All Forum Posts by: Steve K.

Another thing that could go wrong is you end up owning a property without sufficient operating capital. They say real estate is a great way to make a large fortune, but it takes a small fortune to get started. Especially when it's your first deal, out of state. You should expect to sink some extra dough in post sale. I'd be worried about cash reserves if an issue comes up before you can refinance. So it seems risky to me, but if you pull it off, hats off to you! Definitely some creative financing. 

Also it seems odd that you would need to make a cash offer. I can't imagine turnkey markets being cash-only markets, but I could be wrong, maybe you found a real honey hole. However if the "great deals" are coming to you from a turnkey provider, there's a possibility that TK provider is just using sales 101 and creating a false sense of urgency to speed up the sales cycle and close you. You probably already know this but if a TK provider or any realtor ever urges you to make quick decisions, use cash, not have a 3rd party inspection and walk the property yourself before purchase, then you should do some more research on who will be counting your money (or your brothers money). 

If boyfriend is taking money out of his savings account to pay the girlfriend, the mortgage broker will probably see those transactions when they review bank statements, which they will. Plus if those payments are supposed to be pay stubs, you’d have to pay a crapload of income and payroll taxes on that money, about 25%. Doesn’t make any sense whatsoever. Boyfriend should just make a higher down payment or wait until he has two years self employment income history, and not have girlfriend involved in the deal if at all possible.

@Austin Mize apologies I just reread your comment where you mention you have a home loan already. Lots of options for a young man like you, I’d say if you want a more passive investment buy up some blue chip stocks or a fund with high dividend yield like the ones we’ve been discussing, or if you want a more active investment get into real estate and find properties that you can force appreciation on with sweat equity. Just be aware that the real estate route could easily turn into a 3rd job! It’s a job working for yourself that gives you control over your schedule but a job nonetheless. Even if you hire a manager real estate is a business you have to run while stocks are much closer to being a passive investment. If you have a passion for running a real estate business then jump in but if you’re looking to free up more time for other things it’s high dividend yield ETF all the way. 

@Austin Mize that's great that you're saving and learning about investing at your age, you've got a bright future getting started so young. . You didn't mention primary residence so I'm assuming you're renting? If so I'd focus on owning a primary residence first. Depending on where you live and how much you need for a down payment in your area I would recommend starting with a house hack situation either a large enough house to have roommates that pay your mortgage or even better a duplex. Investing is both an offensive and defensive situation where keeping expenses low is just as important as investing wisely and having roommates or tenants next door covering a mortgage kills both those birds with one stone. Regarding the car, the wisest investors I know drive old beaters even though they can afford nice cars, a big car payment is the worst thing you can do. I stick with reliable brands like Toyota and drive them into the ground. If you can get by without a car by all means do so it will help your DTI if you dont have a car payment.

@Stephen Flynt they were preying on first time investors, using heir personalities and podcasts and YouTube videos to build confidence. It seems like when they scheduled calls with seasoned investors they would turn them away or just not follow up. If an inspection or visiting the property was mentioned they would say “well this property is going to be sold in an hour so if you’re not ready to pull the trigger then this investment isn’t for you.” They would send property info, and if the investor showed interest they’d say “oh that one sold right away, here’s another similar one but you have to send money within an hour or it will be gone.”, Creating a false sense of urgency and convincing people to sign up without doing any due diligence, just going entirely on trust in Clayton. True definition of a confidence man. Looking back on the process and how they set everything up it’s very clear it was a scam and everyone involved on the selling end had to know it. Maybe in the beginning Clayton thought Oceanpointe could magically polish these turds somehow and turn them into performing assets but I doubt he’s that’s stupid to believe what he was selling was a viable product even in the beginning, and a year or so ago when he started getting compliants/ people asking for their money back he could have stopped then but he was in too deep and kept selling trying to sell his way out of it by attracting new investors and using those new funds to “pay rent” to his existing investors, who hadn’t yet learned that their property was vacant and never got rehabbed or rented.

@Jonathan White the time to stop supporting his cause was over a year ago. There’s no way Clayton and Natali didn’t know they were a part of a scam back then, they were getting reports from clients and people on here way back then but still pressed forward with fraudulent videos and kept selling more “turnkey” properties for $50k that they knew were practically worthless. Clayton’s first lie can be found in his intro bio on his Morris Invest channel. He claims “I’m Clayton Morris, longtime real estate investor...”  I wouldn’t consider someone who just got into real estate investing to be a “longtime investor”, and anyone who is a longtime investor knows that selling falling down properties in war zones and claiming  they’re turnkey properties is a scam. If you rewatch the YouTube videos through the lens of knowing what happened, you can pick out lots of lies: “Nurses and doctors rent these properties”, “C class properties are easier to manage than class A properties”, promising 12% returns without lifting a finger, etc. bottom line is Clayton and Natali should not have put themselves in a position to be trusted with people’s life savings. They were posing as experts when they actually had limited experience investing themselves. People who went through the process or got partway into the process have said Clayton and his employees told them they couldn’t get an inspection or come see the property first or they would lose the deal. That’s a sure sign of a scam. I’d say at the very least Clayton and Natali were negligent in the beginning and then became complicit. At this point they’re guilty of helping people lose their hard earned money.

@Dr. Jordan E Smith Knowing your numbers is a good basis as a starting point, but don't let numbers be the only thing that informs your decisions. In your comment you state "obviously more is better", but I'm here to warn you that when it comes to real estate this is not entirely true. At least, there's more to it than that. Cap rate and NOI and COC are important, but don't assume the better the numbers the better the deal for you personally. One thing someone wiser than me once told me when I was first getting into analyzing deals is that cap rates aren't linear as in the higher the better. It was counter-intuitive for me at first to realize how caps max out and stop being good at some point, but it totally makes sense. A 15 cap in a market where 6 is average should be a giant red flag. The building probably has structural issues or is inhabited by rival gangs or both to be priced that low. That building looks great on paper, but you'll be getting into a specialized market that requires expertise you might not have such as evicting gang members or fixing major structural issues. In my market for me the sweet spot is 6-10%. You have to learn both your own market and your own sweet spot. My advice would be rather than getting too focused on cash per door, think about what kind of business you want to run. For example I have an apartment complex in a transitioning neighborhood, C- property, great cash flow on paper. Up until doing that deal I thought the bigger the building, the more cash in my pocket each month, the better. However since doing that deal I have learned that I actually prefer owning smaller buildings closer to downtown that are A's and B's. They have less cash flow on paper but I like them better overall for other reasons. I like doing business in those neighborhoods better. I like driving to those buildings more so I go more often. I like improving those buildings more so I make more improvements. I'm seeing better appreciation. I have less vacancies and less evictions. I'm using my managers less so I'm paying less management fees. On top of all that they're less stressful to own and take up less of my precious time. Since you're a doctor, you might prefer dealing with A and B class properties even though the numbers aren't as good on paper simply because they might be something you'll stay interested in and have more pride of ownership in. I think that's a big factor that shouldn't be overlooked. It sounds like you plan to self manage in the beginning so this is definitely something to consider for you personally. Real estate is like any job in that the more you put into it the more you get out of it. Your profit, like any business, will depend on how well you run the business. Since you're making doctor money and working doctor hours, real estate may be a big opportunity cost for you to put effort into to begin with anyway, and you may be even less likely to divert time away from your high paying career for properties you don't like. You should only start a second job in real estate if you have passion for it, and maybe in your case that means buying more expensive properties that you actually like. In addition to calculating how much money you want to make, think about what kind of business you want to run.

Solar hot water systems (popular in the Carter administration), used large, usually tilted up panels on the roof to preheat hot water or glycol in order to lower the homes electricity and/or gas consumption and to heat hot water. Also sometimes the hot liquid was used for radiant heat. These systems are mostly obsolete, except for heating swimming pools usually in commercial applications and there aren’t many installers left in business and even fewer installers that like to work on rehabbing older systems. Does the home still have the panels on the roof and the large tank somewhere in the house? I would remove all of it, if it hasn’t been maintained perfectly over the years it is likely to have leaks. The solar industry today is focused on photovoltaic panels, which create electricity instead of heating water or glycol.

Morris blaming OP is not acceptable. Morris was selling the rehabs, he should have known it was going to cause a massive backlog and that he wouldn’t be able provide what he was selling. It’s called basic expectation setting and having a clue if you can deliver what you’re selling or not. Playing dumb is not okay when you’re dealing with people’s life savings. He should never have been giving financial advice to begin with, he’s not a CPA or an MBA or even an experienced investor, he’s a novice. He definitely shouldn’t have put himself in a position to be trusted with other people’s money given his lack of experience investing himself. Either he’s really dumb or knew it was a scam at some point during the last year and continued selling anyway. 

@Son D. sorry the local PD was less than helpful. Kind of surprised by that but then again, I guess I’m not that surprised.