All Forum Posts by: Ryan Webster

@Maugno M.

If you have already paid the contractor over $500 call you accountant there are ways for you to take the deduction without reporting 1099. In the future always get w-9, insurance cert., and lien waiver from every contractor. In some state you'll be required to get workmans comp cert. or waiver as well.

@Eric Sanne

How long have you been self employed? Are you working with the same commercial banker who handles you business banking? Are you showing a paper loss for tax purposes?

@Joe T.

Where in iowa? And why are your debt terms so unfavorable?

@Eli Sorey

In today's market my biggest pain point is finding and hiring skilled employees. The inherent problem for contractors is you are hiring for skill based positions. These skills take years to acquire and years more to predict. Furthermore these skills cannot be proven in a traditional interview process. As of the last 4 years we have developed a performance metric based probationary employment which allows applicants to demonstrate their skills. On average we hire 1 out of every 30 applicants who interview. Out of the 30 who interview 75 have applied for the position. Find an efficient way to screen applicants for trade skills and you'll have the potential to build a great business.

Thanks Don,

Are all private debt agencies, hard money lenders, and any similar business required to file reg d exemption? 

@Jonathan Dicent

Depends on how you structure it. If you raise private capital as debt there is no need to register. If you raise private capital as private equity you will be required to register. Registering will cost you between 15k-35k each time you start a fund. You will then have to issue k1 to every investor in the fund. This cost alone would push me towards a debt structure.

there is a large distinction between theoretical and actionable, but ill do my best to help.

first read, listen, and watch everything you can on real estate investing. Ill leave a list of books to start with at the end of this post. then you'll need money. to acquire money you'll need to find people with money, and learn how to make these people money with their money. Most importantly never lose their money if you lose their money its game over. If you make them money they will continue to give you money to invest. Since your starting with nothing I'd suggest a brrrr or value add buy and hold strategy. This will allow you to recycle your limited capital. If you want a million net worth in 5 years assuming you could pay investors straight interest and no equity, assuming your could get 3% a year appreciation. assuming you could consistently find deals that you could add 30% in value add. Assuming all units could cash flow $200 a month. assuming your bankable. assuming you can find a investor with the net worth and liquidity you'll need to secure the debt. assuming you can build a team to manage your portfolio.  you'll need somewhere around 56 units-75 units depending on how quickly you can acquire them. another option is partnering with an experienced syndicator as a co-syndicator in which case you would simple have to raise $50,000,000 in private equity. you'll need to find a way to do 20 years of work in 5 years but even if you fall short by half you'll still have increased your net worth by $500,000k

Id start reading the following books, most of the knowledge you'll need is in these books, but Gaining the experience you'll need in the short amount of time will be hard if I were you Id look for an experienced partner or mentor.

start reading....

low and no money down deals

brrrr investing

best ever apartment syndication

magnetic capital

abcs of real estate investing

rental property investing

estimating rehab cost

the e myth

raising private capital

the real book of real estate

10x

real estate finance and investment manual

cashflow quadrant 

It's not when you buy it's what you buy. There are still good deals to be had it just takes more effort, and creativity to find, and acquire them. keep looking and be conservative in your under writing. 

Real estate in and of it self is not  risky. Given enough time you will gain appreciation. How much time you need to gain appreciation depends on the asset, the sub market, and most importantly the investor choosing and managing the asset, and in the most extreme example your lifespan.

Risk in real estate investing comes from two sources. 

the 1st and biggest contributor is investor error. If the investor fails to accurately appraise the value of the asset at acquisition, you can lose money. If the investor fails to properly manage the asset you can lose money. If the investor over estimates rents you can lose money. There many mistakes an investor can make to lose money.

The 2nd is a economic contraction causing a lose in value such that the investor cannot continue to hold the asset through the contraction.

If your goal is to simply limit risk I would go with passively investing in a syndication. MF syndication allows you to achieve scale that you couldn't achieve on your own. Nothing protects against risk better than scale. You'll be able to get into a large institutional sized asset that historically have preformed in all parts of the market cycle. You'll have the advantage of a professional property management team. You'll have an asset manager/s with nearly inexhaustible resources to run the business plan and keep an eye on key performance and economic metrics that would indicate the necessity to execute a contingency in the business plan. 

In the current market conditions I look for sponsors that have the following:

experience in all parts of market cycle

are acquiring large assets no less than 100 units 

a proven value add strategy

offering a true preferred return (7%-8%)

a 70/30 or greater equity split

monthly cashflow distributions

invest along side their passive investors

running a 5 year business plan and have debt terms that exceed the length of the business plan( this will become important if you have to hold the asset longer than the initial business plan)

assets located in markets with strong economic indicators

@Cedric Skeen

Nearly all comercial brokerage issue market reports cbre, marcus and millichap, irr, are ones we use. Costar, and reonomy are another great resource. In addition the federal census has a good collection of data.