All Forum Posts by: Jay Hinrichs

Karen,, from my knowledge,, prior to the safe act.. to do hard money ( private lending) in CA you needed to do that through, or as a RE broker.

a RE broker can do these loans ( I am one and can do them) and an NMLS licensed LO can do them without being a RE broker.. And then you have consumer finance license's and then those that just lend without any licenses.

In my mind one of the things that sets CA apart is the fractionalized TD not being a security.. Although in other states that I work many times the closing companies have never heard of this... And the reason that is, is because the loans by and large are small compared to the CA. market were 500 to 2 mil private hard money loans are common and many much higher. YOu need to pool people to get these done.

Now I am doing some deals on the East coast and even though my attorney there had not heard of this I had them give me an opinion letter that there was nothing in the state law that precluded it.. And since they are non consumer loans there is no NMLS required. So the best of both worlds multi bene and no NMLS.

@Mike D'Arrigo @J. Martin Mike I thought maybe you and Geraldine could help J Martin publisize this event and or JV it in some way. AS Geraldine has done many of these types of events so she knows venues and all the little things it takes to pull these off

sounds great you may want to have Mike talk about it on his radio show and run an add in Geraldines mag as well.

Instead of the concept of buying notes.. think about investing in new originations... of commercial loans... IE your local hardmoney lender.

this is an excellent way to get your feet wet... Every city has a few to many experinced hard money lenders.. IE cities of 100k or more... Many take on small investors... And then their are PPM type funds were you can invest in the PPM that then invests in TDs and Notes..... this could be an excellent way to learn as well as the PPM will have detailed information on the formation, risk ,reward etc of the particular note investments they are doing.

Lastly most of the crowd funders are doing some sort of new originations and they have disclosure docs that you could learn from ... though you need to be accredited in most instances with these folks.. but you will find bigger funds that take non accrediteds.

@?Minh L The difference between west coast and east coast " Ghetto" properties is place like Detroit there are 50k homes more than there are family to live in them.. And this is true in most of the big mid west cities not to the extreme of Detroit but there are neighborhoods in each of these towns that are dead and dying .. YOu will not drive down the roughest neighborhoods on the west coast and see half a block boarded up or 3 burn outs per block...

As Chuck eludes to there is extreme high density and shortage of housing. so even the rough areas have very low vacancy rates.. Now collecting rent and keeping a house in good order is another matter and can be just as bad on the west coast as out in the mid west.

Then you have a place like Palo Alto and East Palo Alto.. In my day E palo Alto was the hood in fact a high school friend of was murdered there in the 80's.. YOu could buy a home there for 5k in the 80's well as SF bay area prices just rose through the roof.. these were the lowest price homes and those looking to move into the Hood did so and displaced the prior residence.. So fast forward to now E Palo Alto is not the ghetto it used to be.. And homes sell for 500k and more.. But cross the free way to Palo Alto same house is 1.5 million... Go to Oakland CA. house is 500k cross to Piedmont same house is triple.. and that's just going across the street same vintage homes and sizes etc.. Has to do with schools in CA...

When you go to the Mid West at least from my personal experience you can get some of this regentrification in the down town cores. but not going to see it out of downtown ever is my guess.

A lot of this has to do with Geography as well.. AS West coasts towns are hemmed in between water and mountains.. Mid west towns can sprawl all the way to the Rockies.

I have a duplex in kokomo IN.. that I wish to sell..

Stats:

Rents are 750 a month total

Management in place , new roof and rehab in last year.

PP 39,000.00

Down payment 5K

ZERO INTERST 5k down payment 1k a month for 34 months. Property paid for in less than 3 years... Good option for the CASH buyer

OR

5% interest amortized over 15 due in 5.

[email protected]

Market conditions a lot of time will dictate what you put into a house.. In a rip roaring market you can be less attentive to detail and nicer finishes. In a really down market you end up with Slab Granite and SS appliances in a starter home to set yourself apart and get that one buyer that may be out there.

Usually the most expensive thing you put into a house is something that was missed or unexpected.. I just did a basement and it was a boulder field boulders as big as cars that ran 40k over budget...

And I just put a Wolf range and Hood into an upper end home that was about 15k for that .. Won't get double my money back for it.. but in a market were sales are competitive it will make my house sell before the next guy who put in builder grade appliances.

@Cameron Ellis

Cameron that little article is dead on ... If your going out of state buy the best you can... The lower end product as described in this article is in my opinion not appropriate for out of state investors... Given the maintenance and vacancy and tenant issues to own and run these rentals one needs to be on site to make it work in my opinion. And since there is no appreciation to speak of in these markets you want to get the most trouble free asset you can

@Pyrrha Rivers

curious as to why you would look out of Atlanta for rentals. Atlanta was my best market by a long shot compared to the other cash flow markets.. And your right there on site you can get the best deal and have the most control.

@Pete Tam

I wish I had missed a bunch of my negative experiences as it related to out of state investing.. But I went through it and it was some pretty dark days, although there is light at the end of the tunnel.

Keep Jay y. last post its a good perspective.. And take Note that he did is due diligence.. Was savvy enough to be shown the good and bad... As well as he says he is in communication with his PM basically weekly...

MY main POINT is that TK out of state investing should not be construed as a PASSIVE investment... Investing with company that is in the RE bizz is passive like Brian Burkes company they are professionals you are the investor and truly passive they control the asset... buying a rental and your in full control and need to manage it.

Most all of these homes in the first year are trouble free or should be as they are coming off of a fresh rehab... You really can't analyze these until you have owned them for 3 to 5 years to see how you actually did.. If your lucky and get a tenant that is calm on the house and stays for 3 or more years your probably going to be sitting pretty good.. get a home with tough tenant and or lot of turn over and you won't hit your numbers that for certain.

You also need to compute your travel to view the asset and buy it, as cost of the asset or your not capturing all the true costs. It cost at least 1 month if not 2 months of rent to go view a property one time.. by the time you pay for airfare hotels cars dinning out etc.. that's the difference than just driving around your home town and buying a rental. no real travel expense.

I think the industry is getting better as a whole and the information that's on the internet is huge.. But a lot of people don't know how to use that info and just take the word of the marketing agent as gospel and jump right in.. They are not on BP and those are the ones that usually have some real issues.

@Eamonn Cottrell

Eamonn I have some low end stuff that was left over from my lending days. And I have 11 homes I bought new right after Katrina for the gozone tax write offs. I have 4 in Providence ( Gluckstadt road) a few in Patrick farms. Pearl 3 or 4 on the other side of the reservoir. On one down in Bryam that I wish I did not own.