All Forum Posts by: Jay Hinrichs
Jay Hinrichs has started 333 posts and replied 42265 times.
Post: Ann McCluskey, Strand Park Limited UK, CAREFULL, FRAUD LENDER, SCAM LENDER
#1 All Forums ContributorPosted - Real Estate Consultant
- Summerlin, NV
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Quote from @J Castro:
Thank you for posting this notice. This highlights the vulnerability of borrowers who, facing financial strain, or may rush into fraudulent loan agreements without proper vetting. Scammers prey on this desperation by making appealing offers that are too good to be true, pushing individuals into predatory and abusive schemes.
- Never pay an upfront fee for a loan: A legitimate lender will never ask you to pay for a loan before it is delivered. Valid application or origination fees are typically deducted from the loan amount itself.
- Be skeptical of guaranteed approval: No matter how bad your credit history is, guaranteed approval is a scam. All legitimate lenders perform some form of underwriting to verify your ability to repay a loan.
- Do not succumb to pressure: Do not let a lender or broker pressure you into making a decision quickly. A trustworthy company will give you time to consider the offer and understand all the terms and conditions.
A scammer, often targeting those with poor credit, promises a loan but requires an upfront "processing" or "insurance" fee. Once the fee is paid, the scammer disappears without delivering the loan. This tactic offers "guaranteed approval regardless of credit history". Legitimate lenders never guarantee approval, as they must first verify a borrower's ability to repay. This claim is a ruse to collect sensitive personal and financial information.
one needs to watch the American Greed episode on Remington financial they were the poster child.. and a little different scam they went after dreamers looking to do more than vanilla loans.. they had offices in scottsdale and I think MN and appeared very legit but they required 10k non refundable DD money.. which over the course of 20 some years they took in thousands of 10k deposits and made less than 10 loans.. the owners went to prison.. the lady who busted them was Ingrid Robinson and she has a website on DD scammers.. I almost fell for this myself back in 2011 when capital was near impossible to get because of the GFC I had what I think was a semi complicated bizz plan and they were just too quick to approve and did not really ask the probing questions just hammered for the 10k because I was pre approved LOL.
what we see now I believe is not as much desperate or maybe equal desperate and those that simply dont know what they dont know and with the internet the way it is.. its the only shopping they do is on line its what they are used to.
PS because the 10k was just too small of an amount for folks to litigate over .. people just chalked it up to my deal did not fly.. Ingrid got pissed hooked up with and FBI agent and took these guys down.
Post: Ann McCluskey, Strand Park Limited UK, CAREFULL, FRAUD LENDER, SCAM LENDER
#1 All Forums ContributorPosted - Real Estate Consultant
- Summerlin, NV
- Posts 44,056
- Votes 65,100
Post: Is Helping Homeowners in Foreclosure “Ethical” Investing… or Taking Advantage?
#1 All Forums ContributorPosted - Real Estate Consultant
- Summerlin, NV
- Posts 44,056
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Quote from @Chris Seveney:
In many states now you MUST be a licensed foreclosure consultant. But Chris I could not agree more.. this is just another wholesaling method. I am not being a hypocrite as I had a business prior to the laws changing in OR CA WA with pre foreclosure rescue and I did hundreds of them.. But lets not confuse those that do this with some do gooder agenda this is all about making money full stop. It takes a lot of work and money to track these down and get a chance to sit down and talk to someone in foreclosure.. Who does all that work and expense just for social good. Maybe some non profits but certainly NO ONE on BP does it for those reasons its all about getting a good deal.. Lets be honest here.
Now since I have personally sat with well over 100 homeowners that were in foreclosure to discuss their situations and to acquire their property ( that was the mission after all) Folks get into this jam for all sorts of reasons its just the human condition and a basic issue of many Americans cant control their spending or budget their money. Their are health issues of course and lost jobs.. but there is also the KIDS STOLE the money. 200k forth of cars boats RVs in the driveway with massive payments etc etc. Gambling addictions drugs ..
What I did run into though was some foreclosure rescue person gets there ahead of me and just lies through their teeth to try to get a deal.. I have seen folks deed over a house and not understand what that meant. ( I helped them unwind that one ) Also as noted bad lenders who promise the moon and cant come through and leave the folks NO choice but to file BK to save their equity.. But many times letting it go to sale and collecting the overage is the smart move for them NOT selling to a pre foreclosure buyer. Although that route does have risk as there could be collusion at the court house steps and the property does not get bid up like it would have if the local good ole boys and girls were not colluding to keep the bid very low.. ( ie paying walk off money)..
Yup no offense to anyone but post like this are totally self serving and most folks just dont know the realities of this side of the business I know Chris lives it everyday.. I have decades of experience real world with it with 100s of pre foreclosure transactions done and in the books.
As another stated the financial and credit damage is done going to sale barely moves the needle in that regard so its just BS that there is some credit help happening.. One of the main motivators for folks to stay in their home IE foreclosure rescue lease back is to keep kiddos in their school. Foreclosure rescue lease back is ILLEGAL in many states but of course no one ever mentions that part :)
Post: Cost Segregation Report
#1 All Forums ContributorPosted - Real Estate Consultant
- Summerlin, NV
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Quote from @Sean O'Keefe:
Quote from @Tyler Carter:
So is there a rule of thumb or cost range for a Cost Seg Report for a SFH that is used for a long term rental? I am seeing $500 to $3K in report costs. Seemingly there isn't a ton of difference as long as you got a report. I have talked to my CPA and we qual for a real estate professional and want to use the report to help off set W-2 wages. SFH was only $155K purchase price though. Thoughts?
"Seemingly, there isn't a ton of difference as long as you got a (cost seg) report."
I just finished a consultation with a rental owner that said something similar about cost seg reports and followed it up with "this stuff can't be that hard."
A couple of thoughts on this:
- Bonus depreciation is available on improvements and capital expenses with a useful life of 20 years or less. Items like Concrete generally fall into the > 20 years useful life bucket. If a real estate investor buys a property that’s already built, what skills are needed to determine how much of the purchase price should go to things like Concrete and not be eligible for bonus depreciation? If you don’t have a background/experience in construction / civil engineering / surveyor how would you know how to allocate it?
- Feels like it is important to have the experience and know how to allocate the different building components $ value between things like concrete, landscaping, etc.
- If your cost seg report underestimates or overestimates the amount of purchase price to allocate to + 20 year items. This can increase your tax savings or decrease it. If they overestimate + 20 year buckets, you loss money on tax savings. If they underestimate and you get audited, this exposes you to the risk of having some of the tax savings you received clawed back with penalties and wastes a lot of your time going back and forth with the IRS.
“But the cost seg firm provides audit support so that must mean they know what they’re doing.”
- Not exactly, and do you really want to take the risk on your tax return? If the report is inaccurate the IRS will be asking you for tax savings + penalties back, not the cost seg firm.
“An onsite visit from cost seg firm civil engineer or surveyor isn’t required by the IRS for cost seg firm to prepare the report.”
- Correct, but according to the IRS Publication 5653 Cost Segregation Audit Technique Guide this IRS prefers an “onsite” visit.
- Which study do you think has more audit defensibility? The cost seg report prepared using the IRS’ preferred method or the one that isn’t?
“The firms that provide “onsite” visits can take months to complete the report. This other firm does virtual/self-service and they can have it done in a couple days.”
- Based on the above, is “speed” something that you’re really looking for in a cost segregation report? Accuracy, audit defensibility, and experience should be a priority.
- Another example, do you want the accountant that tells you they can prepare your tax return in 5min or the one that took a day because they had it reviewed multiple times by other CPAs in their firm and took the time to make sure they included everything?
- If you work with a cost segregation firm that actually has an experienced surveyor, civil engineer, or someone with experience in construction look at the property and prepare a report, don’t you think that the report will be more accurate? Accuracy matters for the reasons I mentioned above.
"Seemingly, there isn't a ton of difference as long as you got a report."
There is a big difference. Pay the extra $500 - $1,000 to get a quality report, with high audit defensibility, where the cost seg firm took time to prepare it. This may end up saving you a lot of time, money, and sleep.
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This post does not create a CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.
I asked this once on this thread sorry to ask again.. can a Doctor tenant who wish's to buy the building they have their business in.. and is not a RE investor .. Can they buy the building and cost seg it first year ? it would be an owner operator situation.
Post: Cost Segregation Report
#1 All Forums ContributorPosted - Real Estate Consultant
- Summerlin, NV
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Quote from @Michael Plaks:
Quote from @Andre Taylor:
Looking for a tax company that does Cost Segregation Reports.
Three cost segregation companies are operated by these three Bigger Pockets experts:
@Bernard Reisz @Yonah Weiss @Julio Gonzalez
Reach out to any of them. And read this post to better understand how cost segregation works: https://www.biggerpockets.com/forums/51/topics/1075919-five-...
Michael, quick question Doctor tenant wants to buy the building her bizzness is in .. Can Doctor use cost seg when they purchase the building and go from tenant to Owner ???
Post: I feel lost and naïve
#1 All Forums ContributorPosted - Real Estate Consultant
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there is an old adage for private pilots.
Night moutains experince if all 3 exists its a life threatening flight.
Pick one all three is a no go.
so you have the same thing going No cash ( at least you said you did not) No experience , first deal U can only pick one to get a deal done with some HML but not all three..
Post: Seems to me Biggerpockets Dealfinder is useless
#1 All Forums ContributorPosted - Real Estate Consultant
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Quote from @Nicholas L.:
of course! I know you know just about all aspects of this cold, was just curious if you were still actually buying any yourself.
Oh ya but only to fix and flip or build new and sell as a spec. but not buying SFRs for long term rental purposes in any big way.. I might buy one more in Vegas as I need a garage and thinking i can use the garage for my personal stuff and give the tenant a deal on the actual house.. I hate paying storge rents hate it.
Post: Seems to me Biggerpockets Dealfinder is useless
#1 All Forums ContributorPosted - Real Estate Consultant
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Quote from @Nicholas L.:
are you still buying SFHs at this time? your main gigs are lending and development right?
I fund about 100 sfr's each year for BRRR investors so I under write quite a few in my noggin LOL.. spread sheets down to the penny I am not interested in as I know they never work out the way folks think
Post: Seems to me Biggerpockets Dealfinder is useless
#1 All Forums ContributorPosted - Real Estate Consultant
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Quote from @Jonathan Warner:
Quote from @Jay Hinrichs:
Quote from @Jonathan Warner:
Quote from @Jay Hinrichs:
Quote from @Jonathan Warner:
Quote from @Jay Hinrichs:
Quote from @Jonathan Warner:
Quote from @Jay Hinrichs:
Quote from @Nicholas L.:
i haven't looked at the Dealfinder, so I am not familiar with it and can't comment on it.
but, it sounds like you're not missing anything. most deals right now will not cash flow, and new investors tend not to be conservative enough.
in general, only the higher risk / more creative niches are going to cash flow right now. vanilla LTRs don't. now, to be clear, that doesn't mean they're not a good long term investment. they are- there are other benefits to RE than just cash flow.
i'm under contract right now on a property i plan to BRRRR, and... it's not going to cash flow when i'm done, it's going to break even. but that's just fine with me.
I think for today's market one has to define IT WONT CASH FLOW .. what does that mean?
IE no positive cash flow with MINIMUM down maximum leverage.. Is that why ?
Most everything cash flows when you pay CASH.. So think you have to start there and work backwards.. If the goal is to have NET NET NET operating income on a rental. One needs to work the numbers back from paying cash to how much down will create the amount of NET NET NET one is trying to achieve. Now I get it in markets that have very slow to meager appreciation there is little reason to buy rentals if you cant get some cash flow with high leverage but in other markets cash flow really is not the main concern the main concern is just getting in the game and how much can you afford to feed it with the capital you have to put down.
Personally I think it is about 30 seconds to underwrite SFR.. take gross rents use 50% for operating expenses then deduct mortgage payments and see where you land.. if its close look at it harder if you miss by a mile then move to the next. Going to have to look at a lot of deals on deal finder to find anything that works same with wholesalers MLS etc etc.
Bottom line is investors from 2010 till the rates jumped a few years ago were spoilt rotten with being able to cash flow with Max Leverage that is not how it was before the GFC and it is not returning anytime soon.. at least IMHO your mileage may vary. So bottom line today you may need 30 to 40% cash down to cash flow positive as that is the reality of the market and the mortgage market.
I'm more referring to the irresponsibility of the DealFinder calling a deal "cashflowing" when it doesn't factor for property taxes, CapEx, or maintenance. But, do you think it's unresonable to search for a (not heavily) cashflowing deal now with a 20% down payment? What if I was in no burning hurry and had the time and financial security to wait for a great deal? Searching off market, with an agent etc. I really only need a little cashflow for securuity and padding.
well were is the deal finder ? I dont think I have looked at it just classified.. I would never use any kind of calculator for sfr .. that to me is simply napkin math.. since NO rental ever follows a spread sheet .. something is always going to cause the spreadsheet to be inaccurate over time.
What's your napkin math? To me (a newbie) it just seems kind of scary to based such a large financial decision on a napkin xD Not saying big things can't be done on napkins, I'm pretty sure Lincoln wrote the Gettysburg Adress on one.
Search for "biggerpockets deal finder" It's a free tool that scours on market deals. It's a great concept but I just see big line items missing from the analyses.
I explained napkin math above.. but to me its very simple for a vanilla SFR rental.
GROSS rent divided by 2 = gross cash flow - mortgage payment = cash flow + or - simple as that .. If you do better great and if on the napkin it is really negative then probably a pass. But if it works then next step.. 50% over time is usually about right many try to use 30 to 40% but find them selves in trouble when as @Nicholas L.pointed out when you have a bad tenant turn over or a cap ex early on in the ownership.. like HVAC Roof foundtation etc etc.
And what exactly do you mean by this part?:
"50% over time is usually about right many try to use 30 to 40% but find them selves in trouble when as @Nicholas L.pointed out when you have a bad tenant turn over or a cap ex early on in the ownership.. like HVAC Roof foundtation etc etc." What is the percentage referring to?
Appreciate the responses.
sorry fast typing MANY will use 30 to 40% for expenses .. but that is hope not reality based on most who have experience.. I have owned 100s of SFRs Sold them all.. so that is my experience.
at least in the low B C asset class with 60 year old homes etc.. New builds or Properties in say Vegas with super low prop tax's and desert environment will be less.. but mid west upper mid west with snow grass that grows like crazy old housing stock.. cost are more.
I personally have zero interest in rentals at this stage of my career.. I prefer to rent my cash out to others to help them build their portfolios.. We do have some small commercial and solid B class MF west coast which performs.. but even those we run numbers at 40 to 42%
That makes sense. I amazed that you've gotten by on such simple napkin math. I'll consider that in the future. Personally, I still prefer to run the numbers in a more detailed manner due to my inexperience. Maybe in the future and I can a napkin math savante like you xD
I dont even use a napkin just my noggin :) now if its a true cap rate property I do run those through the cap rate formulas that are avaliable on line. But you know you just never know when a HVAC is going to bust and its 10k or like with one of my buildings I wanted to paint it for my physician tenants so it looked first class that was 15k.. U just dont spread sheet for a lot fo this stuff .
Post: Seems to me Biggerpockets Dealfinder is useless
#1 All Forums ContributorPosted - Real Estate Consultant
- Summerlin, NV
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Quote from @David Fern:
@Jay Hinrichs is the 50% of rents counting property management? Would 40% be ok if self managed?
Quote from @Jay Hinrichs:
Quote from @Jonathan Warner:
Quote from @Jay Hinrichs:
Quote from @Jonathan Warner:
Quote from @Jay Hinrichs:
Quote from @Jonathan Warner:
Quote from @Jay Hinrichs:
Quote from @Nicholas L.:
i haven't looked at the Dealfinder, so I am not familiar with it and can't comment on it.
but, it sounds like you're not missing anything. most deals right now will not cash flow, and new investors tend not to be conservative enough.
in general, only the higher risk / more creative niches are going to cash flow right now. vanilla LTRs don't. now, to be clear, that doesn't mean they're not a good long term investment. they are- there are other benefits to RE than just cash flow.
i'm under contract right now on a property i plan to BRRRR, and... it's not going to cash flow when i'm done, it's going to break even. but that's just fine with me.
I think for today's market one has to define IT WONT CASH FLOW .. what does that mean?
IE no positive cash flow with MINIMUM down maximum leverage.. Is that why ?
Most everything cash flows when you pay CASH.. So think you have to start there and work backwards.. If the goal is to have NET NET NET operating income on a rental. One needs to work the numbers back from paying cash to how much down will create the amount of NET NET NET one is trying to achieve. Now I get it in markets that have very slow to meager appreciation there is little reason to buy rentals if you cant get some cash flow with high leverage but in other markets cash flow really is not the main concern the main concern is just getting in the game and how much can you afford to feed it with the capital you have to put down.
Personally I think it is about 30 seconds to underwrite SFR.. take gross rents use 50% for operating expenses then deduct mortgage payments and see where you land.. if its close look at it harder if you miss by a mile then move to the next. Going to have to look at a lot of deals on deal finder to find anything that works same with wholesalers MLS etc etc.
Bottom line is investors from 2010 till the rates jumped a few years ago were spoilt rotten with being able to cash flow with Max Leverage that is not how it was before the GFC and it is not returning anytime soon.. at least IMHO your mileage may vary. So bottom line today you may need 30 to 40% cash down to cash flow positive as that is the reality of the market and the mortgage market.
I'm more referring to the irresponsibility of the DealFinder calling a deal "cashflowing" when it doesn't factor for property taxes, CapEx, or maintenance. But, do you think it's unresonable to search for a (not heavily) cashflowing deal now with a 20% down payment? What if I was in no burning hurry and had the time and financial security to wait for a great deal? Searching off market, with an agent etc. I really only need a little cashflow for securuity and padding.
well were is the deal finder ? I dont think I have looked at it just classified.. I would never use any kind of calculator for sfr .. that to me is simply napkin math.. since NO rental ever follows a spread sheet .. something is always going to cause the spreadsheet to be inaccurate over time.
What's your napkin math? To me (a newbie) it just seems kind of scary to based such a large financial decision on a napkin xD Not saying big things can't be done on napkins, I'm pretty sure Lincoln wrote the Gettysburg Adress on one.
Search for "biggerpockets deal finder" It's a free tool that scours on market deals. It's a great concept but I just see big line items missing from the analyses.
I explained napkin math above.. but to me its very simple for a vanilla SFR rental.
GROSS rent divided by 2 = gross cash flow - mortgage payment = cash flow + or - simple as that .. If you do better great and if on the napkin it is really negative then probably a pass. But if it works then next step.. 50% over time is usually about right many try to use 30 to 40% but find them selves in trouble when as @Nicholas L.pointed out when you have a bad tenant turn over or a cap ex early on in the ownership.. like HVAC Roof foundtation etc etc.
And what exactly do you mean by this part?:
"50% over time is usually about right many try to use 30 to 40% but find them selves in trouble when as @Nicholas L.pointed out when you have a bad tenant turn over or a cap ex early on in the ownership.. like HVAC Roof foundtation etc etc." What is the percentage referring to?
Appreciate the responses.
sorry fast typing MANY will use 30 to 40% for expenses .. but that is hope not reality based on most who have experience.. I have owned 100s of SFRs Sold them all.. so that is my experience.
at least in the low B C asset class with 60 year old homes etc.. New builds or Properties in say Vegas with super low prop tax's and desert environment will be less.. but mid west upper mid west with snow grass that grows like crazy old housing stock.. cost are more.
I personally have zero interest in rentals at this stage of my career.. I prefer to rent my cash out to others to help them build their portfolios.. We do have some small commercial and solid B class MF west coast which performs.. but even those we run numbers at 40 to 42%
agree but as we know these things are never accurate to the point that spread sheets really are just to me for fun.. its is what it is after you have owned 3 to 5 years then you can run your
spreadsheet and see how close to the 40% or 50% rule you are.. at least its my rule.. :) running these at 30% or 35% like I see usually is not reality over the 3 to 5 years unless its brand new and you get a tip top tenant.