All Forum Posts by: Scott Trench

While it is absolutely true that you can use crowdfunding to source loans for your flips or rehab investments, I think that you will find that raising money this way is super similar to raising debt via a traditional hard money lender. 

Companies like the ones you list make you go through many of the same steps as a hard money lender like submitting all the specs for your property, and charge points, fees and high interest, often at similar LTV (loan to value ratios) just like hard money lenders.

The big advantage to crowdfunding portals, as I understand it, is in volume - if you are doing 100 flips you'll want an infinite supply of money. If you are doing your first one ever, you may want an experienced local lender (perhaps an experienced or retired flipper) that can walk you through some of the challenges you'll face, and perhaps with better loan terms. It will all be in your personal preference.

Hi everyone - looks like we got hit with round two last night. Just wanted to apologize to the community that got sent a ton of emails, and to let everyone know that we are working on automating our defense against these jerks.

Today, I Googled myself and saw that one of the highest ranking results was this post from last year - my first one ever on BiggerPockets:

http://www.biggerpockets.com/forums/55/topics/1267...

Reading it, it's kind of funny about how naive some of my goals seemed - I wanted to purchase 3 properties by the end of the year, yet I had less than $10,000 in savings and was making under $50,000 per year, working a full-time job 9-5. On the other hand, it's amazing how close I came to hitting most of them. I'm glad I shot for the moon, because things went pretty well overall!

While I didn't reach all my then stated goals, I did successfully do the following things:

1) I quit the 9-5 that was holding me back from my REI goals, and joined a startup that lets me study real estate investing all day, every day ;).

2) I purchased a small duplex for $240,000

3) I've lived for free for the past several months by renting out available space in my duplex - "house hacking"

4) By continuing to live frugally, I've accumulated savings at double the rate of 2014, and am now ready to purchase another property - I'm just patiently waiting for one that meets my criteria to come on the market.

5) I've continued to meet investors, agents, wholesalers and many many other interested parties through BiggerPockets and various meetups, and have done my best to give back to the community through articles, forum posts, and my day to day work on BiggerPockets.

Anyone else want to share their first post and measure their progress towards their goals?

Happy birthday!

I don't believe that I'm smart enough to predict a real estate downturn or upturn, not even in my own market of Denver, CO, much less the rest of the U.S. I have no idea where the markets will be in 6 months, 5 years, or 10 years.

One thing that I DO choose to believe in and bet my money on, however, is that the market will appreciate more or less in line with historical averages over the next 30 years. I also choose to believe that the market here in Denver, CO will continue to be desirable long term. I think that's a reasonable assumption - far more of a reasonable assumption than trying to guess any which way over the next decade.

Those being my beliefs, and as someone who feels unable to predict changes in the market, I choose to continue investing, as I am able, in quality properties in quality neighborhoods throughout market cycles as they come and go. 

If the market happens to tank right now, just after my first purchase then... GREAT! I'm still super early in my professional career and that means that I'll be making more money and have more buying power in a downturn than I do now after years of appreciation. I'll be able to get some great cash flowing properties over the next few years and I'll have low equity in my first purchase.

If instead the market continues to swell then GREAT! My first investment is a success and I'll be able to take the cash flow and appreciation from that and put it into additional properties as opportunities arise.

So to answer your question, I don't think that my strategy will change very much depending on local market conditions. Definitely interested to hear additional replies to this awesome topic!

Legendary Article!

Anybody else take advantage of bike to work day and show up nice and glistening from a hot morning commute??

I'm a huge fan of biking to work so this is one of my favorite holidays!  

Love to hear of others that bike to work or that did so today!

@Kristen Schlueter

I just invested in a property here in Denver, CO with my entire life savings ($20,000 back in November '14).  Getting $20,000 to invest was simply a matter of working hard at my job and living frugally - cooking my own food, living in a cheaper smaller place than my peers, and biking to work.  In my case, getting money to invest through basic personal financial management was far easier than finding an incredible deal or using a creative financing solution.

My alternative was to attempt to find a screaming deal from a motivated seller.  Here in Denver, CO, most sellers seem to know that their properties are valuable, and buying property with instant equity (at 80% of market price, for example) seemed very unrealistic, given the fierce competition for every property on the background.  My finance background and ability to crunch numbers gave me no advantage in that fight - there are people who have been doing this for 30 years here in Denver and I had never bought investment property before in the area.

My background did, however, allow me to land a job with steady income.  I used my income from my job to apply one of Brandon's "low money strategies" and bought a property that I live in.  I rent out one side and live in the other, which creates cash flow to pay off my mortgage and speed my savings accumulation for the next purchase (I'm ready to buy now, just looking for a deal that meets my criteria).

Basically, if I were starting out with a business degree, I would use my business degree to land a 9-5 in a field that would be useful to a later real estate business, and use the income from that job to secure financing on a small multi-family.  I'd then aggressively expand  to purchase new properties every 6 months from there.

I personally had to make money, then save money, to have money.

So far, I haven't met anyone investing in real estate because they love owning and maintaining lots of properties..  We are in this to build wealth.

I believe that given the goal of building wealth in the most rapid and manageable manner, that the advantages of buying a multi-family property, living in one unit, and renting out the remaining units far outweigh the advantages of buying a standalone investment property as a first investment.  

I bought a property of this type and here are some of the advantages I've experienced so far:

1) I am the property manager.  When something goes wrong, I open my door, take 5 steps, and fix the problem.  That's a huge cost and time savings.  While it might be different if I had a wife and family that would not put up with having tenants to be managed next door, I think that from a wealth building perspective, the advantage in property management is clear.

2) Financing.  In every case I can imagine, you will have better access to financing (lower rates, less money to be put down, easier qualifications, etc) if you occupy the property yourself.

3) Tax advantages.  If you continue to rent, you will pay both your rent AND the mortgage on the investment property.  If you move into the investment property, you will only pay the mortgage on the investment property.  That interest will be tax deductible, and will replace your rental expense.

4) General handiness.  This may differ for you, but I was a spoiled pansy as a renter.  I did not own tools in any serious fashion (a screwdriver and hammer do not count), and could not make any basic repairs.  Now I do a ton of work myself.  This is a huge boost to my ego, and my wallet.

5) Care and attentiveness.  You are going to do a MUCH better job screening tenants and showing the property when your potential renters are not only going to be your tenants, but your neighbors too!  This again is good for both your sanity and your wallet, in my opinion.

Hope this helps!

@Michael Woodward

Thanks for this suggestion!  We'll keep it in mind.