All Forum Posts by: James Hamling

Shortest best answer;

If you are flipping a property, finance via Hard Money or Private Money, never conventional.
Why? Banks follow 90 seasoning rule, weather law or not, and it is tucked neatly into that 3' stack of papers you sign in a conventional. To fight it will make a lot more trouble then it is worth. And if you can get conventional, you could get Hard Money, which has none of the sell hassles.

If you are holding a property; get Private Money. Sure, you could go conventional, but why? Have you ever actually read the contract you sign with a conventional loan? Do you know all the control you are giving them? Cut out the middle man, retain the control.

I havn't seen anyone state the obvious answer; to get best passive investment plan first you must know 1) your resources at hand and 2) the best applications of those resources.

Cash, credit, connections, know how, SEO savvy, on and on, each lends a totally different and unique set of oppertunity, first you must have a good analysis of what bullets you hold in your belt.

In my opinion, best passive investment in any is to JV with a really smart, good, under backed investor in that field. Become the enabler for the ball buster. That works for any and all fields.

Oh wow, where to begin............

First off, by hiring unlicensed workers not only DOSN"T protect your liability, it INCREASES your liability. If someone gets injured on your property, paid by cash, check, or McDonalds burgers, it does NOT matter, they can and will sue you. ONLY hiring insured workers protects you, and I have never meet a insured un-licensed worker. Don't risk that road, get licensed insured workers ALWAYS. It also protects you! What if they spill a can of paint thinner, that happens to hit a hot light, and "poof" a fire insues, and there goes your property. Your owners insurance will not insure you for having unlicensed workers doing the work and being the fire cause.
Licensed insured workers are an absolute must to C.Y.A.!

Cost of ALL rehab should be completly known day 1, before you ever lock yourself into a purchase. Kitchens, especially custom cabinets, will run you at least 7K. Then theres counter tops, and flooring, paint, and so on. You gotta have a game plan, or else your totally at the whims of fate, at best.

I have flipped FNMA homes, WITH the 90 day seasoning restriction, no problem.

The rule simply covers the physical transfer/ conveyance. I purchase the property, do my rehab/ updates, stage, and list the home. All that together is 2-4 weeks.

Now any buyer you get will probably need 30-45 days to closing due to there financing.

I simply do my thing, list and market, get interested offers, go the negotiation rounds, and once I accept an offer I simply set the closing date for the 91st day (and it almost always coincides with when they could make closing) and it is done. I ALWAYS get a sizable escrow, determined by how many bids I had.

To wholesale one, you simply enter a JV with the investor who is rehabbing it for flipping. A JV is just as binding, and requires no conveyance. Then at final closing, it is executed like a double closing.

Or for wholesaling to a rental landlord, sell it lease option, with an exercise date 90 days in future, so basiclly a delayed closing.

Keep it simple. You can turn peeling an apple into a 5 hour nuclear engineering program with lasers and teams of techs, or just grab a peeler and peel the damn thing. K.I.S.S.

Turnkey properties make sense to be sold simply for the fact of funding. Very few people have any access to long term funding for holding rentals. Although hard money for rehabs is very easy to come by. And the little ugly truth is, the majority of these "turnkey" properties are being marketed at a price well above market value, rationalized and hidden in the "projected" rental income. All packaged, aimed, and sold to newbie landlords.

I am a experienced, 7 digit funded rehab investor. I have been absolutly flooded by these people in the last months trying to peddle properties, with extremly bad numbers, very very bad numbers, almost guarenteed losses.

That being said, I can see the reasoning for a legitimate place requiring an escrow to weed out the pretenders, although I would have countless confirmation including speaking with several people who have worked with them before I invested one dime in escrow.

BBB is the single WORST way to verify a company, hands down. I know, as a BBB A+ company owner. BBB charges a business a yearly fee to be rated, and that is about it. It is all smoke and mirrors. BBB real sell is that the public thinks there some consumer watch dog, which they are not.

If you want real turnkey properties, locate a good rehab investor in the area of your interest. In MN, I would love to offer those to people. I have over 100 realtors who work with me locating properties, and dozens of wholesalers. I have no interest in holding because it is not what I do, I rehab. I am a licensed contractor, and product licensed from all of the major product manufacturers, including distributor licensed, and accredited by many citys offices for excellence.
I would be more then happy to locate, rehab, and sell exactly to someones specefications. That is actually the easiest route for me. And if I exist, I am certain there are others.

I think where is best to begin is to evaluate yourself first, you knowledge base and skills capabilaties. Real estate investment is not a singular thing, it is muti faceted with multipule specialties, and where people get burned and loose money is jumping into unknown waters.

In a generalization, I prefer holding as the best return currently. Although you have many options. Hire a good managment firm to run 100% of the business of renting the property, including finding a tennant, contracts, everything. Then use it as a training course, stay involved, observe and learn from the pros all you can.
-or-
Locate a savy local investor who is cash poor, and JV. They provide intellectual work, and you the resources. Again, stay involved in every aspect and learn learn learn.

One of the most powerful lessons in any business is, know what you are great at, and hire great people to do the rest.

My best advice, a great property can quickly turn into lead boots if managed wrong. Don't risk it, if your not a renting all star, get someone who is.