All Forum Posts by: Andy M.

I always figure approx 6 months PITI payments per property in the bank as a general rule. If it works for lenders then I works for me. I do bend this rule though when I have multiple properties in one LLC. I figure I can have a little less with the combined risk (I.e. they will not all go vacant at once or require new roofs at once). Then if a big expense comes and draws the reserves down below the level I'm comfortable with, I let the cash flow build (it does cash flow right?) until the account is back where it needs to be.

How will the lender know? Fact is, they probably won't. But this isn't being honest and if they do find out it is loan fraud (if you knowingly did it). If you buy the property knowing you will never live there that is a lot different than buying a property and having to move out in a few months due to a job transfer.

I wouldn't mess with it, the consequences are not worth it (even if it is just being honest with yourself). Hope that helps.

You definitely need comparable sales data directly from your local MLS (multiple listing service). Do you have a friend who is an agent who can help you out? Ultimately to succeed in this business you will need to get MLS access and learn to do your own research by pulling your own comparables. The MLS will also provide you with active, under contract, and sold listings, which is extremely important for knowing where the market is heading.

Oh! I forgot number 4! Become a hard money lender to other new investors. ;)

The most obvious thing is that you don't have to pay the points, interest, doc fees, lenders policy, etc. self funding a flip saves you time, headache, and money. Other than that you are right.

The more logical route flippers take is:

1. Begin with hard money
2. Transition to private money (8-12%, no points)
3. Self fund

Check out Ali's blog post, it was good. Also read Jeff Brown's stuff. Bottom line, generally the high (12+) cap rates = intense management, low appreciating areas.

Best teacher is always action. Read here on BP, check out Sean Terry's podcast (he is right on the money and doesn't hold anything back), but most importantly start marketing. A wholesaler is nothing if he doesn't have any product. Speaking with local buyers can give you an idea of what they are buying, but I can already tell you what their criteria are... GOOD DEALS.

Learn enough to get out there and start having seller's call you, filter enough leads and you will find the quality ones, get contracts.

I don't have any Chicago contracts, but I can give you a little advice. This business works if you do. Wholesaling is simple, but not easy. I've been doing real estate for over 10 years now and it wasn't until later in my career that I have been able to wholesale effectively. Most investors can't wholesale because they can't see why someone would leave any profit on the table. Typically newer investors don't see many deals so when they find one they want to maximize it.

Keep at it. Find a local guy who is where you want to be and do what it takes to (read: add value) get them to want to help you.

My neighbor knows I flip properties so he asked me for some GC's or handymen who could redo his master bathroom. I told him that I didn't work directly with any of the subs (my project managers do that) so I couldn't give him an recommendations.

Fast forward 2 weeks, I asked him if he had received any bids for the work and he told me he had. He had received two bids from GC's one was for about $10,000 (which seems REALLY high for the job he described). The other bid was for $30,000!!! I seriously laughed out loud. Seriously, the contractor looked him in the eye and bid $30,000.

That is the craziest story I have ever heard of a GC trying to take advantage of a homeowner.

Agreed. Any book which requires you to take action on the items you are reading about will create better results.

Great book.