All Forum Posts by: Jay Hinrichs

now this is BP Value add.. I would like to one on vetting private and hml lenders to keep folks from 1. wasting time 2. losing EM deposits on lenders that cant close 3. up front due diligence or what they call advance fee scams

0 Votes

Quote from @Shirley Gebert:

Hey Clayton,

I love that you brought up this subject! I'm a private money broker, and one of my struggles right now is finding lenders who will even look at doing a rural property. My client is an investor in lakefront short-term rentals in rural northern Wisconsin. If you're not familiar with this area, extremely high property values and a thriving real estate market. Do you have any advice on how to find lenders who do these types of loans? I feel like I've combed the countryside and as soon as the lender hears rural - they're out.

Thank you!

~ Shirley

Local small commerical banks is were I would be looking.

1 Vote

Quote from @Rodney Lorenzo:

Quote from @Jay Hinrichs:

Quote from @Rodney Lorenzo:

Quote from @John Clark:

Quote from @Rodney Lorenzo:

Quote from @John Clark:

Quote from @Rodney Lorenzo:

Quote from @John Clark:

Quote from @Rodney Lorenzo:

Quote from @John Clark:

Quote from @Rodney Lorenzo:

It wasn't overnight. According to the PM, the city was making efforts to clean up the streets around my neighborhood. When they got to my street, they stopped. Funds may have run out. Police force reduced. I don't know. Hartford has pockets of bad areas. My street had a crack house across the street and a brothel a few doors down. You cross the avenue onto the other block and it turns nice. This wasn't anything I could control

Your analysis is wrong. Neighborhoods don’t decline because improvement money runs out. They don’t improve because improvement money runs out, and simply remain as they were.

Now look at what you wrote. There was a crack house across the street. C NEIGHBORHOODS DO NOT HAVE CRACK HOUSES!!! Then you say there’s a brothel a few doors down. Most C neighborhoods don’t have brothels, and if they do, they are discrete and the girls are pretty.

Bottom line: You bought into an F neighborhood, not a C neighborhood. It remains an F. Whoever sold to you unloaded a bag of s**t on you. I have to question your mental acuity first, though. How could you think that a neighborhood wits crack house was class C?

Your ignorance is so typical of what exists in this industry. Are you from Hartford? Do you make assumptions on places and base them on where you live? Are you saying that I'm a liar and that when I bought the place the crack house and brothel were already there?? No they weren't, because I didn't see them when I inspected the neighborhood. They get chased out from other neighborhoods, but it seems you lack the basic common sense to realize that. Why can't you accept the fact that they MAY HAVE come after I bought the building? Is that not possible to you? Cities run out funds all the time. They allow their neighborhoods to tank because their focus is on more upscale areas that pay higher taxes. Were you perfect in your first investment? Does everything you touch turn to gold? How many mirrors do you own? Just wait when Karma catches up to you sir. Good luck is like bad luck. It has a beginning, middle and end. I'd have to question your mental acuity too and wonder how you speak to your wife or kids like you do to other investors here. Get a life instead of harassing other investors from behind a keyboard.

You said that “soon after” you bought that the neighborhood went from C to F. Neighborhoods don’t decline that fast, and the fact that you “didn’t see” them doesn’t mean that they weren’t there. So I apply Occam’s Razor and go with the simplest explanation that accounts for all of the facts: You did not do a good job vetting the investment, which includes vetting the neighborhood.

Knock off the histrionics about lying. You made a serious error in judgement. Once the real, initial condition of the neighborhood is accounted for, what does that tell you about the performance of the property manager?

I was there. You weren't. Don't come off as a know-it-all, because your failures have yet to pop as they have to every investor. It just makes you feel better when you trash and berate other investors from behind a keyboard. Why? Because you're the epitome of a coward. I owned my error and I made the move to sell. This is was my experience, not yours. I learned from it inspite of pity-parties of one such as yourself that judges others without knowing them or their experience. You don't even know Hartford. The PM was fuel to the fire and in that neighborhood he was a complete disaster. So how was your first investment? Care to enlighten me? Maybe someone needs to go back to their basement.

I simply pointed out that your analysis was wrong: neighborhoods don’t decline that fast. The fact that the city ran out of money may mean that a neighborhood doesn’t improve, but it doesn’t crater a neighborhood two levels “soon.” The simplest explanation is that you missed your analysis of the neighborhood because you were too eager to get into the game.

I sold my first investment 8 years after buying it, doubling the purchase price and making multiples of my investment. I had good tenants and house hacked. I spent a lot of time checking out the neighborhood before I bought.

Oh, and it had a finished basement.

So you succeeded in your first investment. Not everyone does. The difference between you and I, is that I'm not afraid to share my nightmare on Biggerpockets, because I learn from other investors that are respectful and don't need to berate me. I deal with reality instead of tooting my own horn so that everyone can see what a wonderful and successful person I am. Everyone makes mistakes, but at least I own mine. So you've never made a mistake in RE in your life. Woopee!! Maybe RE isn't for me, but I'm not about to let someone's pessimism get in the way as if that's a reason to give up. RE is different for everyone. Experiences are different and cities are different, but I'm sure you're old enough to know that. So YOU"RE WRONG about Hartford, some neighborhoods do decline quickly there. You're just comparing the areas you have your investments to Hartford, CT, which is seems ignorant to me. Ask anyone who knows that city and they'll tell you the pockets that can change a neighborhood from C to D to F, just by going to the next block. I got knocked down and now I'm getting back up. That's all. I now know which questions to ask, which areas to stay away from. Mistakes are to be learned from, so save your arrogance for someone else please. You'll fail big time one of these days. Trust me.

My problem with you is that you are blaming the PM for problems that could have been avoided by you doing better analysis of the neighborhood. It had nothing to do with the city not paving a street.

Paving what street? Do you even bother to read my posts? I never said anything about paving a street. Are you proud of your ignorance? We need to speak to each other like adults, not like high school kids, which means face to face. The PM, if competent, could've turned that building around because they knew that building and neighborhood like the back of their hand. Yes, I absolutely made mistakes with this investment, but if you were able to be successful despite your negativity and pessimism, well then so can I. You're a walking example. Don't hold your breath with your good luck and fortune, because things can come crashing down like you've never seen. What makes you any different? Where are you located? It would be better to continue this conversation in person instead of from behind a keyboard like a coward don't you think? I'm pretty sure you wouldn't use that tone with me in person. Most cowards wouldn't.

this is sad.. !! Everyone makes a mistake in RE over time myself included..

I'm not afraid to share what a horrible experience in RE can be like. The next time I share an experience, it'll be a positive one. Thank you for not berating me for the mistake I made as a first time investor like John Clark has. It goes to show you that there are investors out there with class and decency that would never use a condescending tone from behind a keyboard. Everyone can rise up from the ashes, but putting down other investors is not why I'm part of BP. I look to BP to learn from other investors more experienced than I, because that's how I learn.

not to make you feel any better but in the GFC I lost 90% of my net worth and that was an 8 figure sum. What I did not lose was my good standing with my commercial bankers and my know how. . Its taken me 15 years to get back to a happy place. My days of wanting to own a jet went right out the window in 08. :) hang in there.

6 Votes

Hartford, Connecticut

Quote from @Rodney Lorenzo:

Quote from @John Clark:

Quote from @Rodney Lorenzo:

Quote from @John Clark:

Quote from @Rodney Lorenzo:

Quote from @John Clark:

Quote from @Rodney Lorenzo:

Quote from @John Clark:

Quote from @Rodney Lorenzo:

My problem with you is that you are blaming the PM for problems that could have been avoided by you doing better analysis of the neighborhood. It had nothing to do with the city not paving a street.

this is sad.. !! Everyone makes a mistake in RE over time myself included..

2 Votes

Hartford, Connecticut

Quote from @John Teachout:

Yes, they want you to pay an additional 19% to perhaps get back 25% of your initial investment for class B investors. And this potential 25% return on capital requires certain favorable things to happen both with the properties and the market. Ashcroft is trying to keep kicking the can down the road on this failure because once it goes belly up, there's going to be a stain on their wonderful performance history. I don't see a scenario where there will be any return on or of capital. This one is a write off.

If the properties had been better managed, they probably wouldn't be in this situation. I realize that the interest rate debacle caused a lot of the damage but the low occupancy and collections tipped it into failure. There seems to be improvements but it's resulting in "losing less" per month. I just can't see a "realistic" scenario where they pull this out of the dive. They can expect zero additional funds from us.

not sure why anyone would put up that kind of money for the chance of only getting a small portion of your money back?.. maybe with this Terriff stuff going on interest rates will drop faster than expected and bail these guys out somewhat ???? I guess one can only hope.

0 Votes

Quote from @Cornelius Garland:

Great question, @Sergio Mosq. I've done several deals in the Hampton Roads area. I usually get a durable power of attorney from the seller, which allows me to list property on the MLS. I get paid a "marketing consulting fee" on the HUD instead of an assignment fee.

If you are using a purchase and sales contract, double closing should work. A similar law went into effect in South Carolina. Attorneys have wholesalers sign a disclosure form that they won't be held legally liable for closing the transaction. I suggest calling around to investor friendly attorneys to see if they'd be open to it. There's always a hungry attorney looking to bolster their business, while some attorneys may simply say "no". You just need one to work so I would find your guy and lean on his advice on how to structure your deals.

There's always a work around. Money is made in the grey area similar to how corporations exploit tax loopholes. It's the same thing here.

if your getting marketing fee on the hud then your selling RE without a license also illegal.. this is poor advice.. but hey only if you get caught right :) Oregon just passed a law that you need a wholesalers license.. I like this as its a specific carve out for wholesalers.. to get the license you need fbi fingerprints and back ground.. you must submit credit report you must get a bond as well.. then you have to adhere to the strict disclosures laws.. If you dont buyers and sellers are free to cancel your deal and go right around you.. This does help sellers and buyers and levels the playing field in Oregon.. these laws are just sweeping the country.. as there is so much Fraud and abuse and waste in wholesaling that the regulators and the consumers are tired of it..

Now that all said I partners as a money guy for many that used to wholesale but its not legal so they need to actually take title before they can market the property.. Just need to get a little better deal so you can afford to pay me to control your inventory.. Iowa you cannot assingn anymore no attorney will close those as well .. so in my mind wholesalers should get with the times.

0 Votes

Richmond, Virginia

Quote from @Andrew Syrios:

I just googled and it looks like a bunch of plants have been closed for many decades. Packard closed in 1956, Motor City Industrial Park closed in 1999, Doverfield closed in 2014. Apparently there are 900 vacant and mostly abandoned manufacturing sites in Detroit, most of which have been abandoned for decades. https://www.freep.com/story/money/business/john-gallagher/20...

Given Detroit still has high crime, lots of blight and governance problems, I suspect if the auto industry is reshored it will mostly go elsewhere. (Toyota and Honda, for example, mostly build plants in the southeast and midwest, Tesla in California and Texas, etc.)

One issue is a stat I heard when I was activly lending in Detroit.. unemplyment or will never be employed is somewhere like 40% of the men in the inner city. So how do they turn that around and get those folks working again ?

1 Vote

Detroit, Michigan

Quote from @Ying Tang:

@James Hamling It's possible though, given the average value would include people that are super rich. The median number make more sense in this case. Note that ChatGPT is also coming up with the 29400 number, following up with other sources which make more sense. With Beijing, Shanghai, Shenzhen, etc being the largest cities in China, how can the national average be much higher than those large cities?

My client in Singapore was comparing wages to his factories in Malaysia and Vietnam . We toured one of them right across the bridge from Singapore. the industrial park had many if not 100 small factories making all sorts of stuff.. His business is making components for bosch/black and decker electric motor parts for GE etc etc.. all those little peices that need to be made on 1 mil dollar machines and he had about 50 of those on the floor of his building.

From what I saw just massive amounts of small shops making all sorts of little widgets.. Although my clients have to meet a very strict standard other wise big companies would boot them.

1 Vote

Detroit, Michigan

Quote from @Bernard Wallace:

Quote from @Jay Hinrichs:

Quote from @Austin Duncan:

If you can't find any solution on this platform, you should definitely check out Pace Morby's groups. He's the Creative Finance guy and those individuals in those fb groups know exactly what you're trying to accomplish.

Hope this helps.

I agree with this. a lot of beginners and small time players / lenders .. so this could work plus they are not the sharpest tools in the shed compared to experienced lenders who would find this quite unattractive as a loan.

I’ll be real with you comments like “small time players” and “not the sharpest tools” aren’t necessary, especially when people are out here actually doing the work.

Let me show you what “small time” looks like:

Property purchased for $52,000

I personally invested $32,000 in rehab

Project is nearly finished
Set to sell for $165,000
That leaves a spread of $81,000
Even with a $20K–$25K loan, the profit still clears well after loan costs — and that’s with me using real numbers, not hypotheticals

So to say this deal isn’t attractive or that it takes someone “sharp” to see value in it is unnecessary .In reality, a smaller loan here makes more sense than overleveraging on a bigger one. Not every deal needs to be oversized to be profitable it just needs to be smart.

I’m not here to prove anything, just to get things done. If this deal doesn’t work for you, that’s fine but don’t downplay real efforts when the math speaks for itself.

So if that’s what you consider “small time” or “not the sharpest tool,” maybe the real problem isn’t the player it’s the lens you’re looking through.

Mr. Wallace.. I apologize that you took my response like it was meant to demean you personally. I was not referring to you at all or your deal.

What I was referring to as "small time" and not the "sharpest tools" Was the Pace Morby members who are engaged in EM lending ( gator lending) and small balance loans like what you need. Further Agreeing with @Austin Duncan suggestion to reach out to the Morby Group.

For your deal with most HML you will have challenges in loan size and fico.. So everyone is going to encourage you to refi the whole loan charge you a bunch in fees and interest when in fact your only 13k or so from solving your problem.. Better to pay interest on 13k then to run up 10k or more in transaction costs refinancing this project. And I assume your exit is a sale.

So there ya go.. Hope that clears the air here.. and I wish you the best with it.. My mom was born in Milwaukee and we go there frequently for the state fair . My cousins live out at Peewaukee so I am fond of the area.. Spent my summers there with my grandparents in the 60s.

As for doing the work I fund about 200 deals a year just like this in 7 markets.. So I know the work involved and appreciate how tough it is etc. In addition I own a 90 home new build project in Oregon and I know how hard that work is as well borrowing millions and delivering 700 to 1mil dollar homes to picky homeowners LOL.. It all goes good we make a pretty nice return.. it goes bad I go broke.

0 Votes

Quote from @Colin Tandy:

Quote from @Ryan Spath:

Well explained. We can attest to 1&2 directly as we have properties in Florida and both of these line items have exploded over the past 3 years!

Totally agree with the type of property and the relationship of higher returns and more work!

Great Post! Thanks for Sharing!

Appreciate that! Florida has definitely seen some major increases in insurance and property taxes, it’s been a real challenge for investors to navigate. Have you found any strategies to offset those rising costs on your properties?

And yes, higher returns often come with more hands-on management. It’s always a balance between cash flow and effort. Glad you found the post valuable!

collin what kind of strategies are you talking about to offset taxs and insurance .. I mean this is not rocket science U simply take in more than you spend.. Tax's I guess you can dispute them annually in some states.. Insurance you simply dial for dollars.

0 Votes

All Forum Posts by: Jay Hinrichs

Jay Hinrichs has started 326 posts and replied 41659 times.

Post: How to Protect Yourself from Bad Operators & Ponzi Schemes

Post: Why rural properties are so much harder to finance

Post: Avoid Revolution Properties LLC at all costs

Post: Avoid Revolution Properties LLC at all costs

Post: Ashcroft Capital AVAF2 Fund 2 Status - Potential Capital Call?

Post: HB917 in Virginia

Post: Detroit Tarrifs is now the time for a rebirth and new look @ this market

Post: Detroit Tarrifs is now the time for a rebirth and new look @ this market

Post: In search for flexible hard money lenders in my area

Post: Cash Flow Killers in Real Estate (And How to Avoid Them!)

Jay Hinrichs has started 326 posts and replied 41659 times.

Rounded Star Post: How to Protect Yourself from Bad Operators & Ponzi Schemes

Rounded Star Post: Why rural properties are so much harder to finance

Rounded Star Post: Avoid Revolution Properties LLC at all costs

Rounded Star Post: Avoid Revolution Properties LLC at all costs

Rounded Star Post: Ashcroft Capital AVAF2 Fund 2 Status - Potential Capital Call?

Rounded Star Post: HB917 in Virginia

Rounded Star Post: Detroit Tarrifs is now the time for a rebirth and new look @ this market

Rounded Star Post: Detroit Tarrifs is now the time for a rebirth and new look @ this market

Rounded Star Post: In search for flexible hard money lenders in my area

Rounded Star Post: Cash Flow Killers in Real Estate (And How to Avoid Them!)

Post: How to Protect Yourself from Bad Operators & Ponzi Schemes

Post: Why rural properties are so much harder to finance

Post: Avoid Revolution Properties LLC at all costs

Post: Avoid Revolution Properties LLC at all costs

Post: Ashcroft Capital AVAF2 Fund 2 Status - Potential Capital Call?

Post: HB917 in Virginia

Post: Detroit Tarrifs is now the time for a rebirth and new look @ this market

Post: Detroit Tarrifs is now the time for a rebirth and new look @ this market

Post: In search for flexible hard money lenders in my area

Post: Cash Flow Killers in Real Estate (And How to Avoid Them!)