All Forum Posts by: Gil Segev

Hi all, I am trying to understand the order of actions in the offer process better. Tried asking this in another thread but I guess it got missed. 

Generally you put in multiple offers and only few would get accepted. You can't really have a contractor provide bids for every offer you make or this would be their full time job.

Do you then send in the contractor only for accepted offers? If so, how do you estimate the rehab cost when you put the offer in? Is this just based on experience and a high level estimation? 

@Bob Okenwa can you help me better understand the order of actions in this process? 
Generally you put in multiple offers and only few would get accepted. You can't really have a contractor provide bids for every offer you make or this would be their full time job. 

Do you send in the contractor only for accepted offers? If so, how do you estimate the rehab when you put the offer in?

@Franky Davis so when you said that you paid 61.5k for a house that was appraised for 76.5k, you really meant that your purchase + rehab cost was 61.5k? 

House 1: Appraised 76.5k, Price 61.5k, Rent 825/mo

If so, that's a pretty good deal! 

@Franky Davis Got it now. You bought several >1-1.25% rental properties using creative financing. Very cool! I sincerely hope they will hold their rent in the coming months!

Are these really low income properties like mentioned above? 

I don't see any rehab money in your numbers. Does this mean all of these properties were in great conditions when you bought them? 

Congrats @Franky Davis! Very cool to see creative ways to financing RE investing! 

I am assuming you are leveraged pretty high to be able to invest with smaller investment capital. What kind of cash flow are you able to get per door? 

How confident are you that these properties will continue cash flowing positively if rents were to go down by 10-20% in a recession? 

All the indicators point to an upcoming recession (GDP, unemployment <4%, Buffet indictor/market cap to GDP). I don't know if 2020 was going to be a recession year but with COVID19 bringing >30% unemployment and up to 50% drop in GDP we're getting pushed into one for sure. 

Nobody knows what the extent of the impact on RE will be. I'm betting big. 

Finally some RE numbers! Even though it's just one data point, it says a lot. My guess is that it's just the beginning. Once mortgage forbearance goes away you'll see many more who've lost their jobs and need an out from their mortgage payment :(

@Jeff S. Couldn't agree more. They spent a long time on how to best pitch our case to our investors and get them to trust us to make them lots of money using presentations and personal connections.

I wrote it in the feedback section of the webinar but when they read audience questions they put a very nice sugar coat on it and said they communicate the risk on potentially lower returns in bad times to their investors and have skin in the game themselves.

@Account Closed it's definitely the view the webinar was promoting. I see it as irresponsible to use OPM at a time like this with such volatility in the market and not being able to define a clear exit strategy (i.e. lending tightening). 

Regarding securing passive RE investment with property collateral: it's too similar to securing it with stock these days. No one can guarantee what their value will be a few months down the line. You could argue that stock can get wiped out completely while RE is secured by an physical property but in the coming years there is no way of saying what its value would be. 

I listened in on a webinar on raising money in a changing market from another site earlier this week where a team of savvy investors went out of their way to teach us listeners how to get other investors to trust us with their cash (aka "use private money") in these unstable times where traditional lenders limit their exposure by tightening their lending rules so we can continue with our business. They discussed how much safer RE is when compared with the stock market these days and that the average investor would be happy with just keeping the value of their investment funds from falling so we are actually helping them with their problems. 

Now don't get me wrong, I am all for using private money but don't you find it cynical to use money from investors who fear investing in the stock market these days? RE may be a more stable investment vehicle but can anybody really guarantee keeping their investors' money safe or even turning a profit with the lack of visibility we have in the market 6 or 12 months down the road?