All Forum Posts by: Joe Cassandra

Doesn't give us a lot of info. But 27% COC seems super high. Does that include all expenses?

If it does, that's a killer deal. I'm guessing it's in a C/D neighborhood though?

Sounds like you're not out much money, especially since he didn't take a deposit. He basically was private-lending to you while you got together the rehab and selling it. 

Never heard anyone do that...but I guess it's not completely unfair. But weird he didn't disclose that to you...andn weird you wouldn't ask for the what the option price is when you're ready to exercise it. 

But, I'd just chalk it up to learning and get out.

Can one of your parents co-sign on a loan. 

They may have trouble pulling out that check...

Unless you show them you could house-hack a property, and BRRRR out their money from there so they don't need to have it stuck for too long.

You could pay them interest on it. 

After it works, they may want to fund some other deals.

For investment purposes, I usually recommend a local bank. 

For a normal house purpose, just look for mortgage brokers. Calling banks individually could take a lot of time as they're overrun with PPP and refinancing right now. A mortgage broker has the connections right now. 

Yes, you can get many quotes on your situation within the first 14 (may 21?) days without a credit hit each time. 

Talking to 3-4 brokers will give you an idea about where your rate will stand and then it's just a matter of: 

1) How much for down payment

2) How long it takes to close

The seller likely won't want to do the repairs. 

If you just hit them with giving you a credit on the HUD, they'll probably budge else they have a class action lawsuit on their hands (with the tenants...obviously that's speculative).

You don't want a lowering of the purchase price. You want the cash to make the repairs. Ask for the credit.

Funny enough @Mike Morawski, I'd say RE is NOT my passion. 

I enjoy finding deals (investment opportunities) and putting my money to work to grow my wealth. 

Other than that...

I hate a lot of RE stuff. 

- Finding tenants

- Managing contractors

- Dealing with stupid house problems

- Doing any DIY handy stuff

- Dealing with attorneys, realtors, accountants...insert profession here

- Fighting with appraisers and inspectors

- Dealing with picky buyers who are worried about that tiny crack in the basement and pull out of a deal because they think they see mold...turns out it's not

- Wholesalers who suck

...

List goes on!

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It's honestly something I've struggled with if I should just be a private lender and stay out of everything. But there's nothign like finding a deal with instant 60k equity that cashflows right away. After refinancing you have $0 in the deal and it still cashflows. That's a thrill. 

But it's a struggle I have. As my passions are what I'm actually self-employed in (writing + marketing)

There's a lot of chatter committing the worst investment make you can make: 

"This time is different." 

Now, I don't know @Thor Sveinbjoernsson if the best call to action is to liquidate. I for one am selling one of my rentals next month that has $100k+ in equity to stash the cash for any opportunities in the next 12 months.  

FACTS right now: 

1) 32M+ unemployed ---> Study in NY times that up to 42% of lost jobs are permanent. That's about 14M without jobs. No. Everyone is not going to just gallop back to work in a couple weeks. 

2) In USA Today, over 100,000 small businesses are closed for good. Another 100,000 in NEW YORK ALONE are already closed permanently. Bigger businesses like Sweet Tomatoes with almost 100 locations closed all their places for good.

3) GDP is expected to be down -30%+. Worst in history. It probably won't bounce back until 2021...and that's according to the Fed. More businesses are likely to go under at that point.

4) In a Kellogg study, they looked at how people are spending stimulus/unemployment. They aren't freakin' saving up money to buy houses with this money. They're keeping buying food, paying their bills and saving it. The savings rate is the highest since the 80's. 

5) Banks are hoarding credit reserves --- highest in history --- in expectations of defaults NOT just in mortgages, but for credit cards, car loans, capital calls. 

7) States have no money. In GA, the governor is looking to cut over $9 billion from the budget due to shortages in the Treasury. This leads to more job less, less unemployment benefits, etc.

8) In terms of the stock market --> the stock market has been propped up by hundreds of billions in stock buybacks over the last 10 years

That's all gone for a long time. 

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CONCLUSIONS: 

---> "Oh, 2008 was caused by real estate speculation." ---> many people lost their jobs that weren't tied to real estate popping. It took 3 years of economic recovery to get country back on their feet. RE may not crash, but a lot of folks could have trouble both PAYING for their current house much less BUYING a new house

---> Banks aren't going to just sit around and let 4M+ people not pay their mortgages. Banks aren't your friend. They will find a way to get their money. 

---> The economy is interconnected. If 12M people stay unemployed, that will put a dent in buying demand and ability to pay for a roof. 

If the Fed keeps bailing folks out, that'll only put a bandaid on folks paying their bills...but consumer demand would stay depressed thus crashing the economy. Again, people are also not using their stimulus checks to buy new houses. If anything, they'd sell their house to get funds especially if banks tighten refinancing

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BOTTOM LINE

Yes, there's no telling what could happen. Liquidating all your assets isn't what you should be doing. More, you should be looking for more cashflowing streams to weather any problems ahead + in case inflation sends values up. 

I think it's a healthy discussion to have with no absolutes. Not sure why some people get so offended when this topic comes up (like on this thread) as if you just committed sacrilege of some kind.

Other forums it's "don't talk about religion or politics..." 

Here it's "don't talk about if you should hire a PM or not"

Worse..."don't talk about if you should hire a realtor or not" 

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The problem is most viewpoints will be skewed based on isolated experiences. If someone had 1-2 bad experiences with a PM, they will be in the no-PM camp. 

Much like ---> "how do I get good tenants that stay a long time?", it'll come down to how thorough you vet. 

Maybe it'd be beneficial to discuss: 

- What 10 things should I look for in a PM co. 

- What 20 questions should I ask to see if they are good or bad

- How can I find referrals to PM co. that aren't biased

- What are basic services a PM should provide and if they don't they're fired (and we can tell them upfront)

- How do you calculate a deal including PM costs and still make the right profit

Post the deal in marketplace. Someone here may fund.

I just rented a B/C class house.

90 inquiries.

Had qualifications on ad.

60 didn't qualify due to credit or income even though on ad.

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I tried open house and got terrible results.

My top quality tenant came from a self tour. Shot me pics of DL and time in and out.

He said those are the best experiences. I took a risk doing it. Next time will try Rently.