they were defrauded.  The outrage was such that the AGs of 4 states jointly sued John and the real estate marketing company and won a $400 million judgement!.  (Interesting, because the best guess I’ve seen is that John maybe personally grossed no more than $10 million from this mentorship over a 8 - 9 year period of time). Nevertheless, John walked out of the courtroom after the verdict was delivered, walked by his car, continued walking and has NEVER been seen or heard from again!  This was 18 years ago. 

Quote from @Doug Smith:

When we started this company, I had been a special assets officer (handling non-performing loans for banks trying to extricate them from the deals with as little damage to them as possible) during the last big crash. At that time, few realized that you can buy and sell loans, so the software didn't exist. Since we used small investor capital to buy and sell loans, we had some investors that were softward engineers. I agreed to handle one of their portfolios for free (he's actually still with us nearly 15 years later) if he would build out a system to help us build out the database system. The problem was that I kept tweaking the model. We ended up going back to the tried and true Excel Spreadsheet. We saved Settlement Statements from every closing and one of our former partners owned a national title company, so we had enough closing cost data to build a models for each state on the buy and sell side of the note buys. We had to enter in holding costs, holding time (time value of the money), ARVs, rehab costs, a contingency reserve (a little extra to cover unforseen stuff), a reasonable profit margin, etc to get to a "Strike Price" as we call it. That's the maximum amount we will pay for the note. We would also calculate two different "worst case scenarios"...what if they don't pay and what if they do...then go with the lowest strike price as our ceiling. I think our modeling has adapted to market changes over the years, so we've stuck with Excel as we can easily change the parameters to keep it "fresh". I hope that helps. 

Doug, you’ve gone with “what works” for you, not all the “latest fancy” technology, for technology sake.  But, you may want to check out Bryt Software, it was a real game changer for us.