All Forum Posts by: James Masotti

I flipped a house in Wilmington which had significant termite damage. There were no laws requiring me to treat it, I was however required to disclose it. Of course once disclosed you can pretty much guarantee that every buyer will want it tested, and therefore we had it tested in advance and provided everyone interested with the results showing that there was no active activity and that it has been treated and was on warranty which was transferable to the buyer. If the buyer wanted to pay to have it inspected again they were more than welcome to do that at their own expense. 

 I invest in Wilmington and not Philly. Buying a multi-family building is going to be hard as the city is really cracking down on the majority of their zoning variances awarded to the single family properties. So it's very important if you look at buying one that you check the original zoning, whether it has an approved variance, and how long it's been vacant (according to the City's vacant property registry) because the property will lose its variance after a year. I would also say that in the neighborhoods that have multi-family they trade a higher multiple than single family does, even though you'll get lower rents so just make sure you're paying attention to that when shopping around if you do consider Wilmington instead of, or in addition to, Philly. 

@Robert Sowulski - Feel free to send me a message and I'll provide some context for how I do this in Wilmington.

@Mindy Jensen and @Brandon Turner - Gentle nudge to continue looking into this option :)

 This and also the Ultimate Beginners Guide. 

I would challenge if you have the right agent if they are telling you to go get pre-qualified to get started. What they are really asking is, are you a tire kicker and someone who is going to waste my time. You don't need pre-approval to go shopping. You need some sort of proof of funds to write an offer. So the agent is telling you to put the cart before the horse. 

Since you asked opinion I'll give you James' Steps to buying your first real estate deal. (eventually I'll need to turn this into a blog post)

1) Read the aforementioned Ultimate Beginners Guide

2) Once you have read step one and decided what type of investing you want to do then read the next most relevant book (this could be Out of state investing, and BRRRR. If you are going to BRRRR or Flip, than you need to make sure to read J Scott's books on estimating rehab costs)

3) Consider your level of risk that you want to take and what kind of "investor" you will be. You will be able to get better terms buying in your personal name and using conventional mortgage, however you now assume all of the risk personally. If instead you plan to run a business that happens to involve real estate you can plan to set up an LLC. (NOTE: I did not say go set one up!)

4) Identify your market

5) Research the nuances of your market

6) Start analyzing property data publicly available on Zillow/Trulia/Redfin/Realtor.com etc.

7) Keep track of who the agents are who are listing the cheap/ugly (relatively speaking for your market) houses.

8) Put together a 1-2 page synopsis that details out your planned investing style

9) Set alerts and or manually check publicly available listings that based on your initial analysis would meet your investment criteria

10) When you find something that passes the screening criteria for the prior step, contact the agent and send them your synopsis. Let them know who you are, what you're looking to do, and that you're just getting started. Let the agent know you'd like to make an offer but you need some referrals to be able to do so. Ask for referrals to a lender (who can either do investment mortgages in your own name, or commercial mortgages). If you're going to go the commercial route, ask for a local attorney who works with real estate investors who can help create your LLC.

11) Get your financing lined up. There's lots written about on strategies for financing whether you have approval from a hard money lender, a commercial lender, a residential letter, you have cash in the bank, a business partner has cash in the bank, you have a 401k you can leverage, you have a private lender, etc. etc. Doesn't matter which option you go with, just figure out getting one of these that you can submit with an offer once you make one.

12) Contact the list of agents you have been keeping track of in step 7 and share with them your synopsis and let them know you're set up and ready to make offers if they come across any deals that meet your criteria.

13) Start attending or networking with local investors (arguably this could be step 0 as I think there is huge value in doing this even if not in your local market)

14) Join facebook groups for real estate investors in your local market and start asking for contractor recommendations.

15) Ask on BiggerPockets for contractor recommendations

16) Understand good contractors are worth more than gold bars in Fort Knox, so don't expect everyone to give you their top choice contractors if they do any serious volume of deals then they are trying to keep their contractors busy themselves. You'll have to work through this. 

17) Make an offer

18) Make more offers

19) Get an offer accepted eventually

20) Ask one of the contractors you've talked with to walk the property with you. Be prepared to pay them $100 or something to do this, so they know you're not just a tire kicker and that you're serious about learning from them so that you can do better on the next deal.

21) Assume your offer will fall through because the property will need more work than you originally assumed

22) Refine your criteria with this new knowledge

23) Repeat steps 17-22 until you get an offer accepted and it passes the walk through from the contractor you're working with

24) Get your paperwork in order to get to closing (Leaving this a little vague because my list is getting long, but this will include all the financing, insurance, title, etc.)

25) Close on your first property!

Okay there is way more that obviously has to happen after this, but you'll notice that getting a CPA is no where on this list. There are a ton of great CPA's on BiggerPockets with whom you can eventually talk to, but understand the amount of tax optimization that you're going to get when you only own one or two properties is almost zero. CPA friends please feel free to disagree and argue with me here :) 

Buying real estate isn't complicated or hard and people try to make it hard and complicated. Part of the problem is that all the advise that you're hearing isn't wrong. At some point you will have a lot of risk and liability that you'll want to make sure you're talking to an attorney about proper asset protection. At some point your tax return will be complicated enough to need to talk tax strategy with a CPA (or you can just read @Amanda Han's book on Tax Strategies )

Hopefully this all makes sense and I'm really looking forward to seeing what kind of feedback I get from other investors on this post.

Cheers!

I have a registered agent for 3 LLC's in Delaware. It only provides a certain amount of anonymity though as someone can still search property records and find your mailing address (which likely isn't your registered agent) and then through skip tracing or some other further investigating may be able to trace it back to you.

What you avoid though are the frivolous attempts at trying to quickly look things up and sue you because it makes people have to go through more levels of effort. 

At least that's my personal interpretation. 

 I also believe with regards to Delaware entities, if you don't have a physical presence in the state where you can be served, that the State of Delaware requires you to have a registered agent to accept service of process on your behalf.

Welcome to BP! All of my rentals are in the City of Wilmington. This is a great resource for all things generic real estate investing. If you end up wanting to dig into specific topics like neighborhoods, contractors, dealing with City L&I, evictions in JP Court, etc. I strongly suggest you go check out the DelREIA facebook page which is where all of that information specific to Wilmington can be asked and found. 

All the best as you start to find your way. If you haven't already I strongly suggest you check out the Ultimate Beginners Guide to help you figure out what investing style best matches up with your personality and goals. 

I'm assuming this is a commercial loan, check in with Jason Sheehan at Meridian Bank. Shoot me a PM for contact info.

Agyei - For things specific to the Delaware market your best bet will be DelREIA as there aren't many investors in Delaware on here. That being said for Dover reach out to @Blaine Brown. If you want to chat Wilmington some time, I'd be more than happy to do so. 

@Lauren C. really has you put to work now. Getting on the Instagram and the BP Forums...it's almost like you're starting to like this stuff now :-P