All Forum Posts by: Jonathan Towell

It sounds like you want to underwrite loans for your clients? I suspect no lender will allow this, because they'll want to underwrite their own deals.

I often see realtors go to lenders to get preliminary terms on a deal. That way you can proceed with helping the client submit an offer with loan terms to pencil into the pro forma. During the due diligence and financing contingency, the buyer can work with the lender to get final approval.

Unless the buyer is financially strong, the buyer should usually have some kind of financing contingency.

I hope that helps. I wish you the best!

Sounds like a great deal to me. But, what are you asking BP for? Ask your mentor! He's the one with the local intel. :)

(That interest rate sounds a little high, but that would be my only nit to pick without knowing the local market.)

Howdy @Cassidy Burns,

All those sound like good deals. What was your question about them? Which is best?

(I'll assume that is the question.)

I'd probably work on finding a good deal first. If you can find a great deal, then you can bring in investors to match the opportunity.

I hear ya! The market is hot all over!

Idea: Go off market.

Find a local, older investor. Buy him (or her) lunch. Ask questions and genuinely show a willingness to learn. Don't try to get a deal done. Examples:

- When did you get started?

- Are you buying or selling?

- What constitutes a good deal for you and why?

- What neighborhoods do you like? 

- Etc.

Just take notes. Then ask who is another investor they know and if they'd be willing to make an introduction. Ask this new investor to lunch. Rinse and repeat.

You will find more deals this way than you know what to do with. We've been at it for a couple years now. We get a pretty steady flow of opportunities. And, we got to learn from many smart, experienced investors.

I wish you the best!

PS: We go to lunch with young investors too, but usually only when they invite us or when we want to invest in them. Older investors know what they are doing, are often looking to exit old deals, and don't see younger guys as competition.

You're right that this is a common question. When I got started investing, I wondered why nobody just published the magic "good deal ratio." I kept thinking that I should just be able to run math on every deal, sort in a spreadsheet, and choose the one at the top.

The problem is the infinite variables, many of which are personal.

For example, to a new investor, the 20% discount rule is a great one. This person needs to ensure cash flow and minimize risk.

To an older investor, no discount may be more desirable because the older investor has cash reserves to bank on appreciation over cash flow.

I could go on all day with examples. Bottom line: I don't think there is a universal good deal. 

(By the way, this is why mentors are so important. They help us analyze deals on a personal level.)

Yes, that &"$8k allows them to get repaid in 3 years, but not make any money. And, the "rate" of return is not guaranteed in your description. It is only a guess as far as I can tell. 

Yes, that lender gets collateral, but it is in 2nd lien position. 

Anyways, you might pitch it and see what respsonse you get. It never hurts to ask.

@Quy Huynh You might also ask your CPA. That $2k number comes from the IRS and sometimes changes or varies depending on the type of work. But it is a good rule of thumb.

It can be a challenge. Usually the ones who are reliable are expensive and booked up. The best way to find a good one is to get a recommendation from another investor.

Searching for a good deal is like finding a needle in a haystack. When you finally find a good deal, why give a low ball offer and risk losing the needle? Why not just offer something fair? Then, improve the property and make it worth more. Rinse and repeat, and develop a reputation as a fair businessman. Do that for a few years. As your reputation grows, you start getting referral business.

I know a lot of investors that only give low ball offers. They just don't land many deals. And, they often develop a reputation as a cheapskate. Maybe that isn't so bad on the buy side. But, what about when you go to sell the property? Do you want people thinking you are cheap and unwilling to be fair?

I've never heard the advice that you should be embarrassed by your offer, but it sounds like terrible advice to me! I don't want to purposely embarrass myself, especially to people in my community. (I embarrass myself accidentally enough, without adding extra on purpose!)

I hope that helps. I wish you the best!

Lenders will often lend towards construction costs in addition to purchase price. Just ask.