All Forum Posts by: Harrison Painter

Both books are some of the best in the business.

Too many folks get into the Investment and/or Real Estate Profession and treat it like a hobby instead of a business.

People have always looked at real estate as "easy money", but the reality is much different.

These books open your eyes to what you need to do in order to succeed, and the advice and material is TOP NOTCH!

If I ever were to enter the traditional real estate business again, there is no other company that I would rather be a part of than KW.

There is absolutely no fraud involved, everything is disclosed on the HUD, and the program has been created and approved via a solid team of attorneys in multiple states.

We can use ANY title company, deeds are recorded, the bank does their own appraisal, and EVERYTHING is disclosed.

If the banks appraisal comes in less than our value, then the investor gets an even better deal!!

Let me make this crystal clear: There is no kick-back, and no cash out to anybody. The price of the home IS the 65% of what the bank tells us the home is worth, and that is what the lender has the mortgage at, and the price that the investor pays, PERIOD.

I understand the concerns, and know that It is due to all of the "cash back" programs and appraisal fraud of the past. That is not what we are about.

As a well respected Broker and Investor, I have too much to lose to deal with fraudulent activity. If I EVER caught wind of ANYBODY in my network doing something illegal, they would be banished IMMEDIATELY!

The investors who buy these homes are folks looking for a long term hold that will cash flow.

We have found one regional lender that will do 8 mortgages, and the last four are being based on 55% of value, so the investor will need to bring a little money to the table on these deals. We are also hearing that 6 month seasoning is coming on these rate and term refi's, and we will probably just revamp and hold the notes and mortgages for the 6 months. It will slow us down initially, but nothing we can't work through.

If you, or your Mortgage Broker needs some clarification, simply have them call me anytime!

John,

I agree to a point, but with our business model that fix simply does not work for us.

For the loans to be off the books and in the company name, It is my understanding that they need to have 12 months seasoning. We are still researching this, but so far that is what has come up.

Our price points are so low that investors want to buy 5-10 at a time via our zero down program, so the 4 mortgage lending guide is strangling these folks. If there is a solution out there, my job is to find it! :D

My advice?
Stop worrying and start working!

There is ALWAYS a way.

There is not much anyone can do about the politics at this point. The best thing we can do is batten down the hatches, work hard, and good things will happen.

There is going to be some pain, no question, but creating wealth, a business, or any other form of success is never easy.

The good news about all of this?
There are some incredible opportunities if we can be creative, patient, and stay smart!

Our philosophy is to only buy and sell single family homes in areas that we would feel safe to live in ourselves.

I am a little spoiled in our home market of Indianapolis, as there are plenty of good cash flow investments located in safe blue collar demographics.

In Atlanta, my partner for that market actually lives in the neighborhoods that we buy and sell in. The crime rate is higher, but we are seeing so much pride and improvement in these areas! It is a great opportunity!

The Tampa/St Pete and Orlando markets have been flat for us. I am seeing desperate investors driving the rental rates down to unprofitable levels in all the demographics. Properties are based in more suburban markets here, and they have been purchased correctly. I feel really good about our long term position, but it is going to be a longer and more difficult ride than we anticipated.

Cape San Blas/Port St. Joe, FL has been dismal for the short term. For those of you unfamiliar with this area, it is an upscale vacation rental market in the panhandle. The economy is really taking its toll here, as tourism is down. You can get a phenomenal deal on a Gulf Front home right now, but you will need to be able to have enough reserves to hold a very negative cash flow position. It is paradise, and a great long term hold if you can afford it.

Expensive Lesson #1: When I first got in this business, I thought contractors were professional, showed up on time, kept to budget, and would complete a job with quality workmanship, and all within the agreed upon time frame. (I Paid up front on that first job too! Ouch!)

Expensive Lesson #2: Getting cocky after a little success and thinking everything you touch will turn to gold. Bought a house for cash with a 2 minute walk through. Did not realize it was on a well and septic. Well was dry and septic system was leaking. I probably do not need to explain that a large amount of money was lost on this project. To this day, I will not buy a home on a well and septic.

Expensive Lesson #3: Trusting others! When money is on the table, people are not trustworthy. Be it a partner, a friend, or a person you might have worked with before. Money brings out the worst in people.

Expensive Lesson #4: Thinking that people are willing to work as hard as you. Too many times people just do not hold up their end of the workload, but still expect a full check.

Mike,

I am sure you are a very successful man and we can all learn a lot from you.

You have opened my eyes to new possibilities and I have seen the error on my ways.

Will your $50 E-Book teach me how to do it all correctly this time?

I am excited! :lol:

The way our leases are structured, we can collect as much as $165 for a 30 day late. Our typical rent is $750 to $800 per month.

Since your average rents are only $500, I would assume that you are in very sub par neighborhoods. That might be the root cause of your combative attitude! I made the mistake of working those neighborhoods, and it made me a very unpleasant person to be around too.

At the end of the day, if your 'carry a big stick" and simple business plan is working for you, then do not change a thing! I only wish you nothing but success.

I am confident that you will soon reach your goal of retiring from your day job soon. The ability to live off of a real estate income is a wonderful thing :wink:

Basing a plan on tenant history is not discrimination.

We have created a point system based on early, on time and late payments. Documentation is key in the rental business.

We have very limited leeway for a first year lease tenant. If there are problems out of the gate, then odds are the situation is not going to get better. We know that a poor decision was made in our tenant screening process and we re-evaluate as to why. We also know the end of lease games people play to avoid paying rent, and we will not tolerate it.

For a second year lease tenant, a plan we have used with success has been to add late fees and 50% of the late months rent to the next 2 months payments.

If that first payment is not made, then we lose no time in the eviction process since we sent out the notices as per the lease agreement. If they pay the first payment of the plan, then we just salvaged 45 days of rental income + late fees. If they pay both, then we just avoided a bad situation, and actually made a 10%+ profit for the portfolio with the added late fees.

*While a guy like Mike is evicting, we are adding 10% plus to our bottom line. Not sure how that is running a business as a non-business, as it is my experience that profits are a good thing!

If a historically good tenant has been with us for 3+ years, and all of the sudden misses a payment, odds are there is a more serious problem (job loss, divorce, ect), we talk to them and evaluate if they have the ability to catch up and get back on track. We try and create a plan that will fit their financial situation. Not unlike a Loan re-modification when a person goes late on their mortgage, we are well within the law to create a customized action plan on a case by case basis. It would be difficult for someone to make the false accusation of discrimination. We are confident in our professionalism, confident in our business plan, and confident with our attorneys!

If we deem they tenant does not have the ability to keep the current property, then we work hard to find another property will meet their current financial situation.

The bottom line is that late tenants can make you even more profitable! We might lose a percentage of a portfolio's income with a few evictions, as it is just the cost of doing business and unavoidable, but we also make a percentage of that back in late fees and solid action plans.

That said, we have worked hard to create a winning system, and I do not want anybody to believe that what we do works every time.

It has been a long, hard, expensive road to get where we are today! There is nothing about real estate, or rental management, that is easy.

Mike, do I need really need to clarify my statements at an elementary level in order to combat your dismal attempt at spin? :lol:

We evaluate a situation, calculate the economic risks of our options, and a plan is made accordingly.

For example: If a historically good tenant is a little late, a plan is implemented to help them. The longer the tenant has resided in the property, and the better their payment history, the more lenient we may be.

We still move forward with the letters required for the eviction process. This shows the tenant that we stick to the policy of the lease, and it also creates a layer of protection if things go wrong. In doing this, we really do not lose that much time if the eviction ends up needing to be filed.

If they get back on track, then we successfully averted what could have been a bad situation.

Mike, I honestly feel that It shows poor judgment on your part to consistently stereotype folks into such narrow categories.