All Forum Posts by: Nigel Guisinger

I learned a long time ago build the team and the property will follow. So you need to have a team of: financier ( this can be a bank, lender, hand money lender, rich uncle etc), operator (property manager), contractor, inspector and a real estate agent (this can be multiple at the same time). Once you have the team and only once all roles are found then and you start looking for the asset. Doing anything before cheats your team and will cost you. Investing is a team spot and you want to be a part of the team. Also know that you aren’t a player on the team, you are the GM. You buy and sell and trade the players on your team to improve the product the team produces. 

Set up a separate LLC and have your attorney verify that there is a clear vail of separation. I own a business and two property holding companies. My only mistake is that I've used one in the past to help the business when it has some issues that required a cash injection.

Rates depend on the asset, percentage down, how strong you are financially, the terms and point structure (meaning the fees the lender charges). I’ve paid anywhere between 12% plus 5.5 points with a 50% Ltv to as low as 4% with 1 point and 80% ltv. So it all depends on the deal and the risk. The truth is the more experience you have, the better the deal and the better your track record you have the better rate you get in many cases. 

You need to get more specifics from that developer. As someone who has bought land and developed each of us has a formula depending on what we are putting there. Example a piece of land to build apartments have a value based on how many units I can place on the property per acre. I have a number that is in my write ups that says I can only pay so much for land to hit my numbers if I build my typical floor plans. And if he’s going to build new home lots you have to do something similar. How many square feet are the lots going to be, how much do lots sell for, how much do the improvements cost including Dev fees or other charges, what engineering cost look like and once you know this you can figure out your max buy price. Always start at the end and reverse engineer what you are working on. Of course the guy said yes find me something but you need to understand what you are looking for and you need to ask that person in detail what they want and what they think is a deal. Start with the yes and work backwards from there. If you don’t you are going to waste your time and get frustrated. 

Where I am from they have a value chart range. Example is that a 1/1 might be 900 a month and a 2/1 is $1100. The tenant pays a percentage of that rent and the housing pays a voucher amount for tithed portion. Example is that on $900 gross the tenant may pay $300 and housing pays $600. You receive the full $900 but in comes in two checks. So you will have additional accounting and both sides are subject to late pay penalties if not paid on time. However housing will set the date that they pay and you must sign off on that. It really not a bad system because you know that your housing check will come in every month. 

I strongly prefer buy and hold because there is added value for the passive income. When you add in the tax advantages to me it’s clear. Look at the value of foo g work once and collecting every month, especially if you put management in place. Yes there is money to be made in flips but even the big flippers buy and hold some for passive income. I’ve build and rehabbed in the past but the name of the game for long term is buy fix and hold. 

I value free flowing consistent passive cash flow over squeezing out a few extra dollars and doing nightly because I’m not local. I just purchased a 24 plex in Branson rents are 650-700 and purchase price was $990k. That’s $41,250 a unit. All units are year long leases. So when I figure my cash on cash knowing that I do nothing I have in year one an over 25% cash on cash return. It’s not as high as nightly rentals but I dont have to do any work. 

I have around 40 units in the Branson area. They are all long term rentals. There is a lot of restrictions on the str so while we looked at that first we found Branson is a good market for us for the long term rental market. One of our condos is Rented our long term but you can do short term rentals. That complex is called Fall Creek.

I would suggest looking for that deal but rather than attempt to wholesale, find another person that wants to invest and team up. A percentage of something is better than nothing of nothing. If you have a good deal a partnership with a money person my be a good idea. And if you are looking for the education this will get your feet in the door. As many above said it’s rare to not fail. Expect to fail and make some mistakes. But it you team up you can cut your losses as you grow your education. 

I've used bridge financing for deals like this in the past. I secure permanent financing in advance as well. This way I can buy and rehab and roll everything into a long term loan. Not everyone will do it but talk with you local bank and see if it's a possibility. The deal I'm working on now is done that way and I had to put down 20% of the buy and I get 100% financing on the rehab and the long term is set as long as I complete the rehab within 12 months. If post rehab cost are under 75% of FMV I can take out the extra for my next deal.