All Forum Posts by: Eric Jacobs

No no no except you @Jay Hinrichs as usual....you do not run away from a property just because it is cash flow negative.  You run away from a property that is cash flow negative when your objective is cash flow.  At the same time, if your plan is purely hinging on speculation, I would likely say you are gambling more than investing.  Having said that, I was just involved in a $10M deal in Miami that is definitely cash flowing negative for a while but it is an assemblage of an amazing piece of land with amazing entitlements with multiple exits, all designed to negatively cash flow...my point is its all about the plan...hard and fast rules are usually wrong....what’s that saying “foolish cosistency is the hobgoblin of simple minds”

The first mistake is believing that there is some black and white answer that will work for all circumstances. There are so many variations in investing the idea of staying away from SFH "like the plague" tells me one thing. What you need more than a place to deploy your money, is a plan with what to do with it. While I don't disagree that you don't invest to your budget, neither do you invest without regard to it. If all the money you have in the world is $30k for example, dropping $30k for a duplex (with some debt) and 5% return is probably not smart. On the other hand, if you are buying a SFH that you can fix and flip to turn your $30k into $50k, maybe not so dumb. At the same time, maybe SFH as a rental in the area you are looking at works $ wise while property value is appreciating more for SFH than it is in other asset classes so while sure you face the potential vacancy, if you want to avoid risk completely, you should put your money in a savings account and go back to work. Don't let the money burn a whole in your pocket. Take some time to have an end-game in mind. If you can get yourself there and properly plan, what to do next will come as an easy answer to an easy question. . If you don't know what to do next, you have no plan and without a plan, what you are really doing is gambling. If you are going to gamble, I recommend Baccarat as at least the odds are the best in the casino....good luck

I have sought to and successfully penetrated entities on more times than I can count. There are a variety of approaches to do so depending on the circumstances.  Each jurisdiction is a bit different so a detailed account would be of little value.  On balance I find the most successful alternatives are either to (a) maintain no insurance at all and be prepared to lose the asset or have the entity with no assets or (b) maintain a significant amount of insurance and just hand the matter over to the carrier (while strictly respecting corporate formalities).   

@Jay Hinrichs I hear you though I wouldn't do it as fractional. The lender is an LLC and the investors sign something like a participation agreement. This way the Lender controls the process and extraneous issues are less likely to interfere ...

Wouldn’t advise about applicable law in your area but with a banking background you’ll get what I’m about to tell you.  The $300k can be leveraged at a multiple with co-investors.  For example, you loan $500,000 @ 10%  with 2 points up front (perfectly normal hard money rates) for one year.  You put in $250k and get investors to put in $250k.  You give the investor 8%.  

At the end of one year, the borrower paid total interest of $50,000 + 2 points.  You pay the investor $20,000 and they are happy with 8% and no headaches . You get $40,000 ($30kinterest + 2 points up front). Your return on your $250k? 16%+.I don’t know why you would get involved with gap funding where this risk is incredibly high and the brain damage is greater...this is a fast oversimplification but you get the picture i hope. 

1. Ditch the “I don’ t have much going for me” mindset

2.  Be around people doing what you want to do

3.  Learn every single day

4. Find an investor that doesn’t have time but believes in you

5.  Make a deal, bust your butt and don’t screw it up...

Do it once and it only gets easier..Having money is overrated.  I was just involved in a $10M deal where the driver of the deal did not have money in the deal.  He found the deal, brought a ton of value and is walking with a substantial piece of value.  From the looks of it, he should net about $2M on the very, very conservative side....

“If you think you can or think you can’t....you’re right”

While there are many reasons why this is in no way like 2007 not the least of which is the trillions of dollars the Fed has injected into the economy that will take decades to get out of the system, certain trends are emerging that should be a signal to those of us that have been keeping our “powder dry” and those that are not overleveraged that opportunity may be emerging.  According to the Florida Association of Realto: 

ATTOM Data Solutions' July 2018 U.S. Foreclosure Market Report shows that foreclosure starts increased from a year ago in 96 of the 219 metropolitan statistical areas (44 percent) analyzed in the report.

Twenty-one states posted a year-over-year increase in foreclosure starts in July, including Florida (up 35 percent); California (up 3 percent); Texas (up 7 percent); Illinois (up 7 percent); and Ohio (up 2 percent).

Nationwide, 30,187 U.S. properties started the foreclosure process for the first time in July – a 1 percent increase over the previous month and less than 1 percent year-to-year. However, it's the first increase in foreclosures after 36 consecutive months of year-over-year decreases.

According to ATTOM's report, four Florida cities have seen a notable change in foreclosure starts over the past three months, including:

• MiamiMay: 4 percent increase
  June: 35 percent increase
  July: 29 percent increase
• JacksonvilleMay: 22 percent increase
  June: 22 percent increase
  July: 81 percent increase
• OrlandoMay: 12 percent increase
  June: 22 percent increase
  July: 41 percent increase
• Cape Coral-Fort MyersMay: 11 percent increase
  June: 64 percent increase
  July: 59 percent increase

"The increase in foreclosure starts is not just a one-month anomaly in many local markets given that July represented the third consecutive month with a year-over-year increase in 33 metro areas, including Los Angeles, Miami, Houston, Detroit, San Diego and Austin," says Daren Blomquist, senior vice president with ATTOM Data Solutions.

Go to work Wholesalers !!! I don’t have time to knock on doors but the knocking here may just be opportunity.....

@Patrick Desjardins thanks 

What do you think of these conferences for commercial note buyers?

@Chuks Erinne is right, you definitely don't have to explain yourself but I can say with some certainty hope is not a strategy either.