All Forum Posts by: Chris Clothier

A friend of mine here in Memphis has been investing in properties for several years and does quite well at it. He spends time purchasing the properties, inspecting them and even does a majority of the work himself. He and I have talked many times about him letting me take over some of the heavy lifting and doing his renovations and management to save him time and money. It takes him three times as long to do the work and often twice as long to rent the property. However, he enjoys it.

Here is the real point though...

You see, it's not just about finding more deals - it is about how you earn your living. My friend is a lawyer and bills at between $250 and $400 an hour. He estimates that he spends between 20 and 25 hours a week on his portfolio on top of working between 40 and 50 hours as a real estate attorney. The money he saves doing it himself is not comparable to the money he loses not billing in his law practice. But, as I said, he loves doing it.

In the black and white - he loses money. In the gray areas, he is probably a lot happier doing the work than he would be billing the hours and that satisfies what he is looking for.

Chris

Hal -

I love the post. That is awesome. FYI - I took a mentor the first time I met with a homeowner I was so nervous. That was 10 years ago in Colorado. I can tell you this much without knowing anything about the situation. What has always made me successful is that I have never lied or pretended to be someone I was not. Meet with the owners and have your facts together on the value of the properties and the activity in the area.

They know you are an investor from you letter, but let them know very early on that you do not pay retail and you are in the business of purchasing property at substantial discount. Let them know that you in no way want to offend them, but you would like to make a fair offer for them and a fair offer for you.

From that point, it is all about the condition of the property and the research you put into the properties on the front end. I always made offers when I visited the owners, but I had to eventually give that up. I spent way too much time talking to owners about their personal stories and learning about their cats. It made them like me, but i spent a lot of time!

So do your homework, be honest and be prepared.

I am sure you will do great.

Chris

Kevin -

I know that there are 'Gurus' who talk about placing fake newspaper ads, craigslist ads and even posting bandit signs about property for sale when you really have none. To be completely frank, i think these suggestions are made by people who make more money selling goods and ideas to unsuspecting people than they do actually transacting real estate.

Under no circumstances would I ever tell someone to place fake Craigslist ads. There are simply too many investors our there looking for good deals and if you find one and get it under contract, you've done the hardest part. If you have a deal, you can find a buyer.

best of luck,

Chris

Greg -

I know the conversation took a turn and this may not be exactly what you were meaning, but when it comes to growth I just wrote a blog today about that exact topic. It definitely takes commitment and a willingness to get away from the business for a time and review EVERYTHING! We have grown 114% in one year after already being the biggest property buyer and seller in West Tennessee.

We simply committed to get better and better and to not accept being really good. We wanted to be great. So we thought bigger, hired better and shard our vision of growth with our entire staff. Part of our vision came from masterminding with extremely successful business men including former heads of Kodak, Freddie Mac and two international companies. Their advice and insight inspired us to keep pushing and today we still mastermind every few months.

So without knowing exactly where you want to go, but understanding why you want to go there, I can tell you that it takes hard work and dedication. I would be more than happy to share with you how we raised over $6 million to operate our business without bank financing and have built a sustainable growing business that will be here for my kids and possibly there kids!

Best of luck,

Chris

Yes Jimmy -

You can use your self directed IRA to wholesale properties. Your custodian simply directs the money into the purchase of the property and then the funds are replaced at time of closing on the back end.

We have a ton of clients who use their SDIRA's for short term loans which is not the same as wholesaling, the transaction is just as quick.

best of luck

Chris

Hey Rob -

There is one way to get a list of SDIRA account holders who are purchasing real estate. The title will reflect the fact that there is a custodian of the title. It will say something in the effect of "Equity Trust Company FBO Chris Clothier". I may have the verbage incorrect, but the title will reflect that company. We created a computer program to search records for these types of transactions. I am quite positive you can use a list providing service that can compile these transactions for you in your area.

To Chris' point - there is a 2 day seminar in New Orleans during September. Equity Trust University. Both Will and Chris are correct. This would be a great opportunity to network, but there will be a ton of companies there with tables and some, including mine, will be speaking about investment options from stage. Obviously I think it is a great place to connect with the exact audience you are looking for.

best of luck

Chris

Phillip -

Here is how we reached the numbers on this property. the purchase price is actually $72,900 and it was sold today with contract pending at $70,500 even. That being said, it was entered incorrect on our site and our assistant used those number and posted it at $74,900 on BP. That is minor and I ran the numbers at that price to show how we reached our calculations.

Cost - including $16,000 in completed renovation $74,900
25% down payment $18,725
Financed amount $56,175

Assumptions

Financed at 5.25% for 360 months $310
Taxes - City & County $137
Insurance $ 25
Property Management $ 74

Monthly costs for the property are $546.

We estimated the property would rent for $825 and that is the number we used in calculations. The property actually is awaiting the closing of a two-year lease with first year at $825 and the second year at $850 with a $1050 deposit retained by the owner if and when the tenant moves out.

Rent $825
Costs $546

Monthly cash flow is $276.

Very few of our 292 investors actually look for cash flow from properties for expenses - say living expenses. A majority are looking for the positive cash flow as a passive investment. That being said, each has a different calculation for vacancy and maintenance costs but we recommend calculating 10% of the gross rent for a vacancy and maintenance cost. By doing (and documenting) extensive renovations on the front end to the properties, it raises the initial price, but we are seeing a drastic reduction in deferred maintenance and holding costs.

Lastly, this particular property is being purchased by an investor for $47 per square foot after all costs which is an extremely good deal. They are paying $56,900 for the property and $16,000 for the renovation for a total price of $72,900. The property was assessed within the last two years at a value of $91,000 and at $825 the rent multiplier is at 1.13 which is not our best property, but it will perform better as rents improve.

Those are the numbers on this particular property.

Phillip - please accept my invitation to discuss if there is anything we can help you with here. It may be that we cannot, but if we can, the offer is there. You are absolutely entitled to your opinion and I respectfully disagree with some of what you've posted on our properties, but welcome the chance to speak directly with you.

Chris

Ibrahim -

Believe me, the last thing I want to do is get involved in this query. But it stems from my asking Phillip to not comment on my property listings with negative remarks about how overpriced we are, if he will not speak with me one on one. Since seeing his first post I have offered to try and help with his negative investments here in Memphis, but he has not responded. I have only offered my assistance. Nothing more or less.

But he has a right to his opinion and right to ask about me. One thing you will not see on here is a bunch of brand new registrants posting how great I am. I don't know if we have any investors on BP, but I do know as I stated in an earlier inquiry about my company Memphis Invest, that an interested investor can talk to as many of the 292 investors we serve as they need to get a good feeling about how we do business.

Now, how about the numbers on this property.

Jon -

I absolutely agree with your point that not all investors need a company or service like mine and it absolutely comes with a cost. But I wanted to point out that not everyone lives in or has the time to be actively involved in their investing. If they do, there is no reason to use a turn-key vendor. That term in itself is so overused that it would make a great thread to ask what really is the definition of turn-key. Every one of our investors have full time jobs or live in markets where cash flow with low entry price just isn't possible. In that scenario, our investors look to a company like ours to handle the transaction for them and absolutely pay a premium for that service. But it is a big responsibility to treat them fairly and help ensure they are successful.

Chris

David -

You are responsible for everything in regards to the property. You are the owner. If you lease it to a tenant and spell out clearly what they are responsible for and they don't follow the lease...guess what, you are responsible! If you own real estate your name is on the line.

Chris