All Forum Posts by: Todd Pultz

@Jonathan Taylor Smith @Damien Papillo

I couldn’t agree with Jonathan more. Most are not equipped to handle investors or pretend that they really are! I got my license this year because I was tired of dealing with realtors and paying them the commission when I did all the work.

However, I just recently spoke with my broker and we are going to put a class on to teach some of our agents (ones that want to) how to work with investors and specifically for the brrr strategy. Part of this is teaching THEM how to drive for dollars and bring that to their investors. This is a gap in our industry, but it could be such a win win for everyone. There are some good agents brokers out there who are investors and will do good for you, but you have to ensure your investment goals are not the same. You don’t want their bread crumbs

@Brian C. @Joe Villeneuve

Brian, I’m not sure what experience you have in real estate, but please take this the way it’s meant and not be offended. Your first mistake is posting a possible deal on here and asking for feedback and then attacking those that give you feedback. Joe is a pretty intelligent dude and is right on with most of his comments.

Your theory on how to calculate cash on cash return was used to show a positive mark on this deal while failing to point out you will have negative cash flow for 12 months thus making your CoC return in year 1 NEGATIVE.

And you are off base with your statement that every real estate deal is based on hope like this one. Many investors on here have developed a strategy to evaluate a property to mitigate risk and be successful. That doesn’t solve everything, but experience sure as heck helps reduce the risk factor and we underwrite to account for worst case scenarios. Then if the numbers make sense we do the deal. Your whole deal is based completely and solely on hope that everything goes the way you want it and you have 0 assurance that any of this will work out. Your worst case scenario is you drop 14k year one, then this guy doesn’t move out and doesn’t pay rent so you start dropping 1200 a month again in year 2. While you try to evict, this guy gets a lawyer through public assistance and he ties you and this property up in civil litigation for 12 months and then you ultimately lose in court and have 0 to show for it. Now if you win in court, you spent 14k year 1, 14k year 2 and then 15-20k in attorney fees and then the guy is pissed he lost and he destroys your house and you dump 30-35k into it to be rentable again. All in all you now spent around 80k and your still negative cash flow!

And I don't buy your cash flow number either with a 180k mortgage, HOA, insurance, water, cap ex, vacancy loss etc. I think you are using what @brandon Turner refers to as "lying" cash flow instead of "real/true" cash flow

That being worst case scenario, if you are ok with that and the numbers still work for you, jump into the deal and each one of us will pull for you to be successful.

But, can you not just find a house without all the risk and positively cash flow year 1? This deal makes no sense to me at all. While I appreciate you being creative and hustling, there are better deals to be had out there.

Best of luck to you and I hope this works out for you, I really do! I guess I just feel a duty to give honest feedback when a deal looks really bad! We’ve all made mistakes along the way and most of us wish we had this platform before some of those mistakes.

@Diane Savoian @John Morgan hold on, where are you guys finding these renters with credit scores over 500? Where are you finding renters with any credit for that matter? Totally kidding, but I’m not! In my C world credit is tossed out the window otherwise I would have no renters. However I’m looking for key indicators like owing utility companies money, check cashing collections, cell bill collections. The we combine that with their criminal history and ensure there is no eviction history. However, I will take someone with an eviction depending on timing. And lastly, I look them in their eye and figure it out. I do not do this in our B or A properties, but score doesn’t matter as much as what’s driving the score. I run 3% or less vacancy rate on hundreds of doors. Actually my worse tenants are the ones that have good credit. Maybe it’s because they hit a road block and had to settle for C but in the back of their mind they really feel they should be in B? They tend to be a little more needy.

@Adrian Fajardo let me try to clear up what I meant. You can find plenty of lenders especially hard money that will give you 80% of purchase price so 21-22k will close one quad at 100k, so you could easily take down 4 quads at the same time. However that is not the goal! We want to get all in at no more than 90k, so that includes purchase, repair, closings. Then after raising rents and making some improvements we should be able to get it appraised at 120k. Most lenders will you give you 75% on refinance, so you could pull the 90k out and pay off your hard money and yourself leaving you with 0 in the deal. If you could do that on 4 quads around the same time, you could use that initial 100k to do all 4 with a little left in reserves. Then after refinance you can reuse the money to do it again. If your a newer investor and not use to turning properties stable quickly you may not want to do 4 at once, so I would suggest staggering a month apart. 8 buildings which is doing this twice will have you cash flowing 8-10k a month with 0 in the properties. This is not as easy as looking at MLS. You need to hustle and drive for dollars. You want to find properties that have low rents and I like finding owners with horrible financials as that may make it harder for someone to get a loan on them with out the stellar tax schedule for each property. These are negotiation tactics. You may have to come in with a quick close and no contingency to convince them, so if your not not comfortable doing this on your own, get your team ready!

@Leo F. Send me inbox and we can connect. I don’t wholesale. Investor first, property manager 2nd and realtor in the mix.

@Leo F. I have plenty of friends your way and they say the same thing. Cincinnati and Columbus do not work like that with ease either. Dayton is overlooked a lot because we don’t fit the model for growth etc. but several Midwest cities like Dayton can get this done. It’s not simple. We drive for dollars and find off market properties, but it is very doable! You don’t get the high appreciation but you also don’t get the drastic down turns. Dayton and others are stable cash flowing markets with average appreciation.

@Jabbar Adesada not hard to do with a little hustle. Let me know if there is anything I can do for you

@Adrian Fajardo tackling a package deal like this is great. Owner financing would be my first route, but you have to figure out what seller wants first. Higher interest, bigger down payment, short balloon, higher purchase price etc? I always start with trying to determine their monthly NOI and try to work on an offer that nets them that much and just a bit more monthly. That might be intriguing them if you are removing the headaches. The goal is to get in at 70% ARV all in, that way once you Raise rents, fix up etc., you can pull all money back out and have 0 in the deal. If you go to a lender they will be able to do a portfolio loan or blanket mortgage. The key is to make sure you can get individual properties released from the mortgage if need be. Get in at the right price and rinse and repeat! You need to make sure there is value add here and her calling a realtor is not a great start. I would draw up an offer ASAP and present it to her fast. Get her thinking

@Adrian Fajardo I am not currently focused on this personally as we are purchasing larger multi-family. However, this is how I started my portfolio. The preference is to buy multiple quads or tris at the same time! The poster said he had $100,000, so that could easily get him into 4 quads, get them stable, refinance to get money back out and do it all over again. We have always liked portfolio or package deals.

@Mark Niles start marketing that your accepting deposits for fresh rehab rental. Sure post pictures and details about what is done, but don’t exaggerate. Just don’t rent until your completely finished. And do not promise a move in date unless your 100% confident you can deliver! Good luck