All Forum Posts by: Corey Smith

@Jay Hinrichs Thanks for chiming in on this, and that makes sense. I didn't know that this was how it worked previously. That would be my biggest fear in the whole thing; not being able to refi out of it, and not being able to make whoever I was borrowing the money from whole again.

Given the money I have tied up in two typical turnkey properties, I may need to just exercise some patience and stack up enough capital on my own to take on one of these projects all on my own dime. It'd probably take me a year, year and a half, to get there using my W2 and other rental income. But once I did I could probably grow my passive income number at a much faster pace than "Save $20K, then buy the next turnkey property" method I'm currently working on. 

Plus, I'm finding that I'd like to be more "active" in my investing than simply finding good traditional turnkeys, buying them, and managing property managers. But being in Seattle, having a full-time job, and three kids ... I need to find a space somewhere in-between Passive and Active (t least until I can free myself from the 9-5 world). And I think getting in on the front-end (BRRR) on out-of-state rentals feels like where I need to be.

But I'll continue to get out and talk to as many people as I can, and maybe I can find $70K-$100K via a lender that I can use to get the ball rolling before I can build the capital all on my own.

Thanks again for the input!

@Elo Xen I'd never seen it referred to as active turnkey, but that sounds a lot like what I've had in my mind. Very much like it. I've been working with Turnkey Marketing companies in hopes of finding providers that I'm comfortable with, and that offer the option to pay cash to fund and rehab. So far I have found one, and I've also been in contact with one that @Ali Boone referred me to.

I like that this method can speed up my progress. I just need to find a way to more quickly find the cash to make it happen. Which is why I was asking about the likelihood of finding a private lender that will lend on this type of deal. I'd imagine it'd be looked at the same as if I were trying to BRRR a property all on my own. Maybe even better, since I would be working with a team that is more experienced with it than myself. I almost wish I hadn't tied up the money I have so far in traditional turnkey properties.

 I have thought about friends/family as a means to Private Lending, but there is not a lot of resources there for me (which is why I am beginning to get out and start attending local investor group meetings to expand my circle).

And I definitely agree with everything you said as far as finding a company that I'd be completely comfortable with if I went the BRRRR+Turnkey method. And the reason you just said is the reason why I'd be interested in it ... so that I could roll the equity to the next purchase and get more out of the $20K-$25K I can put in than just one property. Because obviously with traditional turnkeys, you're not getting that money back out of there anytime soon!

 I hadn't heard of the Sharpe index, but I'm about to check it out.

I'd agree that it may not make sense to take extra risk, if my W2 pay is good. But I'd also like to find a way to more aggressive than just being heavily passive, like through standard Turnkey or syndications ... at least at some point. Turnkey will work for me in the short term, which is what I plan to do, and once I have a few of those under my belt and understand all of it more thoroughly, I'll spend some time looking into syndications.

But while I make a decent wage, I still would only be able to purchase two, possibly three, properties a year if I'm having to save $20K-$25K to put down 20-25% down to buy each one. Not the worst situation, but I have goals that will require me to be able to move at a faster pace. Trying to find that way.

Hey BP!

Over the last month and a half, or so, I've been deep in the rabbit hole that is Turnkey Investment Properties. I've seen opinions strongly for, against, or just indifferent on the topic, but that's not what I'm looking for with this post. 

Given that I live in Seattle, and I don't know enough quite yet to source, rehab, and tenant (BRRRR) a property on my own yet, it makes sense to me to look at out-of-state turnkeys. I have a $100K HELOC (I bought at near the bottom of the market here in Seattle, so this doesn't leave me overly exposed) that I've taken out with the sole purpose of using it to purchase cash flowing rentals. Long story, short ... I've found two turnkey properties (one SFR, one Duplex) in Birmingham that I'm under contract on right now. I found them through a Marketer/Promoter, and became really comfortable with the actual provider and the management side of this particular company. The provider is reputable, and the numbers pencil out decently even with the HELOC payment factored in ($238K combined purchase price, $2750/mo rent ... $300/mo NET cash flow), so I'm comfortable with it.

Here's what I'm trying to figure out, and would love some help. I've found a couple of Turnkey providers that appear to be reputable that offer the ability to jump in on the front-end of the process, and fund the purchase and rehab part of the deal. BUT ... you have to be a cash buyer. Doing it this way would save me thousands of dollars going into the deal, which of course would increase my returns. I love the idea, since I'm a well qualified borrower and can refi the property after it's tenanted and performing, and it gives me many of the effect of the BRRRR strategy.

My problem is that I could likely scrape cash together to do an all-cash deal, but I wouldn't be able to do these kinds of deals at the speed I'd need to in order to reach my passive income goals within the time frame I've set for myself ($6K before March of 2021, if you're wondering). I'd probably have to do them so slowly (MAYBE two a year) that it probably makes more sense for me to just take smaller returns on a larger number of deals.

So, as my topic name suggests ... what are my chances of finding private money out there to fund the purchase & rehab costs, where I'd be getting the Private Lender his/her money back in 3-6 months, or at tops a year? I'm not expecting to find private money right now, while I only have one accidental rental, and two turnkeys under contract. But once I have multiple properties under my control, with the same provider, and can show a proof-of-concept of sorts, could I find a private lender to lend that money for 3-12 months?

That's a bit of a novel, I know! But it's a thought that I've been throwing around in my mind, as I try to figure out a way to add some extra juice to my efforts to escape the rat race.

Thanks!

@Jim Costa I ended up hanging my license at a Brokerage in Tacoma that charges $0 desk fees, or any other fees for that matter. It's even a 90/10 split (after being 80/20 on the first three deals) in the event that I do start doing some actual agent work. It was a pretty smooth process getting from passing the exam to finding a brokerage, overall.

As I've said above, I wasn't interested in being an agent ... I wanted access to the MLS. Which is the only money I'm shelling out while holding this license at the moment. It is, I believe $480/year (pay every 6 months though).

The MLS has been pretty big from a learning and knowledge standpoint. I've been able to dig a lot of data out there that has helped me narrow down a target area. Like may will tell you, there aren't a ton of potential deals coming across the MLS, but I've seen a few that I have sniffed around.

Hope this helps you in your decision-making process!

Corey

I found BP back in late April of last year, so going on 9 months now. REI was brand new to me (despite being an accidental landlord for the past 8 years ... go figure). I haven't done any deals yet, but my experience so far has been great.

The mindset change that has come from hanging around here, listening to podcast and reading suggested books, etc. has been priceless. While I've been in the education/knowledge seeking phase, my wife and I have been able to get ourselves into much better financial positioning (which likely doesn't happen if I didn't have these shiny new goals). I've since gotten my RE License, have met & partnered up with a fellow BP'er, and we are within a couple weeks for firing up a direct mail campaign.

So the short answer is ... I haven't done a deal yet, but the wheels are moving towards finding something off-market to jump in on.

I should have included in my first post that we are not mailing to every house in an area, but rather ones that fit our criteria. 

But the line you just had is about all I had in mind for that part of the disclosure.

Thanks for the input @Jonathan Makovsky and @Patrick Britton. I was assuming that it was as simple as just stating the simple fact along the bottom, or wherever. Just wanted to make sure I wasn't missing something.

@Frank Spaulding It's my understanding that, at least here in Washington State, it's good practice to not mail to a listed property (as a licensee myself) due to the rules against solicitation of properties listed with another agent. I know we're not soliciting for listings, but I've seen it recommended to avoid those properties as to eliminate any gray area.

Hey BP,

I've recently attained my RE Brokers License in WA and have partnered up with a fellow BP'er (also licensed), and we are planning to start doing some direct mailings. We are both aware that certain disclosures need to be made when dealing with potential sellers, as licensees.

I was hoping that some of you wouldn't mind sharing how you disclose your broker status on your direct mail pieces, or at least the gist of what you say. We're both completely fine with disclosing our status as licensees whenever necessary. I've even found in some cases it seems to make a seller more comfortable to know that I have fiduciary responsibilities. 

Is it sufficient enough to just state they you are a licensed broker in the state of Washington, that we are not interested in listing the property, and if the property is listed with an agent that we unfortunately would not be able to work with them?  Of course, we'd also disclose this once we actually talked to the owner as well.

I'd appreciate any feedback!