All Forum Posts by: Jonathan Towell

You don't need a license to become an investor. I think you've got the right perspective. Integrity and reputation are critical.

A good name is to be chosen rather than great riches, and favor is better than silver or gold. Proverbs 22:1

Keep reading, listen to the BP podcast, and provide value to other investors. 

To find a mentor, you need to offer the mentor something. It isn't because mentors are selfish. It is because their time is limited. The best way for a mentor to know that their time is going to be well invested in someone is to see that the person is going to dig deep and create value.

Keep digging!

I'm guessing you are referring to county foreclosure auctions. I'd recommend the book "The Pre-Foreclosure Property Investor's Kit."

Basically, it works like this...

People buy houses using mortgages from lenders like banks. When a person quits paying the mortgage, the lender goes through the foreclosure process to take the house back from the borrower. Once a month, the lender representatives meet investors at the county courthouse to auction off the properties. 

I imagine the rules differ from state to state or county to county. Usually, investors need to provide proof of cash or certified funds before they are permitted to bid. Because proof of funds is required, you can't "finance" a house in the traditional sense. In other words, you can't win a property at auction and get 60 days for a lender to provide funds. 

But, the word "financing" just means the act of allocating capital to acquire an asset. So, you can "finance" houses at auction by bringing cash. Or you can finance them by securing a line of credit before hand, withdrawing funds from the line of credit on the day of auction.

I hope that helps.

I doubt the entity type will affect lender rates. We put every property into its own LLC to limit personal liability.

My understanding is that FHA is for no more than 4 unit buildings. I'd love for someone to correct me on that.

Another strategy you may investigate is to find a local bank willing to finance the construction. After the property is built and leased up, refinance on the secondary market with a Fannie Mae, Freddie Mac, or CMBS product.

That stinks. Sorry to hear that. A few options:

1. Find a partner willing to help you secure the debt in exchange for a monthly payment or small piece of equity.

2. Find something else to use as collateral for a line of credit. Equity in your home could be used to secure a HELOC. A vehicle could be used to secure a LOC, etc.

3. Find private money. There are plenty of folks out there looking to lend against a good asset. You'll probably pay more in interest, but you can often negotiate no origination fees, no flood insurance, no appraisal fee, and other stuff that banks will nickel and dime you on.

4. Similar to #3, but find an owner who is willing to finance the purchase to you.

5. Similar to #4: find an owner willing to do a lease-to-own to you.

Keep researching on BP. There are a ton of ways to get around this problem. 

I wish you the best!

If the properties will pay your down payment and repair budget in 2 years, that is a 50% cash-on-cash ratio which is pretty great.

Downside is the trailer. I've never bought a trailer, but I would expect that a trailer would decrease in value over time, unlike a traditional home which will typically increase in value. This makes me wonder how a lender will view the trailer when using it as collateral.

Regardless, if you can buy the property, invest $12k, then get it appraised for more than 20% what you purchased it for, a bank may let you refinance and pull all your cash out so you can go do it all over again.

Cash-on-cash is great for long term wealth building. But, for short term scaling, it is good to look for properties where you can add value, the pull you equity back out in a short time frame. If you can find both of those elements in a single property, you've probably got a good deal.

I hope that helps. I wish you the best.

We just create our own LLCs. All the forms are on the state government website. We also do our own contractor contracts. There are plenty of contract templates online for this kind of thing. We have a bookkeeper who keeps our books and only involve the CPA in the end of year tax statement preparation.

But, if you need an attorney, you might see Steve Stone. He has helped us with a syndication filing and is very good.

We've had decent luck doing good old fashioned networking. We try to take investors out to lunch a few times each week. There is probably a better way via mailing lists or something like that. But we enjoy getting to know people so the old way works for us.

@Phil Earley Does that ratio of 1 to 60 include maintenance staff?

Your wife won't house hack either?! Has she been talking to mine? :)

The challenge is the market is currently pretty hot right now. So sellers with good properties can demand all cash and get it. But, seller finance is a great way to scale up if you can find the right sellers.