All Forum Posts by: Jerry W.

@Ilan Friedman, if you are going to do a flip you really should use an LLC to help limit liability. lets say in 5 years the foundation cracks and they want to sue, you could still be liable. if you form an LLC for each flip, when the deal is done you can collapse and close the LLC and effectively close your liability if you ran the business right.

You guys are making me salivate, my STR gets maybe 20% occupancy. Now summer is fairly good, but winter stinks. I try to get traveling nurses in the winter but only limited luck. Since winter is like 8 months here, you have to do really well in the summer to make it work. I am slowly picking up some repeat customers. Our tourism in the winter is almost nothing. Location location, location.

@Victor L., you need to worry about buying a property before you worry about all this other stuff. You can waste a lot of time worrying about things that don't matter yet. Buy a property in your own name first. The loan rates will be better, the terms will be better, and you can get insurance for liability. You can get a lease from another local investor, or an attorney , or off the BP site, but you need a property first. Later you can transfer the property into an LLC or a trust, or whatever. right now you don't have much in the way of assets to protect. Just my 2 cents bud. Either way good luck. it looks like you are on your way, don't stop.

@Kwesi Landers, I bought my first intentional rental property because I knew it was a good buy and I figured it would help provide financial stability for my young family.  I had already lived the broke college guy with a family thing to death.  Not having enough money to get your kid a birthday present that cost more than $2 and that was an important $2.  Later I was making an OK living, but a funny thing happened, after  doing a partnership and adding a property every 2 or 3 years I had an epiphany ( I have always wanted to use that word in a sentence) I could actually make enough money to provide for my family and eventually leave the massively high stress job I was in.  It took 20 year almost for the light to really turn on, from then on it has been full steam ahead.

@Burt Gourley Thanks for sharing. I tried the STR a little over a year ago and have had mixed results. In summer I do pretty well, but it is dead in the winter. I was able to do a one month furnished unit once, but that was it. I probably am $4k less in income than if I had just done traditional renting, but I have really enjoyed it. I also expect it to take years to build up a clientele, but only time will tell. I applaud your courage to try something new.

The problem with this scenario is that there truly are some great possibilities for making wealth in real estate.  There are guys who do make huge spreads and who can take a bad looking house and make it a good rent producer.  However they cannot supply 10,000 of those deals.  most likely they cannot supply 100 of those deals in today's market.  Some folks see this and think hey, if he did it so can I.  those people may be great at writing code, or great at selling shoes, or great at installing lawns for folks with new houses, they just know nothing about real estate investing except what they see on HG TV or Morris Invest.  They do due diligence, but they don't know what sounds real and what does not.  Even some savvy investors on this site lost some money.  They guy who had never invested in real estate had no chance.  When people prey on others they look for the easy victims first.  You don't see the 25 year old 6'4" 250 pound guy getting mugged, it is the 70 year old lady who weighs 90 pounds and walks with a cane.  It an happen to anyone, but usually it is the most vulnerable victim, not physically in this case but non educated in real estate.  I nearly bought a house in a seriously bad neighborhood in Ohio once.  I thought it was in a nice area and it looked great, luckily for me another turn key investor chimed in and slammed him good and educated me at the same time.  You don't know what you don't know.  I knew what investing locally was like, but not in that kind of neighborhood.  That would have been a $100K house in my town, there it was a $17K house.

@Michael B., sorry to take so long, had a very full day.  First I was not calling you a snake oil salesman, I was telling the group how those kind of statements suck people in and make them buy the kind of stuff Morris was selling.  However I will take your challenge to me.  I agree to buy 10, or even a hundred of the deals you say you can deliver.  Shoot me the PM with the contracts, and I will fly out and look at them and close within lets say 30 days for 10 or 90 days for 100 of them ok?  If you deliver I will apologize in public on this forum and I will tell them that unlike Morris you can produce these kind of deals and I bet within a few months you will have demands for thousands of these deals.  In fact maybe I can get @Jay Hinrichs to give me the thumbs up on a loan and I will buy a thousand of those deals.  Agreed?

The reality is that you will not do that.  Now you sent me a picture of something showing you were almost getting $1200 from a management company apparently for rent.  You also sent me a separate picture showing somewhere you are making a payment of about $290.  Nothing tied them together, but lets give you the benefit of the doubt and say they are the same property.  This means you are all in for say $50K  put 20% down and finance $40K for payments of about $240 per month.  I expect 10 or 100 or 1,000 houses for sale from you for $50K each and with rents coming in for $1,200 each.  You cannot do it.  Don't get me wrong I want you to sell me those properties, but you can't.  You might have a deal like that, even a few like that, but you cannot deliver them to me for that price, neither could Morris Invest.  I am not calling you a liar, I am say making those kinds of statements to induce newbies to invest with you is grossly misleading.  They will not get those results and you will not sell them properties like that.  If so sell them to me.  The reality is that maybe you can get all in for $50K and possibly deliver $800 in rents, if so that is pretty good.  I have invested in OOS deals and gotten nearly 3% returns on paper, but not overall.  Not even close.  In one city I was almost at 2% of price to monthly rent and just barely broke even after nearly 3 years.  Vacancy high taxes, turnover costs, constant repairs ate it up.  I actually have no problem in posting all of this on the forum here.  I really want to dissuade folks from thinking you can just buy properties like this.  I bet you didn't just buy a property like that.  It was one of only a few, you have a system, boots on the ground, very through knowledge of the area and either looked at the property personally or at least had a video walk through.  I never actually saw my OOS houses in person, I had the video walk through, and the other was pictures from a joint venture associate.  You cannot supply deals like this to others, despite your bio showing that you wholesale houses.  How many deals like this have you sold to folks?  We could ask for them to chime in but how would we know they are real?  Just publish your offer to sale online with addresses and I will fly out and look at them and we will close the deals you say these newbies can get by investing.

Now it is your turn to suggest that I am not a man or what ever you choose.  I have no intention to hurt anyone's feelings or call their reputation into question here, but I will actively challenge and call out folks who in my opinion are misleading others as to what they can buy out there.

Your turn.

@Michael B. this kind of quote "

A mortgage on one of my leveraged properties is about $250 Dollars. The collected rent is about $1200 - see the difference? 3 of my properties beat your CA gross rent! Yet if I have one vacancy the other two still cash flow and cover the mortgage payment on the 3rd. "  

Is how people get sucked in.  The reality is you CANNOT deliver those kind of deals.  If you could on a highly leveraged property everyone you touched would be rich.  It is not real.  There can be dream deals, there can be good deals, but you cannot consistently deliver those kind of deals.  However that is how you lure money from folks who so desperately want to get out of the rat race.  You talk about reality if you are honest.  There are some dam fine turnkey operators on this site, but they don't use the snake oil pitch, they are honest and deliver exactly what they promise.  However it is not as glamorous.   You just pitch the massive amount of income that you have and how they can have it too if they listen to you.  These things have been around since before the snake oil peddlers traveled around in horse drawn wagons.  They do it because it works.  When you are legitimate you explain in detail and you show your happy 500 previous customers.  Pie in the sky look at this fabulous thing will make you to be unable to deliver.

I have put a few of these folks in jail.  You would be surprised how hard it is to prove real fraud, you would also be surprised at how few cases prosecutors lose like this.  Eventually the scam becomes so plain you can't miss it.  They seem to get bolder every time it works, but it often catches up with them.

@Ed L., why not look at the tax rolls and see what it is valued at for taxes, call a friend in real estate like an agent or broker and ask what the fair market value is, then see if it pencils out.  please don't use estimated vacation rental income as a basis as it is really unknown at the moment.  I have a couple vacation rentals in a not great area for anything but 3 months in the summer.  I can tell you the rates vary a lot on size quality and special amenities and marketing.  I have one really nice rental I can't hardly get bookings for for $120 a night, I have cozy comfy one for $80 per night that rents best.  The best one in town runs $250 to $350 per night, but it is right on the river.  It has a hot tub, fishing by the door, and is very well marketed.  He beats every other place by 50% at least.

First off the easy way is to use one LLC to acquire several properties. To initially start the LLC loan it say $50K. Then you use that money for $10K down on a property and you spend $30K more to fix it up. Now you can say its worth say $100K and so you refinance and pull out the $40K you put into it and buy another property the same way inside the same LLC. If you choose to form a second LLC you can contract with that LLC to manage the other LLC's rentals for 10 or 15% of the gross income. After you get about 10 properties in the first LLC you can pay yourself some wages, pay back the loan you gave the LLC to get started, and form a new LLC to do the next 10 properties. That is way over simplified, but do you get the idea?