All Forum Posts by: Joe Edwards

@Ryan Blake

You are spot on. Let the season investors call what it is. This is a boiler room/ chop shop.

Who pays this kind of fee with out recieving the loan. I could understand if the fee was attached to the closing that would make some sense. Still silly to pay this much money in a fee but hey at least you know you closed the deal.

In my opinion I would call this a SCAM/ MONEY GRAB!

I get 3-4 of these a month in my email. Most of the ones I have come across are in Utah.

INVESTORS BEWARE!!!!!!

@Jennifer Torino

Ok you said you will be all in at 270k. You also said that a turnkey property in your area is almost impossible to get and would go so quick to a cash investor with no contingency.

This is all wonderful news! My question is what will be the ARV when your 100% done?

I know the construction is scary giving this being your first deal and all but depending on what the ARV is this may be the one for you.

No pain no gain! The ARV is great this may be the deal that toughens you up for these distressed deals in the Madison that no one wants. You may be carving out a sweet spot and you dont even know it yet.

Stay positive! Keep thinking clearly like you are because you positioning yourself to be able to pivot if need be which is awesome. Just hang in there and know NUMBERS NEVER LIE. It's not all about how much you spend on purchase or rehab but what's it going to be worth if you had to sell it and what return on you investment you will be recieving.

Good luck on this deal its seem so far like it's a good one. I have to admit I'm a little bias because I cut my teeth in investing using heavy construction strategies to create great return.

@Jason Crittenden You are spot on my friend. Money only should never mean equal or majority equity in a deal. NEVER!!

@Darius Ogloza but 90% cash is doing nothing for the deal. It is just money only. He is finding the deal, putting the deal together, managing the deal as well as laying his commissions to the side for the deal.

His partner is basically playing bank only!

Not sure if you use hard money lending but they are typically funding the deal you bring to them for up to 80 or 90% LTV or the ARV. Image if your lender told you because they were lending you the money they and 75% of the deal. I'm certain you would tell that lender to go kick rocks.

The deal presented is not the lender it's the investor that found the deal, put it together that is the value

Does that make any sense to you?

@Alberto Nikodimov

I'm going to shoot it straight with you.

With him being 90% of all the cash and zero % deal flow responsibility and you being 10% cash, 100% of the deal flow responsibility, waving your commissions, waving your management fee, you finding the deal and processing all the paperwork.

You should offer him a 60/40 split (you being 60 and him 40) after you guys BRRR the property and pay him back his 90% plus any expense and you back your 10% plus any expenses.

After refinance both of you have all your cash out and should split the net cash flow 60/40.

The reason I believe you should have 60% is because you found the deal, negotiated the right number, put all the people in place to execute the deal, managed the execution of the deal, did all the paperwork for the deal and you are waving all your professional fees. All of what I just mentioned about is a million time more valuable then just his MONEY. His 90% cash is no where near the equity of you making the whole deal possible.

If your friend/ partner wants to be 50/50 partners with you after paying all expenses then he needs to include paying you for realestate commissions and management of the deal.

Nothing in a Investing Partnerships is FREE! If you are leaving money on the table that would in any other deal be a expenses is you INVESTING in the deal. It's your skin in the game.

So your 10% cash, plus commission fee, plus management fee, plus deal finding assignment fee is all your skin in the game. That skin far out weighs his 90% cash. MONEY is very easy to get and much cheaper then 50% split if the deal is a BRRRR deal.

If I was him I would be happy with being able to park my money for a 100% return of my cash and 40% equity stack in cash flow for life. That's winning because he didnt have to do any thing but know you hahaha.

You want to sweeten his pie some pay his 90% and your 10% cash 8-10% interest when you refinance.

You and him are great friends and if you want to keep it that way you need to be strictly business with him and let him know now that MONEY is great but money does not find good deals, PEOPLE DO!!!!

Never give up crazy equity for cash when you can just work in a higher interest for it and keep all the equity for yourself.

Best of luck

@Nik Moushon

Yeah for sure. Controlling cashflow is king right now. What I have found some success with is leveraging my suppliers. I pay up front 30-50% for orders need and they hold the order once they recieve it until the project is ready for it. This has helped alot with keep things somewhat fluid. Its heavy on the cash out the door side but I run most of my projects with only 2-5 drawers. So I keep a decent amount of cash on hand to things going. I also have to because all my projects are value add deals with the renovation starting at $200k and up.

@Nik Moushon

LOL.... I completely understand where your wife is coming from. My wife and I did it a bunch before we had kids and that ship has completely sailed. So no more living in them for me anymore.

In regards to contracts they are very important. As a investor and GC myself I'm extremely grateful that I dont have to deal with ever hiring a GC. The truth of the matter is most GC dont really price there projects well because most dont self preform they sub everything out and on the flip side most people hiring a GC cant fully afford what they are trying to purchase for themselves.

Investors/ clients hiring a GC need to fully understand that a good GC could careless if you make money or not. There job is to preform the scope of work they are being compensated for. If the investor makes a fortune in profit on the deal doesnt add a penny to the GC bottomline and if the Investor losses his *** he should look to the GC to bail him or her out.

Now for the GC's that cant fully deliver, dont self preform with there in house employees that should be all layed on the table. This will allow clients/ investors make clear decisions on who to hire.

I personally would never recommend hiring a GC who doesnt self preform on the investment. Only a self preform GC can truly keep schedule. GC's who sub everything are at the mercy of the market. If the REI project is paying less then the client you better believe the subs are going to prioritize where the resources are.

With that said Investor investor should be realistic that there project budgets could never compete with a client project budget so be very mindful when you hiring someone good but you trying to squeeze the eyeballs out of honest AB. Your never going to win.

I can go on for hours about Investor/ GC project relationships. LOL...... It may be a good thread to start here on BP.

I wish you the best on your project. COVID is definitely the elephant in the room and the supply chains, logistics and the cost of materials are completely out of control so make sure you are engaged and way out front on the cogs you need to purchase to get the house finished. Get all the finished materials order right away so the long lead times dont murder you time schedule and you budget with extended carrying cost.

@Nik Moushon

I love that you thought outside the box. The best and most profitable deals I feel are the ones that you put together that others couldn't imagine.

Well done! When are you expecting it to be complete. Try to share the completion photos if you can.

@Craig Dieterich

Looks like a home run to me. 35k with no improvements needed and your COC is off the charts. I would bury my cash in that kind of sand box any day. Way to go!!!

@Mike Mocek

The market here insane! (Northern New Jersey) I believe in the last 3-4 years I had one property that I offer a bid on without waiving inspections and appraisal. In my market it's hard to even get a serious offer consideration with waiving all the red tape.

Over the years I have created a few excellent work arounds but with that said you have to be on point with your site visit before putting your offer.

Only advise I would say to you with your market on fire is stay patient, dont get emotional and stay with in your investing strategie. In time like this just know you may have to look at double the amount of deal to get a good one or become more creative with the ones no one is touching.

Good luck