All Forum Posts by: James Galla

Have you tried reaching out to any lenders yet? That's probably a good first step to see whether your idea is received well and to also get to know who your local lending institutions are.

I'd suggest a consult with a fair housing attorney to learn more about what discrimination is not permissible.

@Charlie Moore

Hoarding? Oh no way. Just tell them no. Also take a minute to recognize that telling them no should be easy - the fact that you are stumbling on this may indicate your potential complacency with other units. So, you should reevaluate to see whether you are being too nice. This is business, not charity. If you finance your properties, the banks aren't going to be very charitable with you.

@Stephen White

Most of those seminars are scams in that they over promise and under deliver. The whole sales pitch is based on the fact that you have entrepreneurial traits and that real estate offers income growth. The presentations often forget about the difficulties any investor would experience.

The only thing those seminars are good for is a free motivational talk about how you can build wealth in real estate.

Looking forward to it. I think one of the biggest problems I saw in folks' complaints, while working for an AMC, was undue influence via threats of complaints to the Appraisal board for no good reason or jamming objectively bad comparables down their throats and demanding they are used.

Well, you can try for a straight-up personal loan, but the interest rates may be higher than you'd get via a traditional REFI/HELOC. On the same track as personal loans, there are hard money lenders, but that would carry a high cost as well.

I'd also suggest seeing whether the vendor-seller of the furnace would consider doing a purchase money security interest/regular security interest on the furnace/whatever equipment you are getting. It's essentially like a mortgage on your furnace/equipment just like a car loan.

Those are two options for you to check out. Good luck.

You aren't coming through too clear on who the partners are - is it you, your wife, and your sister?

You:

In determining sweat equity, I have a preference in not making up numbers or throwing out random percentages because that can result in tremendous over/underpayment. Rather, I would prefer to go with whatever the closest actual value of the services you are offering is. For instance, if you are offering to redo the floors, you ought to seek out some bids for that kind of work. Take your lowest bid to see the value you are offering to the partnership and you can see what portion of the value of the property that makes up. (I.e. $10,000 worth of labor translates to $10,000 worth of contribution). The purpose of getting third party bids is to get your third partner comfortable with your numbers so they don't think you're throwing random numbers around.

Wife:

Being a wife gets plenty of credit personally, but financially, you need to look at what she is doing for the partnership. Frankly, looking at houses isn't worth anything more than a couple of bucks. You don't throw percentage ownership shares at that kind of contribution. The same goes for calculating deals. All partners ought to know how to do that so no one is walking in blind and wholly reliant on someone else's ability to do simple math - it's not actually worth much for lower-level deals. If, however, your wife is an accountant and performs actual accounting services, for example, then she ought to be given credit for the value of services contributed. The same goes for any other labor provided.

Hopefully, that gives you an idea of how to frame the discussion.

Watch this from the Ohio Department of Commerce Division of Real Estate regarding wholesaling in Ohio.

Good luck.

That might not be the best use of your time - you may end up making near minimum wage, for instance, while a better use of your time could be generating a better W-2 income that can be leveraged to purchase property. You can learn the ins and outs of self-management through contacting other RE investors.

@Eli M.

The mistakes I'd look for are on data entry. Maybe the appraiser incorrectly inputted the sqft of a comparable property - that, for example, could result in a material change to the report. Maybe information is not reported correctly in the public record (e.g. a house may have 2 bedrooms but is reported as having 3).

With respect to the quality of a comparable, maybe the appraiser relied on a listing instead of an actual sale. Maybe the distance of the comparable is too far or temporally too attenuated. Maybe the comparables do not appreciate the neighborhood boundaries.

Just a couple thoughts.