All Forum Posts by: Rich S.

Thanks all for the replies. So is it safe to say the only way they make some sense is large returns and probably not one SFH at a time, as it won't involve enough profit for the hassle? I'm also guessing that being in proximity to keep constant tabs is very important as well. Crazy that someone torched a car over $20!

Good day BP.  I'm curious if anyone specializes or has had success renting to folks with not great criminal histories or bad credit histories, etc?  It sure seems there are LOTS of folks with less than great reputations/experience in their life, but they all have to live somewhere.  I'm just curious if anyone has experience capitalizing on this, has tried to capitalize, etc... 

I assume you are doing this REI thing to make money.... if you sell him the house, can you use that money to make more money than if you kept it? The bottom line is that house is a tool to make money... so if you can sell that tool to acquire other tools to make even more money, you sell... if you can't, you don't, IMO.

Kudos to you for flying in to town to inspect your rental.... that kind of follow through is what separates the very successful RE Investors, from the rest.

The bottom line is everyone's answer will be different... because goals are different, tolerance for risk and leverage are different, etc... If it were ME and assuming said individual is living just fine without the money...I'd keep working my job, doing the same things I always do with the rest of my life like nothing has changed AND I'd seek out the happy medium returns vs. risk.  I wouldn't put all of it in any one endeavor...  I'd probably split it into 1/4s....

1/4 to pay off as much debt as I could... factoring in what debt costs me the most.. for example if I can make 6% on the money, but I'm paying 9% on something else... I'm still losing the 3% so I'm paying off the 9%... If I have all low interest debt and feel like I can get a higher return if money was invested, I wouldn't pay off anything, but use that money in something I can easily get it out in the event of need

1/4 into a hands off, no labor investment... for me it would probably be peer to peer lending... with small amounts in multiple loans to spread the risk... returns are solid and I appreciate the service they provide

1/4 into a value add multifamily... in the midwest you can find a great cash flowing property with lots of equity for this much money

1/4 I would park and not touch... put it in a high yield savings account... yeah, I know, not doing much for me, but I believe in the bird in hand..... 

@Steve Vaughan are you calculating the $5K based on value of property or is that just your standard?  I'm curious if folks are using flat amounts or a %, etc.. 

I think the one thing folks are missing when giving advice is how small the market is where this investor is looking.  I completely agree that you always need to offer what works for you and don't worry about what others think and that is a great strategy in high volume areas with lots of opportunity.  That doesn't seem like the case here.  It sounds like a tricky spot for @Benjamin Zwiebel... I think the biggest factor is sticking to your numbers and only moving forward if your numbers can work.  Another key I think is looking for ways to CREATE opportunity by converting a property to multi-family, MHP, etc... I say this because with a smaller town, opportunities are fewer, so you may have to think outside the box.  If your goal is to invest in your town, because you want to make money, but also because you care about it, throwing lowballs all over the place I'm afraid will leave you on the outside looking in.  In a large market, I completely agree with the strategy of not caring... but in yours, not so much.  The last thing I would say is make sure your RE agent and yourself are on the same page... their reputation is at stake if you lowball all the time as well...again, not a big deal in a big market, but I'd guess a pretty big deal in yours.  Good luck.

Yeah @JDMartin.... so did Charlie Bucket and I think it turned out OK for him!  The GOLDEN TICKET is opportunity... what you choose to do with it is the deciding factor! 

If everything checks out, I think you'd be crazy to pass up the opportunity.  For those on this site with no or limited track record, 90% of them don't have $$$ to fund deals/start their business.  Someone is providing a GOLDEN TICKET and hoping you can be the mentor to grow said business.  Everybody thinks being an expert is the answer, but in my opinion "FIT" is the key.  If this is a good FIT for them and you, I think you'd be nuts to turn it down.  People with unlimited resources create more "fits" than everyone else.  Because of their capital and track record, more doors open, hence they can make more things fit.  I'd assume that someone like you doesn't have people offering you a million dollars very often to start a business.  That doesn't mean you don't have a good business or track record, just the fact of how rare this opportunity is.  Can you think of a scenario that would give you as much opportunity to grow financially than this one?  

I think the good advice you have gotten: *stick to what you know/what you are good at .... *diversify with flips to rentals to allow yourself some security...*I think new construction is riskier at this point than the other avenues, however, there are niches are that aren't affected near as much as others due to economy... I'd explore those....*in the point about when economy starts to turn and lending regs get stricter, might be a prime opportunity to become a lender as part of the business too... you might not know much about it now, but I'd suggest learning about HML... in order to potentially have another avenue for growth... especially since it seems your partners are sitting on loads of cash.

Good luck!

I think it basically comes down to your goals and where you are at in the business.  Just some examples

@Jay Hinrichs has been in RE his entire life... many successful businesses in it, but also many contacts within his day to day where RE is a comfortable topic.  I'm sure he's done well by building the right connections which may not have happened without talking about it and it has helped him accomplish his goals

@Steve Vaughan stays silent... I would imagine because he is comfortable with where his business is at, doesn't need to self promote to accomplish his goals and it "fits" his style

@Caleb Heimsoth stays pretty much silent because as an example his work would be filled with negativity on the topic... which won't help him accomplish his goals

I think it comes down to WHAT are you hoping to get out of talking about it?  Are you hoping to attract people to help with your business or are you hoping to make folks aware so they bring you deals or tools to do deals?  Are you worried about talking about it because you will get nay sayer responses which will give you doubt?  Some folks love the fire it lights when people doubt them too!  I think if you are trying to grow, you are calculated about how you talk about it and where.  I've made a point to just mention my interest in real estate when talking to folks in the business or folks with high net worth.  Just in case it turns into something.  I don't talk about it with family much because they think I'm crazy and most don't have any ability to help me, nor are they interested.  

I think what you do exactly depends on your personal situation. I, personally, would do what I could to help. If I could afford to give him a place to stay for the short term I would... as much of the negativity seems to be coming from the living situation. I'm not saying you rent to him and I'm not saying you shouldn't... but I am saying, often times people need a nag or a nudge to get through times like this. My family has a history of depression and for everyone that says "you have to let them hit rock bottom" before you can help, hasn't lost family to suicide... pretty hard to help when that is the result of rock bottom. If I were in your shoes, I'd invite your friend to shadow you in your business. Have him come to meetings with you, check out properties with you, show him your business. It may stick, it may not, but it will engage him and potentially lead to opportunities or relationships. It will also improve your relationship with him, which may very much help you help him with his demons. I think often times people in REI just focus on business, numbers, results, money, etc... we miss the process part... we miss how much of this is based on relationships... to other investors, contractors, property managers, tenants, etc... If it were my friend, I'd do what I can because getting burned in the short term by a friend who may not hold up his end of the deal will sting a lot less than not trying to help and much worse things happening, in my opinion.