All Forum Posts by: Tom Meade

had to revive this thread...it popped up in the "related discussions" of another thread I was just on. I too got my start from a Carlton Sheets VIDEO TAPE!

I was young and impressionable, so I didn't see through the BS then, and somehow found a way to buy my first house "creatively" with "no money down". Definitely thanks to that course - can't remember that I used any of his specific methods, but it got me thinking about creative ways to try and structure deals with OPM. And I knew I wanted to make my living in real estate.

But as has been posted here, there is no magic bullet. I quit a really good job in financial services to be a laborer for a small residential remodeling company. I literally learned the business from the ground up - first construction, then worked at an equity syndication shop and now a commercial mortgage company - doing some principal investing along the way.

Thanks to Carlton and a local "guru" to whom I "donated" over $15k (bootcamp and an unsecured promissory note before he filed BK). OUCH!

But hey, that's how I got to where I am today!

Hi Rhonda - seems like you've sniffed out the basic issue with all these types of "courses" - there IS no secret sauce!!

REI is pretty straightforward - buy something for less than you can fix it and sell it for. <<<10 second pause for effect>>> That's it!

It goes for SFH, mobile homes, duplexes, big multifamily, small multifamily, EVEN NON-PERFORMING NOTES!

My purchase price plus the cost to fix the problems (physical, financial, legal etc) has to be less than what I can sell it for. That's it!

As to whether you should dive into NPN investing as your first foray into REI, I'd say do a lot of research. There are some great threads here on BP about investing in NPN. Its a completely different animal than straight fix and flip or buy and hold strategies.

The guy standing up there saying, buy NPN, be the bank and re-fi with the owner is seriously oversimplifying the thing! With the new Dodd Frank regulations making their way into the world, you REALLY have to know what you're doing. If his $2k course actually taught you the details of how to execute these type of transactions, from start to finish, it might actually be worth it. Problem is that many of those courses are more fluff than substance - and that's really dangerous in the NPN world.

As has been posted elsewhere - you need to be really careful when using any of the "Rules of Thumb" espoused in REI - 50% Rule, 1% Rule, 2% Rule etc.

Use these Rules of Thumb as screening tools to know if a deal is worth looking at a little more closely.

Once you get into the level of due diligence that the OP is asking about, you're breaking down the underwriting into each specific line item, based on historical operations of that actual property, or on your assumptions about the current "market" rent, expenses, vacancy etc.

when we're underwriting larger transactions, we only apply the vacancy number to the top line Gross Potential Rent. Then we look at historical (if available) numbers for Other Income (laundry, late fees, app fees etc) and underwrite to a conservative estimate of total Other Income.

Hi Andrew - not to sound too sappy, but I believe this is the way things work - when you're putting in the footwork, the universe will conspire to help you (pretty sure I read that somewhere).

You're on the right track - a MOU or LOI (Letter of Intent) is definitely helpful to wave around when you're looking for financing. As you get closer to inking a deal, you'd love to be able to have them (the tenant) signed up to an actual lease, but LOI's have definitely been used to secure financing commitments.

Best of Luck!!

Hey Brian - I have a buddy who is a lawyer in Saugus. Buy him a coffee and a donut at Kanes and you'll probably get some free info. Anything more than that, he can get expensive, but knows his stuff. I'll PM you his contact info.

@Duncan Taylor - thanks for the call to action. I've definitely appreciated some of your posts, and your willingness to call people out, and I'm glad to see you're taking a positive step towards solving a problem you've been very vocal about.

I'm not yet at a place where I can offer to be a mentor in the way you've described, but here's what I AM willing to do:

Take a few beginner investors on a front seat ride with me on my next rehab deal. I'm closing on March 21, its a gutted 2-family, down to the studs. The plan is to rehab and either re-sell as a 2-family or potentially condo it and sell the two units separately.

If you live in Boston, metro west or the South Shore, and are interested in coming along for the ride, shoot me a PM. I'll have to see how many responses I get and then figure out a way to manage the whole thing....looking forward to it!

Here's why I'm doing this:

http://www.linkedin.com/today/post/article/20131101150259-658789-pay-it-forward-give-and-ye-shall-receive (no affiliation and nothing being sold there, its a link to a great blog post on LinkedIn, not written by me)

The Alchemist

Siddhartha

The Fountainhead

Agree, you should never assume anything. For example, you might assume that you could show up to a local networking event and talk to investors about all the various ways you could work together, even if one of those executions is in direct competition with the head of the REIA...but that might be an erroneous assumption, and you might be asked very directly not to talk to people at the meeting about that part of your business.

Fannie Mae actually has a small loan program for multifamily, and I think the minimum is $750k for non-recourse. Insurance co's definitely provide non-recourse under $1M, but typically only for top quality assets in major markets with well-qualified sponsors. I'm not sure there's an actual floor on an FHA-insured multifamily loan, but the cost, paperwork and timeline can be prohibitive for smaller deals.