All Forum Posts by: Account Closed

I really dislike the term "warzone." It has a truly negative connotation.

I don't know what a warzone is, but I invest largely in areas where there are shootings and crime. The truth is those are in fact the places where poor live. The poor are largely ostracized because they are in need and they live in undesireable neighborhoods. For me we are talking the West and South sides of Chicago which are famed for their violence. I have seen a lot of terrible things, methlabs, police cordons of places where there are bodies lying in the street (not just around Obamas house *wink*). I have seen condoms and needles, the homeless and wild dogs (in the city no less). I have dealt with gangbangers hanging out in streets, and have bought properties on streets with 8 brand new Cadillacs parked on it. HOWEVER I have bought and sold 50 or so homes in the last 2 years and I have NEVER seen a gun, or have felt or been threatened. I hire only local contractors and interact with the community as much as I can. I have become friends with many pastors in local churches, even working with them on real estate deals, and attend gatherings at local events. One does need to take precautions. In all our flips for example, a construction worker sleeps in the property every night. Dogs are useless to prevent theft - they are usually poisoned very quickly.

There are bad people such as gangsters and drug dealers that are in these neighborhoods. The fact remains that the poor need a place to live too. They have dreams and desires like the rest of us, to own homes, to accrue equity. THere are many that will live lazily on the Section 8 rent but they are to the benefit to us landlords and not to the detriment of anyone else by the government and our national debt.

Furthermore, it is in these neighborhoods that the real deals can be found. Homes in poorer neighborhoods are selling at a bigger discount that those in high income neighborhoods. The people buying homes in these places are real people with jobs that can support a mortgage. I am about to close on a property purchase for a rehab, with the eventual homeowner already with a mortgage lined up for 170k, with comps to support the sale (I bought the piece for 40k, 40k reno). She is a postal worker for 17 years and has already been working with the contractor to pick out tile and other customizations. THe property will cashflow for her as its a 3 flat and we will have the Section 8 tenants in place for her before she closes.

Something also to think about is why there is so much crime in these areas. These are policy questions no doubt but the inexplicably wide wage and income gap could be an issue. Just throwing it out there.

Please don't use the term warzones anymore. Real people live there and don't appreciate it. Not to single you out, but to everyone on the board. Thanks.

I bought Apple at $28 in the 90s. Never sold it. Thanks Steve Jobs (and my grandad for the gift of stocks)!

http://www.deloitte.com

Also for your first deal syndicating, what you should do is talk about your investments like you are doing it yourself. If you are talking to the right people, they will be interested, because if you don't come off like you are "selling" them, then they will sometimes ask if they can invest in you.

For example, I did a deal a few years ago (before I had my fund all set up). I was running everything through an LLC with partners taking equity positions as partners. I had this one project where the total cash outlay was 80k. I wrote a whole proposal thing and actually I had 2 people who were going to invest in the deal. A third person has been interested so I sent them my proposal and said something like... hey take a look at this deal. Is this something you are interested in? Unfortunately this deal is fully subscribed, I guess I could ask the other investors if they would like to take a smaller position... or I could lower my own equity position but that means I would have very little skin in the game(I made it seem like a real pain in the butt).

Next thing I know, I've got an investor throwing their money at me, threatening to get mad at me if I couldn't get them in on the next deal. Thats how you should approach it. Have a deal so good that people can't keep their hands off of you, and then exclude them (people want to be a part of something others are not apart of - exclusivity).

Good luck, V

I know how you feel. My shrink says I need to get 7 hours sleep every day and taking his advice has helped me a lot (for a while I was going on 3 hours a day for 2 yrs). I still dream about real estate though. If you feel like sleeping during the day then close your eyes and take a nap. Some of the most successful people I know take 20 minute naps in their office throughout the day.

Whether its addition or passion, there maybe no difference, the important thing for you to remember is that you have only 1 life. Sleep when you need to, eat when you should (not fastfood twice a day). Whole grains and fruit I guess are talked about these days... organic is fashionable but seriously we are what we eat, if we work hard we deserve to eat better.

Also you should plan on working until 80. If you have that kind of mentality then it really is passion. My dads a dentist and he is already 70+ and refuses to retire. If you have drive and passion like that (even if its for money [my dad doesn't like teeth that much...]), then I see success and long life in your future.

One thing Greg didn't mention in his is other avenues of raising money. Tieing it along with another post that just came up on the recent posts feed (how to syndicate ones first deal), one thing you can be working toward is raising money with a fund. It doesn't matter how young you are.

It is entirely possible to raise money with just a few years experience. Here in Chicago we have a group of fund managers that I hang out with a couple times a month (its a "braintrust" kindof thing we all shoot the shi* and have drinks) - its kindof like a support group. My fund is the smallest, but I am certainly not the youngest in the group. Others in the group include a 28 year old who has his own hedge fund with 500mm AUM (long/short equity - he said yesterday hes net short, for those who care).

My point is, yeah maybe you need some experience, but if you are good at what you do and can prove it, and bring people to your side it doesn't matter how young you are, you too can raise your own fund. Remember Ken Griffin of Citadel Asset Management built his fund out of his dorm room. Mike Burry dropped out of Med School and started his hedge fund. If you believe you can do it, you should give it a shot.

Unless you're at a big bank related fund like Goldman Sachs Asset Management or something, yeah you are on "Wall Street." But the best hedge funds are not on "Wall Street." Bridgewater Associates the biggest hedge fund in the US and is located in California. With that said....

Most important thing is your track record. This is the first thing will people ask for you - no one is going to invest in you if you can't show them your past deals. However, the thing about real estate is that you are able to actually develop a track record very quickly because you can flip a house or something within just a few months.

A lot of people pick the name of the street they grew up on, or if they have good memories of a particular street. What's wrong with BK? Be proud bro!

So its late, I don't know if this post is going to come out well. Since we are talking about bankers.... So I have had this conversation with my cousin very recently. My cousin is a banker. So I am telling him about how ridiculous I think it is that a bank would much rather foreclose on a person than attempt a loan modification. The context of this was that my friend's mom, who was a government engineer, but now retired was attempting to do a loan modification to get these great rates they are giving out. So she attempted and was denied. She is a stable, excellent citizen, an immigrant from India, she is now living on her pension. My cousin said that a bank would never refinance an old lady because she would probably die before the end of the loan. I am sure he was serious but it sounds pretty absurd. I understand the risks that banks have to take, and how they need to be more cautious with peoples credit and stuff... but I don't understand how they can borrow from the Fed at such historical lows, but offer me commerical loans at prime+1 but with a floor of 5%. WTF a rate floor?! You just can't help but feel ripped off. My cousins retort: the banks are trying to recapitalize. They have had heavy losses and they are going to raise their rates what are you gonna do about it? Apparently banks don't make that much! He says Citi only has an interest margin of 2%. SO my question was how does Citi make so much money if they make only 2% on their deposits? The answer was leverage. It is crazy in that universe. My cousin's a great guy, but I am not a fan of bankers.

A lot of these ratings are ways for real estate institutes to earn money. A lot of people like accumulating boyscout badges, if you know what I mean.