All Forum Posts by: Christopher Telles

@Todd S. congratulations on completing your first flip, and getting your new business past the inception stages. 

I'm curious, when you approached the seller (I'm assuming a bank) how did you or did you supply them with POFs?

CA property is or can be much more expensive than other places around the country. And it's seems most people focus on the larger dollars, but really the deals are similar in many respects in that the %'s are applied the same across all price points. 14% interest is applied the same whether on $100k or $1MM. The same goes for ROI: 20% x 100k = $20k Vs 20% x $1MM = $200k

The most significant differentiator is the dollars going into the the deal are much larger and this represents the biggest challenge for a lot of investors.

 Less is often more. Working to gain work is very different than working to earn gains. When your hard earned capital is on the line even the most liberal of folks tend to get conservative.

In a recent conversation with a prospective investor I shared a project proforma with him. When we discussed the maximum number I'd be willing to buy the deal he balked and said there was more room for use to go higher if needed.

I reminded him of our discussion moments before of the minimum gains (%) we'd use to guide the investment. He laughed, reminding me I hadn't any "skin in the game" since he was proposing to fund the deal 100% so what was I so worried about if we paid a little higher price if it meant "getting the deal". 

As much as I need an investor to fund my deals right now, I can't buy simply to gain work. My buys need to work gains.

Greed will guide fools, and fools will follow greed.

Your experience has guided you to never be made a fool. Stay disciplined.

 Many, many people have made substantial profits buying real estate in the Los Angeles markets since the original date of this post. And 2 1/2 years later the market continues its march towards...

It is not uncommon today to see MF listings hitting the market sub 3% CAP rates. Uniformly, almost all prime investment area MF property is listed at sub 4%CAPs. The rules for today are to find off market distressed assets or distressed situations e.g. divorce, bankruptcy, probate, partnership disputes, and compete for those assets.

Alternatively, another avenue for higher yields is to look at other asset types such as office, industrial, mixed use, retail, or special purpose properties. Or, look at other real estate business models such as FixNFlip.

Whatever your approach, you will need to look at a tremendous amount of deals, kick more than your fare share of tires, and make lots and lots of offers that make sense for YOU. The sellers initial response or rejection isn't within your control nor should it be of your concern. Find a deal that you like, and make an offer that works for YOU. Rinse and repeat until your in a deal that you know will pay you money.

 Ditto, what he said...

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Welcome to BiggerPockets.

To your success,

Chris

 It still doesn't matter. If you are wholesaling and not approaching the property under a creative financing scenario you don't need to know how much debt he has on the property. You make him an all cash offer with terms that allow for the time you need to find the end buyer.

What condition the property is in, what its worth to an end buyer (ARV) and what you are willing to pay for the property is all a wholesaler should need to know.

Actually, Oceanside, CA

You might also check into:

Oxnard, Point Hueneme, Long Beach, Huntngton Beach, Dana Point and Imperial Beach

Assessed value has little to do with actual market value. You should analyze its actual income and expenses and make an offer based on that analysis.

If the seller rejects the offer then move on to the next deal. Time on market is usually an indicator the property has warts or an unreasonable seller looking at the asset through rose colored glasses. Nothing you do will change a fools opinions short of being made a fool.

A very loooooong time ago I was a customer service manager for a utility. At the utility I worked for we had very few residential customers and obviously a majority of commercial customers.

Typically, a utility account for any entity was considered commercial for the same reasons you probably created the entity, to capture the liability for the account in the entities name. I imagine they don't care one way or another what type of property is being served rather their more concerned with the signor on the account.

If you want to use an entity to create an account then they will more than likely require you to create a commercial account.

Banks work the same for checking accounts, credit cards, loans, etc. An entity is a separate legal person in the eyes of the law, but also because it's not an actual person with a social security number, and it requires different handling that can only be completed through the use of its EIN number.

The utility will need to check UCC filings, and perhaps run a D&B report (similar to a credit report but for Legal entities).

The work around to creating a commercial report is to open a utility account in your personal name which they may or may not allow depending on the services in place upon the property.

 Given your description and the number of moving parts you might wish to consider using conceptboard.com Its a white board app that allows for the incorporation of documents, images, text, and drawings. It also has an internal communication feature although I've not used that aspect:

I have used its as a story board to assemble processes and then communicate those processes with context through images of materials and drawings with text box descriptions with arrows and pointers designating useful areas within the story.

Conceptboard is relatively easy to learn and once learned offers a superior platform to communicate ideas, concepts, samples, designs, business plans, etc.

Personally, I use slack.com to communicate with team members for business only communication. Slack works like a chat service but also separates from mobile phone network communication allowing a distinct bifurcation of business and personal communication.