All Forum Posts by: Ryland Taniguchi

Originally posted by @Mark Kao:

Originally posted by @Ryland Taniguchi:

Originally posted by @Mark Kao:

currently I have 3 properties (I live in one) . The way I've done it has been pretty elementary.  When I've built up enough equity either by paying down the loan or the value has risen sufficiently I've done cash out refi's to buy properties whole while also trying to keep down the monthly payments and taking advantage of the tax deduction. I'd like to look at getting into something like a duplex or quad but where I live (Seattle) has made it an expensive proposition. How can I increase my purchasing abilities in a cost effective manner? 

It's hard to fund SFR rentals with no money out of pocket (unlike 100-unit multifamily), especially in Seattle where cash-on-cash returns are very low. To increase your purchasing ability, you need to understand how to work with private money.

However, there is always a way to do anything if you know. Every week, I find a way to fund a flip flips with no money out-of-pocket. But I guarantee that it's not necessarily easy. You have to find "home run" deals and know how to structure it. I use the profits from flips to buy out-of-state rentals with a 16%+ cash-on-cash returns. 

Basically, you need to take 10x massive action and keep adding tools to your tool belt such as land trusts, joint venture partners with private money, credit partners, subject to, lease options, seller financing, hard money with 90% of acquisition and 100% of rehab, assigning contracts for a fee, etc. 

 Out of state properties make me nervous (maybe I shouldn't be). I'd like to check out of the state, but I'd like to fortify my and increase my knowledge and base in the greater Seattle area first. 

I don't think everyone should be buying out of state. You have to buy where you know the area intimately. I'm just saying that's what I do because I know the out-of-state areas as well as I know Seattle. But here in Seattle, we're putting about 20 off-market deals a month under contract locally and I rarely find good cash flow properties. 

Originally posted by @Mark Kao:

currently I have 3 properties (I live in one) . The way I've done it has been pretty elementary.  When I've built up enough equity either by paying down the loan or the value has risen sufficiently I've done cash out refi's to buy properties whole while also trying to keep down the monthly payments and taking advantage of the tax deduction. I'd like to look at getting into something like a duplex or quad but where I live (Seattle) has made it an expensive proposition. How can I increase my purchasing abilities in a cost effective manner? 

It's hard to fund SFR rentals with no money out of pocket (unlike 100-unit multifamily), especially in Seattle where cash-on-cash returns are very low. To increase your purchasing ability, you need to understand how to work with private money.

However, there is always a way to do anything if you know. Every week, I find a way to fund a flip flips with no money out-of-pocket. But I guarantee that it's not necessarily easy. You have to find "home run" deals and know how to structure it. I use the profits from flips to buy out-of-state rentals with a 16%+ cash-on-cash returns. 

Basically, you need to take 10x massive action and keep adding tools to your tool belt such as land trusts, joint venture partners with private money, credit partners, subject to, lease options, seller financing, hard money with 90% of acquisition and 100% of rehab, assigning contracts for a fee, etc. 

Seems like some are negative about wholesalers on here and that may be good for those of us who love and appreciate wholesalers. Wholesaling is a lot of work and I am always willing and eager to help wholesalers learn how to do better ARV comps, construction estimates or structure a deal. If your out talking to off-market sellers, you'll run into 20 so-so deals for every home run deal. And guess who they send their home run deals to? The person thinking that wholesalers are losers or the person trying to mentor them.

Originally posted by @Jason Hatfield:

Hello BP!

I'm looking at a deal that would combine these two methods but I'm unsure if a HML or PL would do the deal as they would have the second lien position. Does anyone have experience doing this?

I would put 10% down and have the seller financing the other 90% of the purchase.  I would then be looking for the lender to cover rehab and holding costs.  The plan would be to refi as soon as its seasoned and cash out both the seller and the lender.

Is this a common strategy? How would it differ if I was assuming an FHA loan or using a Subject To deal?

As always, thank you for the help!

Not enough info here to answer the question. Not sure what the equity is on the deal.  Not sure if the seller owns and free and clear or has a mortgage.

But here is a suggestion. Take out a HML or PL in first position to (1) pay the seller and (2) pay for the rehab. Pay the seller a good amount of money in exchange for them taking second position on the seller financing. Rehab, flip and pay off the seller within 6-months.

HML and PL generally don't like second positions unless you have at least 20- 30% equity in the deal. In my experience, it's easier to get a seller of a free and clear property to take a short term second than to find a PL or HML to do the second.

Setting big goals is great, but it's more important to 10x your massive action. Learn how to consistently get 50% to 80% IRR and money will find you.

Originally posted by @Rick Zink:

I understand the difference between the both of them.

While I am not the most experienced in the world, I do have some experience.  I own a few rentals that are cash flowing.  I have flipped a few and made a moderate profit.  To date, I have never lost money in Real Estate.  I attribute this to the dogged due diligence that I take before I close.  All of my previous properties I have either used a Bank mortgage or I have simply bank rolled myself.

Currently, I am in a position that I have an opportunity to purchase and flip two possibly three houses.  The time on Market is a little longer than what I  would like to see but the profit is solidly there...but I digress.

My reason for this post is that I am having a little bit of a hard time finding a Hard Money lender as well as a GAP lender.  Most I have found want me to buy into a program that I am happy to do but they can't seem to give me a clear understanding of what I am going to learn.

Can someone please point me in a direction that I can find helpful lenders that can assist me in acquiring these properties?  I do not want to let these slide by as I am looking at a handsome profit on each one.

Any help or advice is welcomed and appreciated.

 Finding a hard money lender should be easy. Go to your local Reia and your local auctions and there should be there. The one I know that lends in your area is longhorninvestments.com. 

Gap lending is very difficult. I have 3 gap funders but my experience is that you have to earn this by a long and solid track record with private money lenders. 

China had been manipulating the currency by pegging the yuen to the dollar. This kept the yuen artificially weak so that it could continue to export cheaply to the U.S. and the world. This also has caused low interest rates in the US as deflation was simultaneously exported to the U.S. People may worry about hyperinflation but deflation has been the concern of the Fed.

The US did the same thing as China did in the last 15 years to grow out industrial base during the roaring 20s. After World War I, America required that European debtors pay their debts in gold. America after World War I stockpiled 70%+ of the worlds gold supply and his caused capital flows to pour into the U.S. This also caused the hyper-inflation in Weimar Germany in 1921-1924. In economics, you can only stimulate an economy through increasing consumer spending, government spending or investment spending. If all these "pump primers" fail, history shows that the only way to prime the pump is to print money and purposely stimulate the economy by making your exports cheaper. The problem is that other nations will copy and this leads to the Smoot Harley tariffs that shut down the world economy in the 1930s.

China pegging the yuen to the dollar is doing the same thing as the Gold Stockpiling by the U.S. after World War I. With this yuen peg strategy, capital flows poured into China and caused a decade boom. The artificial boom will end in a major decade of deflation for China.

China is the US in the 1920s. They will go into a ten year global depression like the US did in the 1930s. I think it will happen during the next major cycle crash around 2025. We are in 1998 all over again. In the short run, we'll see the 2000 crash all over again before a long crazy ride in real estate. The party will end in 7 to 10 years and it will be worse than the 2008 crash. 

How do you prepare? You maintain a portfolio of real estate for inflation and liquidiiy for deflation (cash, treasury bonds and cash value life insurance). Your must get out of the buy and hold long term mindset. With crazy high interest rates being driven by global deflation and here to stay for a while, expert a roller coaster in real estate every 18 years. Buy low and sell high. Rinse. Repeat. Don't buy to hold for 30+ years.

I am selling all my real estate in 5 to 7 years, wait out the peak, make money brokering hard money, packaging land for developers, making realtor commissions and wholesaling deals. I think there is like 5 more years to buy real estate and then go to a service model with the systems we have in place.

Don't believe in doomsday. It makes you a horrible investor. As Rothchilds say, invest when there is blood in the street. Or Warren Buffett says be greedy when others are fearful and fearful when others are greedy. When I look around, I am seeing greedy real estate investors now and so be fearful.

Originally posted by @Scott Grover:

First flip is on the market right now, and already looking for the next one.  I bought my first foreclosure at the auction in February 2015, entirely on borrowed cash and hard money, and funded the rehab with borrowed money.  It took 2.5 months to evict the previous owners, but when I finally took possession I got help from some contractor friends, and it's on the market now for a decent profit.  I learned a lot during the first one, but always remain cautious and aware that there are many ways to lose in this business.  Don't assume that every property makes a profit in every market condition.

Love listening to podcasts like Investfourmore for tips and encouragement.  That's also where I heard about this site.

Congrats on your first flip! I lost $100 k on my first flip back in 2003/2004 and so making a decent profit is definitely awesome. Been doing this since 2000 and there is something new to learn everyday.  

I'm doing 12 flips myself now and we're also putting 15 to 20 off-market deals under contract if you're looking for more properties. 

You can try rentometer.com for an estimation (free). Rentrange.com tends to be more accurate but costs money. The only way to narrow down is running comps yourself, with property manager or an agent. Find someone who knows what they are doing. If you need a property manager, message me and I can send you some good people.

Here is how I look at it. I've been a property manager myself in my local market and have bought turnkey out-of-state. If you're awesome at property management or can build an awesome property management team, then doing everything yourself makes a lot of sense. In my case, I suck at property management and so turnkey has been better for me.

I also rehab lots of properties in my area and excel in this sort of thing. However, I know that local boots on the ground often save money than I could rehab out-of-state myself. Why deal with all the hassle in a market that you have no connections and no boots on the ground?

In other words, why manage your own investments out-of-state; you don't have advantage that you have in a local market. The only reason to invest out of state is if your area has high cap rate compression. 

I've heard it said many times on the BP podcast that you can find cash flow 2 hours from anywhere. However, from my experience, I don't know anyone I trust two hours from where I live. I trust the turnkey out-of-state providers more than what I've found locally (here in Seattle) and so I've went that route. In fact, I was so nervous to go out of state in 2010 to purchase from turnkey providers in Phoenix that I only bought 5 properties. I am kicking myself for not buying more out-of-state at that time.