All Forum Posts by: Mark J.

Hi Aryelle-- Welcome to a new adventure! If I can assist at all, please contact me. I'm also a newbie, but have a few deals under my belt.

What are the reasons you want an LLC?

If you have long-term, documented income (W-2), credit score over 700, and your debt-to-income ratio is low, you stand a pretty good chance. Obviously there are other criteria the bank uses, but I'm not well-versed enough to know which are weighted more heavily than others.

Perhaps some lenders / bankers can offer some advice? 

<read in New Yawk accent> Hey, what's a guy gotta do around here to get a decent PLOC, yo? ;)

Instead of a HELOC, I'd encourage you to investigate a PLOC-- Personal Line of Credit. This is uncollateralized, so it's not tied to any asset or property. It's basically just a big ol' credit card that you use when you need it. This is the basis of my strategy. I buy properties with one PLOC, reno with the other PLOC, then either sell the property (if flip) or cash out refi (if hold), pay down the principals, and rinse and repeat, never using a dime of my own money. This isn't the path to instant riches-- it's slow and methodical, but it's working for me (two flips and one hold property over the last 1.5 years).

It took a few weeks of work, but eventually I found two local Tampa banks (big banks pretty much just laughed) that offered me fantastic terms on a PLOC (one is 1% over Prime and the other is 2% over Prime). I called over 25 banks and had four or five in-person meetings (be prepared and have a pitch proposal). There aren't too many banks that offer this product, and now even one of the banks I have a PLOC with no longer offers it. Just keep calling until you get a YES! Now, when you do get a bank to say YES!-- make sure you're getting the terms you want. Try Pilot and Synovus banks.

Welcome Julie! Two big takeaways for me after reading your post:

1) While having a plan is an important, the greater skill you have in abundance is the ability to think strategically and long term about your future and how one action builds on the other towards a larger goal. You're clearly exceptional at that and that will serve you well in life and your career.

However, as Mike Tyson famously said about the way he destroyed opponent after opponent in the ring-  "Everyone has a plan, until they get hit." Once they got thrown off their gameplan, fear, confusion, anger, and panic set in. And that's when Mike would pounce.

Other attributes like tenacity, creativity, the ability to improvise, knowing how to manage and inspire people, being a great communicator, networking, an ability to bounce back after failures and setbacks (and there will be many!), attitude, salesmanship, and a dozen other attributes and skills are, at least I think, much more essential to your long-term success as a REI.

2) You didn't say much about what kind of REI you want to be. What will be your focus? Flipper? Rehabber? Wholesaler? Buy and hold? What kind of properties- single family, multifamily, complexes, etc. do you want to work with? Do you have skills/interest to do rehab work yourself?

THE most important thing is just to start, somehow, in some way in real estate. 

Long story short (cliche alert!)-- Experience is the best teacher. 

DISCLAIMER: I'm just a newbie, so take everything I say as just one guy's crappy opinion.

@Daria B-- I've established a good relationship with the title company and the buyer was fine with using them. It's a well-known local title company that works primarily with investors.

Title company fees were $335. (Title Search = $85 + Closing Fee = $250)

I did successfully sell via FSBO. The key takeaway for me was that the title company does 90% of the work. I negotiated directly with the buyer, signed the sales contract, faxed it over to the title company and they took it to the finish line. Easy.

I also had an excellent marketing plan put together. 

I saved thousands in the sale and actually wound-up selling the duplex for another Bigger Pockets investor in my area.

It was a good experience and I'll definitely be selling future properties FSBO.

@Matt Stewart-- the project was bid at over $3K for the entire job. After I parted ways with him at the 10% completion stage, he said he'd send a bill only for the work he did. Which strikes me as self-evident, but I thanked him and waited for the bill.

<Warning-- Longish Post Ahead>

I'm thrilled by the challenges and new learning that real estate investing has brought to my life. It's truly fulfilling on many levels. However, the most consistently terrible aspect of my investing experiences so far is dealing with disreputable trades guys-- plumbers, electricians, tile guys, contractors, etc. I've been ripped off, over-billed, vandalized, and had terrible work done that needed to be fixed by others. This has been the hardest, most frustrating, and stressful aspect of investing so far. One thing I have gotten smarter (and firmer) about though is to cut ties as early as possible after I start seeing bad work. I usually start by giving simple tasks, observe the work, and then decide whether or not to continue on with that person.

OK-- to my current dilemma: I used a plumber who was recommended by a well-known local investor in the Tampa area. The plumber was nice enough at first (aren't they all!), but his plumbing work was really, really terrible. I won't bore you with the details, but I'm talking about basic plumbing that I could do, but don't want (or have time) to do.

After I told him (very nicely) that unfortunately we wouldn't be working together on the rest of the project, I received a bill for $1,200. That was surprising, giving the small amount of work done. After reviewing his vague bill (not itemized), I offered what I considered a very fair payment of $850 ($350 less than he billed). Here's an excerpt of his response to the email I sent which had an Excel spreadsheet documenting how I arrived at $850.

This was his response last night:

"If I had known you wanted top notch work I would of gave it to you along with top notch pricing. How ever, i gave you decent work at a decent price with nothing wrong with it. Calling another plumber to go behind me and fix something will always result in that plumber doing and saying more than necessary. How ever. If you don't pay me my full amount I will inform my plumbing inspector Associates and code enforcement friends and they will pick that place apart and make you rip out alot of work and you will pay fees galore."

Now clearly, there's some failures in logic here, particularly about top notch vs decent work (this is the first I've ever heard someone admit that they intentionally do ****** work because the job is small...but he set, and I agreed to, his fee @$73 per hr.) But beyond the defensiveness and faulty logic-- it's the THREATS that I find bothersome. They are likely empty threats, but I can't be sure. Although I'm a new investor, and it's important to me to maintain an excellent reputation within the local investing community, I also won't be bullied into paying for shoddy work which I had to pay someone else to complete.

So, that's my dilemma. Perhaps it's similar to the "Cash for Keys" argument I've often read here. Do I stand my ground, perhaps potentially wind-up in small claims court (or worse a lien), and inspectors suddenly showing up at my door or is it worth the $350 to just make him go away (without any guarantee he won't still do what's he's threatened to do-- which is likely just empty talk.)

Your thoughts?