All Forum Posts by: Account Closed

Quote from @Dan H.:

Quote from @Account Closed:

Quote from @Edgar U.:

Ever since BP started someone always posts crash this, crash that, crash this year. The only thing crashing are the ones not getting involved in this market, a lot of money to be made! Adjust strategies, be the best at it, and move on. Should a "Crash" does happen, just adjust again until you figure out what is working and move on, adjust, etc. If one follows the news, there is crash almost every month, if one follows the money, there is money in every month!

Impeding crash can be an opportunity for anyone who can leverage it. A lot of people bought homes in CA after last crash, at a good discount, and if they were smart would sell those homes in the past few years and moved their investment (with huge equity) elsewhere. It will also be a great loss for those who paid full retail when market reached the pinnacle, they will be upside down and their homes will go on foreclosures. It's good to think about it and try to foresee it, so one is not victimized by it at very least.

As to people saying things, people will always say what they want and think. That's why we have Freedom of Speech, versus tyranny where people get their heads cut off if they speak unpopular things. But all the empty talk set aside, there is a reason to expect a new crash. Dodd Frank was good at keeping it at bay until the COVID pandemic hit. Ever since, with hyperinflation, rising RE prices (in part fueled by historically low rates in 2021, before feds started to hike them) and massive cash flow from hedge funds, foreign investors and etc., the RE prices skyrocketed far beyond what US buyer can afford to pay. With US median household income in upper $70K, there is no way your regular 9-5 worker can afford to buy homes at the prices they were selling recently. Once tide changes, investors pull, foreclosures roll things will get ugly. At this point it is not a question of if, but it's a question of when. Most certainly you can thrive in roller coaster if you are well informed and can make the right decision as to when you should buy and when you should sell your RE, just like any other commodity on the market. 

 Simple question: can you list any item ever that crashed when there was less supply than demand?   If you can, what was the item and when did the crash occur?   All studies show a shortage in housing where people want to live.   

It is tough to predict a crash of a commodity that has a shortage.  Many people may never be able to afford to purchase their own home but as long as demand exceeds supply I question if it matters. 

I do think we are in a tough market for RE investors.   Recent purchases are almost universally cash flow negative.  Without rent growth or appreciation, these purchases produce terrible return.   Buy the buyer qualified for the loan with the poor cash flow implying they can handle the poor cash flow. 

Best wishes.  

 Same to you, best wishes and all. The reason for crash is what I have mentioned above. Commodity is not worth what it is sold for, the only reason it is so high is the abundant flow of the cash from hedge funds, financial management companies, foreign and domestic investors who pay cash to purchase 32% of existing inventory. But there is no perpetuum mobile and this will not continue infinitely, just as housing boom of early 2000's didn't last forever. There will be a breaking point, and once investors pull out and lots of underwater homeowners go in foreclosure, things will change. It will likely be accompanied by lower interest rates, with Feds bringing them down to stimulate growth post apocalypses, which will further increase the affordability of houses. One once the chain reaction sets there will be a flood of people existing RE, just as there was flood of people buying in during 2021 rat-race. I think it will be a good time to buy RE when the market crashes. Those who will have cash at such juncture will have an opportunity to gain big time. 

Quote from @Edgar U.:

Ever since BP started someone always posts crash this, crash that, crash this year. The only thing crashing are the ones not getting involved in this market, a lot of money to be made! Adjust strategies, be the best at it, and move on. Should a "Crash" does happen, just adjust again until you figure out what is working and move on, adjust, etc. If one follows the news, there is crash almost every month, if one follows the money, there is money in every month!

Impeding crash can be an opportunity for anyone who can leverage it. A lot of people bought homes in CA after last crash, at a good discount, and if they were smart would sell those homes in the past few years and moved their investment (with huge equity) elsewhere. It will also be a great loss for those who paid full retail when market reached the pinnacle, they will be upside down and their homes will go on foreclosures. It's good to think about it and try to foresee it, so one is not victimized by it at very least.

As to people saying things, people will always say what they want and think. That's why we have Freedom of Speech, versus tyranny where people get their heads cut off if they speak unpopular things. But all the empty talk set aside, there is a reason to expect a new crash. Dodd Frank was good at keeping it at bay until the COVID pandemic hit. Ever since, with hyperinflation, rising RE prices (in part fueled by historically low rates in 2021, before feds started to hike them) and massive cash flow from hedge funds, foreign investors and etc., the RE prices skyrocketed far beyond what US buyer can afford to pay. With US median household income in upper $70K, there is no way your regular 9-5 worker can afford to buy homes at the prices they were selling recently. Once tide changes, investors pull, foreclosures roll things will get ugly. At this point it is not a question of if, but it's a question of when. Most certainly you can thrive in roller coaster if you are well informed and can make the right decision as to when you should buy and when you should sell your RE, just like any other commodity on the market. 

Quote from @Chris John:

@Account Closed

I appreciate your point of view, but we see this drastically different.  I think the worse the economy, the more sellers you'll lose and the real estate market will lock up even more.  I think the only way out of this low inventory and to get back to "normal" is time.  As people age out, die off, divorce, etc. they'll sell because they have to.  Non-investors that I talk to aren't interested in selling because they know that even if they downsize, they'll pay more.

The future will tell though.  Best wishes.

Thank you, likewise. I think people who locked in with 4% or below interest rate loans don't want to sell now for very obvious reasons. Even if they downsize and find cheaper home, they may end up paying the same or more on a mortgage, just because of the high rates. The last time rates were this high is when homes were priced 4-5 times below what they market for now. Back then, in 90's, even 8% was ok rate. After all, you were buying a sound SFH for $140K in a decent neighborhood. The exact same house now sells for $600K, and it's 30 years older and needs work to make it look nice. But once market crashes the interest rates will also go down. Therefore, lower prices combined with lower rates will make homes a lot more affordable than now. And once people start panicking they will sell at the same rate they were buying in 2021. I have seen this behavior in past and while I can't bet my head that people will act in similar ways as in past I believe there is very high probability that they will.

Quote from @Chris John:

Quote from @Account Closed:

The smart thing would be to unload all the real estate before complete crash and then buy it all back when prices drop. Since you can't predict when this will happen, you could switch to short term cash cycle models in the meantime. 

I don't disagree with everything you said, but the real estate I bought was purchased at 70-75% LTV.  It's now below 50%.  If the market "crashes", I suspect I'll be back to 75%?  Why would I sell and buy back when it's already paying for itself, putting a little bit of money in my pocket each month, and is locked in below 4%?  And, pay taxes, realtor fees, etc., so I can lock in a rate that's below inflation?

I won't refi and buy more at these rates, but the idea of selling and buying back is crazy.  It's a ridiculous amount of time, effort, and money.

 If you bought at 75% then you might be ok. When market crashes you may end with what you paid for it. Let's you bought the house for $75K when the market price was $75K, and now it "appreciated" to 100% and you have 50% equity on it. That equity may drop down to 75% (I don't know what the actual correction will be, but let's assume it will depreciate by 25% as a result of it). You have a choice to get 100% (or 50% equity) before crash, or hold it long term. If you hold it for years to come then after market correction it will again start appreciating. But if you got 100% (50% equity) before the correction, you would have so much more buying power when prices drop, and buy back more than what you hold now. It may not be what you want to do if you are ok with roller coaster, because of the taxes, selling and buying costs. It all depends on what you want to accomplish. 

Quote from @Nate Armstrong:

Is a massive real estate crash on the horizon? Experts are divided, but what do you think—are there warning signs suggesting caution for potential buyers and investors?

 It's inevitable. Crash is preceded by pumping exorbitant amount of money into RE which hyperinflates the prices and leads to bubble burst when everyone wakes up. 

Last time it was average Joe who was taking mortgages well beyond his ability to repay. Today it's hedge funds, blackrocks , foreign investors and etc. Dodd Frank could prevent Americans from buying homes beyond their means (that's why few Americans , if they have to finance a purchase, are buying homes now), but it could not prevent hedge funds from dumping billions of dollars of cash into RE industry. 

The smart thing would be to unload all the real estate before complete crash and then buy it all back when prices drop. Since you can't predict when this will happen, you could switch to short term cash cycle models in the meantime. 

Quote from @Account Closed:

Quote from @Account Closed:

Quote from @Account Closed:

Quote from @Francis Figueroa:

Hello all,

I have a few questions about wholesaling in general & the process itself. 

1. First, does wholesaling or searching for deals (in whatever way) make sense as a means of finding property to invest in? Or is this inefficient considering it takes so many calls/flyers etc. just to get one deal?

2. In which ways can someone new to RE discover how to estimate ARV. Estimating repairs, comps and everything else that creates an ARV seems to be the toughest part of the process. Should you know how to do this first, then look to find places or jump head first?

3. What laws/regulations should new investors generally be aware of? I know this is jx specific, but what are general concepts that are the crux of legal disputes? How do wholesalers protect the seller, themselves and the deal from being lost/taken by someone else? 

4. What is the wholesale contract look like? The one between the seller & wholesaler, including the EMD.

I haven't read any of the posted responses, I just know the statistics. It takes about $5,000 in advertising costs and 90 days of making phone calls 20 hours a week to get the first deal. Because of things like escrow, it takes another 30 to 60 days to your first paycheck of $15,000 and 98% of new wholesalers never do a deal at all.

You hear a lot about the 2%. 

You are probably in the 98%. It's big business collecting "guru" fees to promote wholesaling. 100% of the wholesaler "gurus" make money promoting "easy", no money needed wholesaling.

The wholesalers who do 10 deals a month will tell you they have a team, that means salaries, taxes, office space, training and they spend $50,000 to $100,000 a month in advertising. They use PPC, SEO, Mailers, Auto Dialers, real estate agent contacts and so on.  They have a large cash reserve to fall back on and to utilize for double closings. 

They recommend that new wholesalers use "door knocking" which actually makes sense. That's where the deals are. But most people won't door knock, therefore they don't do deals. 

It’s a simple business for people who will do the work and follow through. But few will do so.

 Not to argue, just sharing my perspective: brand new wholesaler doesn't need to close 10 deals/mo. This is not realistic unless you have $25K to spend on marketing, every month, for the next 12 months. Industry average is 18-22% investment on marketing for a return. So, if one aims to replace current income of $90k-$120K/year one may start with $2200-$2500/mo marketing campaign. PPL is one you should start it, simply because it has the shortest cash cycle when you are cash strapped. You move to other venues gradually (mail outs are effective, but take much longer to get your return).  SEO is among top priorities once you get rolling, but PPC is costly and it's easy to burn a lot of cash unless you know what you are doing. It's good to do it, just not in the beginning. Door knocking is not most effective way to do this. There is no reason why you can't start the conversation over the phone and knock the door when you are ready to make an offer and need to see prop and take two dozen pics and video. Of course, if one has zero cash reserves they can simply go door knocking and driving for cash, but I don't know how much time it would take to make any return. If you walk streets and drive 8 hours a day to net average of 1 deal per quarter @$10K assignment fee, then you are essentially working for free or for very very low compensation. Very few people will have stamina to continue doing it, let aside feasibility of this model.   

@Eric N.: Just curious how many wholesales you've done and average size. I don't wholesale, too much work for me for the return, but I pay attention to what the big wholesalers say the market is doing.

I find the properties that are not on the MLS and put them out there for buyers as lease option. Since I get $30,000 up front and cash flow, it seems to make more sense to me. Wholesaling has capital gains which eats into profits big time, I actually get tax write offs instead. I'm averaging two properties for every $5,000 spent right now. In a good market it's much better of course.

Big wholesalers say you should spend at least $10K/mo on marketing, preferably more. They suggest to aim at $100K/mo profit and design your marketing plan to get to that number (spend $22k-$25K/mo on marketing). Of course they will say it, that's what they do. Unfortunately, not everyone can set aside $300,000 cash to run $25K/mo campaign for 12 months. And newbies who don't have quarter million dollars in their checking accounts shouldn't compare themselves to big guys when they make their first steps and have much less to spend on marketing.

You are right about tax advantages of selling the property as "lease option" versus cashing out your income as wholesaler and being taxed on it. But you don't have to do that, you can easily put anything above what you really need to pay your bills back into business. That's how you scale it, just put all your extra income into marketing and it will be fully tax deductible (it's your expenses after all). And if one day you have the volume you are happy with and still don't want to be taxed on income generated, then you are free to put all that extra cash into RE holdings. 

I personally will NEVER deal with leasing a property. I don't want to deal with property managers, let alone tenants who will get on my nerves by failing to pay rent or demanding a new stove, refrigerator, window, HVAC and etc., and breaking the drywall and kitchen cabinets with sledgehammer if I evict them for non-payment of the rent. A lot of people rent their homes and somehow are able to make it work, by properly vetting and being lucky. Or they may have 200 doors and write off 20 broken apartments as a cost of doing business, with 180 still making it worthwhile. It's just not something I would want to deal with. I would rather pay more and earn less on each transaction and scale it (with little headache), then pay less, gain more in the long run and deal with a lot of stress and headache in a short run.

Quote from @Account Closed:

Quote from @Francis Figueroa:

Hello all,

I have a few questions about wholesaling in general & the process itself. 

1. First, does wholesaling or searching for deals (in whatever way) make sense as a means of finding property to invest in? Or is this inefficient considering it takes so many calls/flyers etc. just to get one deal?

2. In which ways can someone new to RE discover how to estimate ARV. Estimating repairs, comps and everything else that creates an ARV seems to be the toughest part of the process. Should you know how to do this first, then look to find places or jump head first?

3. What laws/regulations should new investors generally be aware of? I know this is jx specific, but what are general concepts that are the crux of legal disputes? How do wholesalers protect the seller, themselves and the deal from being lost/taken by someone else? 

4. What is the wholesale contract look like? The one between the seller & wholesaler, including the EMD.

I haven't read any of the posted responses, I just know the statistics. It takes about $5,000 in advertising costs and 90 days of making phone calls 20 hours a week to get the first deal. Because of things like escrow, it takes another 30 to 60 days to your first paycheck of $15,000 and 98% of new wholesalers never do a deal at all.

You hear a lot about the 2%. 

You are probably in the 98%. It's big business collecting "guru" fees to promote wholesaling. 100% of the wholesaler "gurus" make money promoting "easy", no money needed wholesaling.

The wholesalers who do 10 deals a month will tell you they have a team, that means salaries, taxes, office space, training and they spend $50,000 to $100,000 a month in advertising. They use PPC, SEO, Mailers, Auto Dialers, real estate agent contacts and so on.  They have a large cash reserve to fall back on and to utilize for double closings. 

They recommend that new wholesalers use "door knocking" which actually makes sense. That's where the deals are. But most people won't door knock, therefore they don't do deals. 

It’s a simple business for people who will do the work and follow through. But few will do so.

 Not to argue, just sharing my perspective: brand new wholesaler doesn't need to close 10 deals/mo. This is not realistic unless you have $25K to spend on marketing, every month, for the next 12 months. Industry average is 18-22% investment on marketing for a return. So, if one aims to replace current income of $90k-$120K/year one may start with $2200-$2500/mo marketing campaign. PPL is one you should start it, simply because it has the shortest cash cycle when you are cash strapped. You move to other venues gradually (mail outs are effective, but take much longer to get your return).  SEO is among top priorities once you get rolling, but PPC is costly and it's easy to burn a lot of cash unless you know what you are doing. It's good to do it, just not in the beginning. Door knocking is not most effective way to do this. There is no reason why you can't start the conversation over the phone and knock the door when you are ready to make an offer and need to see prop and take two dozen pics and video. Of course, if one has zero cash reserves they can simply go door knocking and driving for cash, but I don't know how much time it would take to make any return. If you walk streets and drive 8 hours a day to net average of 1 deal per quarter @$10K assignment fee, then you are essentially working for free or for very very low compensation. Very few people will have stamina to continue doing it, let aside feasibility of this model.   

Quote from @David Kanarek:

Thank you for your post. I am confused about what you are talking about. I did not ask him to condemn anybody. As opposed to him commenting on my emotional state. And making legal judgments when he clearly has absolutely NO idea of the facts of the case.

Even so, he did declare that "this is just business"
That is not only ignorant, unethical but simply wrong. It's admirable that you are defending him as he defends unethical and immoral business practices. At the very least he could have stayed silent on the issue, saying he didn't know the facts. But he DID make a judgment and that shows he is not what you think he is. I don't need to be a member for years to see that. Having a moral compass is enough. 

Jay is not the most evil and malicious guy on BP, he is actually ok. There are few who are much worse, truly toxic and vile characters here. Some are former state prosecutors. They will waste time 24/7 condemning some idiot "wholesaler" who pulls comps from free database and tries to peddle prop for twice its ARV, they will call him a fraudster, criminal, lowlife, Hitler incarnate and etc. But when it comes to sleazy fraudsters and big time criminals who defraud investors of millions of dollars or more and ruin public en masse, they will defend them and say this is just a business, suck it up. That's because they identify with most egregious crooks at the top of our society and believe that it's ok to defraud and steal and do crimes as long as you are a "big shot", it's just not ok for "low lives" to do the same. I wouldn't pay much attention to them, that's just society we live in and it has a lot of dishonest and immoral people with criminal mindsets. What I would do is contact your local attorney and ask what if any remedies you have under the circumstances, and you should not delay it as time in such matters is of essence. It is good that you created this post, it serves public by giving a warning not to deal with Norada. I totally understand your pain, I have seen since my youth how top tier criminals and crooks ruin the lives of decent people. Good luck to you.

Quote from @David Kanarek:

YOU STILL DONT HAVE ANYTHING TO SAY ABOUT HIS BEHAVIOR !!

This is NOT the way business works. MOST businesses are honest !! MOST don't try to trick their clients! MOST have ethical standards. If you can't even criticize those that are not, it says something about YOU not me....

"Dude"

I have no idea who Norada is, but it could be that it runs Ponzi scheme. I personally would not invest 250K in a company like that. A Note is just a piece of paper. If your Note is secured by any tangible assets you might be able to sue to recover your loss. If their outstanding debt far surpasses what they owe and is not secured, then you may get whatever can be distributed by trustee, if they file for BK. Again, I have no idea who Norada is and this is just a speculation. You should speak with an attorney to see what (if any) options you have to recover your losses. 

Quote from @Account Closed:

Hello, I am 23 and have a job with a real estate company. It is a small team and I have been here for about 8 months now. All my coworkers are much older and very wealthy through real estate, all different ways. Flipping, commercial, turnkey, multifamily, etc. I inherited a house last year with no mortgage on it and I really want to get into real estate investing, when I talk to them about it, they always say figure out which kind I want to get into first and then they'll offer me all the advice and help they can. I am just not sure what I want. I want cash flow, low to no long term maintanence (set it and forget it type), and the less risk the better. I feel like renting out multifamily is what I may be looking for with this, if done right can give me cash flow, I can hire a property manager at some point and I am friends with a lot of home improvement companies, and I could either use some money I have saved up to put a down payment or home equity loan for some % I am comfortable with and pay both off as fast as I can and repeat. Although, I don't know a lot on the other options and I may enjoy another one more or be a better option for me. How can I learn more about which option I should get into?

 Two questions: 

How much you want to spend on marketing, if any?

How much do you want to gross per month?

Don't get trapped with BRRRR and long term investment, where they sell you 200 houses with no cash flow that will appreciate in 50 years.

You are right on point looking for fast turn around and cash flow. So, answer the first two questions and I will try to give you straight to a point answer, with no judgment or meddling in your personal affairs.