All Forum Posts by: Jason Krick

@Account Closed has one of the best reputations on here.  Getting some advice and perspective from him can help you out tremendously.  

Listen to his podcast and his personal story.  It's inspiring.  He has an amazing amount of knowledge.

@Account Closed

First, a couple things.  My disclaimer is that I am an "investor" who is still looking to complete my first deal, so take that for what it's worth.  Second, I can be a bit long-winded, so I apologize if this turns into a short novella.   I'm no expert.  I'm about as far away from that as you can get, but, I am addicted to BP.  These people are amazing.

I will address a few of your statements above, and give a tip or two on what might help engaging others on here.

We'll get to the credit later.  First, it is clear by your career paths, specifically as a teacher,  that you are are well-read, educated, and goal-oriented.  You are certainly more well-read and educated than me.  As for your drive, I feel fairly confident in stating that this is one place where that trait will not be upsetting, or a turn-off to members.  These people are the most driven individuals you will ever encounter.  People who have built multi-million dollar businesses from nothing, and give their advice freely and without hesitation.   

I am torn between what I have learned in sales that you have to sell with a good (and true) story, being really unsure what is and what really is not out there in the realm of deals thanks to gurus, and being told you are supposed to demand what you want of life if you expect to get it. 

I get the confusion regarding lessons from the gurus.  I was lucky enough to find this site before I went that route.

I Tried to search for other information I needed, but since my last spin only received criticism I tried a different route with a different attitude. Sorry if it feels scattered but I am trying to interact and learn. I assumed part of that learning process is to shift your approach if you find it is not being relieved well. Edit what is not working, shift and keep aiming for your goal. Apparently I attempt to do all the above too quickly to peoples liking.

Here's my suggestion in regards to the above statements:  DON'T OVERTHINK IT.  BE YOURSELF.  These forums are not filled with a bunch of potential clients.  You don't need to try any sales strategies on here.  It's simply some people hanging out and talking about real estate.  Think of it like a gigantic coffee shop that fits 350,000 people in it.  Just be who you are, and save the sales trainings for your business dealings.

So I would like to ask you Jason if you were to have a check list of all the vital information needed for people here to help me, what would it include? Thanks for reading.

Again, no checklist is needed.  Just talk like you would be if you were having lunch with someone.  People respond to others being open and honest.

Here's an example using myself.  The guy typing this will be 6 years removed from a chapter 7 bankruptcy this November.  I found a way to get $80,000 in credit card debt before the age of 28, while earning about $25,000 per year.  I decided enough was enough, but I had no way to get out of that hole.  Chapter 7 was my only option.  It's not something I am proud of, but it is part of me and my history.  So, believe me, I get the stress.  I've been there.

So,  here are my suggestions:

• BE YOURSELF ON THE FORUMS
• If you want help on the financial difficulty you are in, explain, in detail, what the deal was, who was involved, and how it affected you.  Ask for suggestions on how to proceed moving forward.
• In regards to your LLC post, if it is a series LLC, explain that in your post. State what each entity is used for.
• If a deal with private lenders went bad, they need to know the details of the property, any agreements with private lenders, terms, etc.  The past can't be changed, but they can point out pitfalls to avoid in the future.
• If you think gurus are a problem, state what courses you took.  Chances are, someone on here also was a student, and might help you with concepts.  At the very minimum, you could be helping others avoid paying for a course that you believe is not worth the money.
• Be humble and eager to learn.

Again, forget about shifting your approach, checklists, etc, when talking to the members on here.  If you just be yourself, I guarantee you that you will be well-received.  Use specifics, and don't be afraid to put yourself out there to receive constructive criticism (some of the most brilliant minds on here are very blunt.  Ask me how I know.  Don't take it personally). Ask questions.  Don't be afraid to admit what you don't know.  

Your drive and passion puts you ahead of about 99% of the people out there.  Just be yourself, and the rest will come.

All the best to you,

Jason

I just realized that, somehow, my mug got turned sideways.  If it wouldn't look so unprofessional, I'd keep it.

Just a random thought this evening.  Nothing to see here.  Move along.

@Account Closed

Please take what I am about to say to heart, and not personally.

In less than an hour, you have started a bunch of topics throughout the forum. One of them, the post comes off as almost demanding that someone hands you a deal of a lifetime. You talk about bad credit due to how bad the deal went. Then in another post, you talk about how the deal actually made your LLC money. Yet another is a rambling post about gurus.

None of these provide details needed for other members to help you out.  I may be way-off here, but you are coming off as extremely emotional right now, and throwing a ton of different stuff on the board as it comes into your mind.

I would suggest that you pause, take a deep breath, gather your thoughts, and take the time to write out a post that spells out exactly what is going on, and what guidance you are looking for.

Again, I may be off-base, but that is how the posts are coming off to me.  Let these people help, but give them what they need to help you.

Best of luck.

Update:  

I have walked from this deal.  I actually decided to come up $2,000 and was told by the attorney that the seller was considering it, while exploring "other avenues".   At that point I informed the attorney that it was clear that she had no intention of selling to me at the agreed upon price, and used my negotiations simply to obtain a continuance, in order to "buy more time" before the sheriff sale.  I have no desire to work with someone so misleading.

Off to pursue other leads...

Thanks Al.  I am 99.9% sure the attorney was blowing smoke.  I can't imagine she would seriously recommend it going to auction and her client taking the credit hit.  If that's their plan, best of luck to them.  I've searched for close to a year for my first deal, one that fit my parameters and had enough exit strategies that I shouldn't get myself in too much trouble if things went really bad.  This deal hits everything.  However, all of her huffing and puffing has not changed the numbers on my spreadsheet, yet.  They still say the exact same thing as when I analyzed it.   If they ever magically do change, I will adjust accordingly.  If they follow through with the threat, I will go back to searching for "my" deal.  

@Christopher Telles  Thank you for the great tip!  This line is great:  "Mrs Dickwad didn't like the terms and felt they should be changed.". 

@Elio L.

The seller and I have built a great relationship.  I can always tell when her emails are a line regurgitated from her lawyer.  I always preface my response with this disclaimer:  "(Name), this is directed to your lawyer, NOT you."  I then proceed to pick apart every aspect of what was suggested.

At the end of every response I always reassure her that it is her attorneys job to get as much money for the client, and to protect him/her.  I would be worried if she wasn't pushing to get maximum value.

However, everyone has their limits and I came close to reaching mine.  At the end of the day, I know darn well I am their only option, they do too.  I wrote a fair offer higher than what was necessary so that the seller could come out with some extra money in the deal.  My numbers still worked and I am trying to help make up for $3,000-4,000 the seller lost when all her tools and supplies were stolen as she tried to renovate.  My other posts have the whole story in more detail.

I guess I was viewed as a pushover.  

I've been dealing with a seller for almost two months now.  She is motivated to the point where she will sell it for the judgement amount, which is good, because I can not offer more than that.  The complicated part of this deal is an insurance claim that she will assign to me to fix plumbing, furnace, and hot water heater due to a pipe that burst.  Assigning those proceeds is the only way to make the deal work.  The property is up for sheriff sale.  I will state that my relationship with the seller has been fantastic

Today the seller asks me to call her lawyer. We exchange pleasantries, and she immediately starts unloading on me about how ridiculous my offer is, that I should pay fair market value, and then I interrupted her and asked what she thought FMV. She quoted the appraisal from 2012. "Perfect" I said. "You get the house in the same condition as when it was appraised, and I will pay that. Did the house have kitchen then? Bathroom? Half bath? Did the roof leak? Was the plaster coming off in chunks? Ok, so get it back to that condition, and I will pay it."

She responds with "Then we will keep the proceeds and you can buy it at the sheriff sale for the judgement amount."  

"I wouldn't touch that property at a sheriff sale knowing what work is needed, and any investor who pays that will lose his/her a--.  

The next 15 minutes is her basically saying nothing but "Well, you got to come up higher."  After about the 12th time I heard it, I will admit that she broke me.  I caved.  I upped my offer.

I finally relented and agreed to up my offer.  I said, "Ok.  I will come up from my original offer.  I am going to find out how much you will charge your client to make this phone call, and I will up my offer by EXACTLY that amount, because I can think many more productive ways for your client to spend her money."

I felt like walking away, but got over it.  My standing offer is:  my original offer+1 billable hour.  I'm waiting to hear back.

@Steve Smith @Nick Noon

Yes, I accounted for 10% for both, as well as 10% for CapEx.

So, to summarize the long post, I calculate close to $200 cash flow, $5000 for reserves from the insurance proceeds, cash-out refi where I could pocket another $5,000-6,000, and be into the property with no out of pocket money.

I also have the garage I may rent.

If you check some of my posts, I tell a bit of the story on this property.  The seller lost $3,000-4000 when her rehab materials were stolen.  I stated I would like to pay her back for that.  If the deal goes near to what I have above, she will get her money back and become whole.

I am looking to finalize a sales agreement on my first property.  It looks like a good deal as a flip, or rental.  My initial plan is to refi and rent it out.  Here's the breakdown:

Property is a 3/1.5 end row home in a B-/C neighborhood with a strong rental demographic. All the numbers below are direct quotes from lenders, contractors, and insurance agents (exceptthe insurance expense as a rental).

Purchase: $25,000

Renovation: $21,000 (includes permits, no dumpster needed)

Closing Costs: $1250 (closing costs, appraisal for HML, title, etc.)

Holding costs: $4168.78

--6 months interest at 14% $2734.50

--Insurance quote for vacant house--$1034.28

--Utilities--$400

Total --$51,418.78

Points—$1577.22 (6 points)

Down Payment--$12,000

Amount owed to HML--$40,996

FLIP ANALYSIS

ARV: $80,000

Realtor commission 6%--$4800

Transfer Tax, Closing costs, etc. --$5000

Total Debits--$9800

Profit--$70,200(net proceeds)-$52,996 (HML+downpayment)=$17,204 profit

RENTAL ANALYSIS

Loan Amount--$52,996

--I will do a cash-out refinance through a commercial lender at 75% of the appraisal value, or $60,000. I haven’t decided whether to take the extra cash to use towards the next deal, or keep the extra $7,000 for my next deal.

Monthly Rent--$900

Mortgage--$284.49/month (amortized 30 years@5%)

Insurance--$45/month

Taxes--$103.95

Expenses--$180 (10% vacancy, 10% maintenance)

Capex--$90 (10%)

Expenses w/o mortgage-- $418.95

Expenses w/ mortgage--$703.44

Monthly Projected Cashflow--$196.56

A few notes:

1) I did not factor in property management, as I plan on managing for the foreseeable future, and would not consider hiring it out at least until rents are raised. Even if I must hire management immediately, I take $90 off and still cashflow at $100/month.

2) Capex—this should be over-estimated, as the entire house is being redone. There will be brand new plumbing, furnace, water heater, new kitchen cabinets, bathroom, etc. The only future capex would be the roof, which my contractor estimated has about 10 years left.

3) There is more work being done than in this analysis. The previous owner had a pipe burst in the basement and is receiving $17,000 from the insurance company. The seller is assigning these proceeds to me. That is where the new plumbing, furnace, etc is being paid from. Although I am considering this a wash for analysis purposes, I have an estimate to do the work for about $5,000 less, which will be used as part of my contingency funds.

4) Tenants are responsible for all utilities.

5) Tenants are responsible for lawn care and snow removal.

6) There is a detached garage in the back that opens to an alley.  I also plan on trying to rent that out for $50-75 a month.

What does everyone think?  It looks pretty solid to me.