All Forum Posts by: Owen Dashner

Hi Brian, there are a couple of good FB groups with active investors in them in the Omaha market. Search for "Omaha Real Estate Meetup" in FB, and also "Omaha REIA". There is some good info about Omaha on both pages. Let me know if you have any questions or if I can help.

@Courtney Duong Basically you are saying, "I will pay x price for this home, but if the seller receives another offer that's higher than mine, I'm willing to increase my offer to y price."  So, if you write an offer for $100K, but are willing to pay more if there is a competing offer, you can write your offer of $100K, with an escalation clause up to $110K with proof of a legitimate offer. You can say "I will beat any offer by $500 (or whatever number you choose) up to $110K".  Then, if someone comes in with an offer of $105K, your offer will automatically escalate to $105,500.  

Escalation clauses have become much more common recently due to the extreme lack of inventory.  They are a great way to strengthen your chances of getting a house if you know what you are doing.

Investment Info:

Single-family residence wholesale investment in Omaha.

Purchase price: $156,200
Cash invested: $200
Sale price: $200,000

Contributors:
Angela Thiel, Brandon Tauber

This market is nuts. This was a dated, but livable ranch house in a popular area in Millard, a suburb of Omaha. We bought the house directly from the owners from a direct mail letter we sent. We bought it as-is and turned right around and listed it for sale without even touching it. Multiple offers with escalation clauses later, we sold it for $200,000, which was $20,000 above asking price. Crazy!

What made you interested in investing in this type of deal?

It was a cosmetically dated, but solid starter house in a desirable school district. This is my favorite type of buy.

How did you find this deal and how did you negotiate it?

We sent a batch of direct mail to an equity list in the zip code this house was in. We went back and forth a bit with offer/counter offer, in the end settled on $156,200.

How did you finance this deal?

We used our line of credit to buy it.

How did you add value to the deal?

We cleaned it and mowed the lawn, and that was about it.

What was the outcome?

The house sold for $20K over asking price with multiple offers, escalation clauses and personal letters written to us. The buyers even agreed to eat the difference if the house didn't appraise for the sale price (and it didn't).

Lessons learned? Challenges?

Make hay while the sun shines I guess? This again just highlights the extreme lack of inventory of quality starter homes in good areas. I'm not sure how much longer this is going to last, but it sure makes it easy to sell when you have a good deal.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Angie Thiel with BHHS listed and sold it for us. 5 Points Bank for the financing.

@John Krause I didn't know what the hell I was doing on the first few loans (debatable whether I even do now). The first 2 loans we did were transactional funding on a couple apartment complexes that the borrower wholesaled with a double closing.  That was stressful (had some hiccups that almost blew up both deals, but we got it worked out). 

One weird thing I noticed is that it was really difficult to find an attorney at first who had any experience with hard money. Once we found our attorney, he helped us draw up the 4 main docs that we use for NE loans: Promissory Note, Personal Guaranty, Sale and Loan Agreement and Deed of Trust. For IA, it's a mortgage instead of the DOT, so each state has some differences.

 I'd be happy to jump on a call with you if you have questions, just shoot me a DM.

@Jay Hinrichs Thank you.  We had a bunch of calls with our attorneys when we were getting setup in the 2 states and had a banker who was on the board of the NE Banking Commission on as well, so we should be good to operate in IA and NE without much red tape.  It's crazy how different consumer vs B2B loans are regulated! I will say it is kind of fun learning a new aspect of the biz, especially since I am used to being a pretty active investor.  It's nice just sitting back and collecting interest instead of running around meeting with sellers, contractors, title companies, etc.

@Derek Dombeck @Jerel Ehlert @Jay Hinrichs thank you guys, very good info - I appreciate your input!

@Jason Wray Thanks for the input, but I already own 130 units and have been an investor for 15 years. The lending biz is another stream of income. It is already up and running with several loans out and I am looking to grow it. New builds will yield nowhere near the 18% return I get on my loaned out money.

Dodd Frank is not applicable to B2B loans.

@Ben Stoodley thanks so much for the information, I really appreciate it.

I started a hard money lending business with a couple of partners in the Nebraska and Iowa marketplace using our own capital. Demand has been solid, and it has become apparent that we are going to have all of our money deployed before long (which is great).  Our goal with the business is to grow it beyond lending our own funds, using either a warehouse lender or private money or both.  I'd love to talk with someone who has scaled up like this about how you structured/collateralized your loans when using OPM.

It seems like it would be difficult to use private money long term with hard money loans, because it would be cumbersome and difficult to keep the money deployed constantly, running the risk of paying for capital without having it lent out.

Thanks in advance for any input.

@Geo Cruz, commercial loans with many small community banks and credit unions are way more flexible on refinances. You might consider going that route instead of jumping through all the hoops and waiting forever for conventional refi's to work for you.  Are the rates slightly higher?  Yes, but they are still historically low compared to years past. Don't trip over dollars picking up pennies.