How a flip turned to holding the mortgage turned to massive returns

[christopher w]

Rookie

At this point I would not waste one more second of your valuable time. You know the deals are real, I know the deals are real, and anyone who trusts either of us believes it as well.

Dave

You need to free yourself from the intellectual shackles you have obviously built up over the years. Remember " to achieve you must believe" and until you start believing you are gonna stay right where your at. I mean that with all sincerity. We put up these mental roadblocks that prevent us from achieving our full potential. It's easier to tell ourselves it can't be done than it is to admit that we are sitting on the couch watching the biggest real estate land grab in history pass us by. You might want to check out some Tony Robbins.  As for the part about "Trust Fund Baby" what does that have to do with the price of tea in China? As if it somehow lessens ones achievements because of where they came from? That is some deep seated resentment you have their. I can only hope and pray that my children never have to go through many of the struggles that I have. Their is always going to be more successful than me, wealthier than me, better lookng than me, etc... But I don't sit around begrudging those people their lives. I just focus on what  I can do to enrich my life and the life of those around me with the tools that god gave me.   

[Mdhaas]

Gentlemen. This is the second time that I have had to ask you to tone it down.  You are both more professional than that.  If you want to argue and name call, PM each other.  Thanks!

[davewindsor]

Earn the respect of a broken down bum like yourself...You are an internet coward and a financial failure...Hardly the RE wiz u play...Anytime anywhere...Money or anything else I'm here...Everyone knows what you are...A loudmouth chump who can't produce he owns anything...You made your entire existence up...You are a fraud...Go away and lose some more imaginary money

I produce what I own on my own, not with daddy's trust fund.  I know what you're all about.  A fake who couldn't do anything on his own.

[rookieNYC]

  LOL....Dave they have meds for that disorder...

Ty Chris W.... ...Have fun in the Bahamas...

Mdhaas I was verbally attacked first...Discipline Dave Windsor please...ty...

[Sean_L]

I have seen it and it is all true. Rookie has no reason to lie. No one here does. Jake is right. It is all right there in black and white.

Dave,

Read the Art of the Deal by Donald Trump. It all all about getting things that nobody wants and are such a huge headache for people that they will basically give it away just to make it go away. There have been times when a loan has been so difficult and the borrower so shrew-like that I almost would rather it close it for free than deal with it any longer (although I never close for free).

Trust me there are all kinds of people making sick money on deals like this all the time. I personally know property wholesalers that are flipping 10 houses a month. You can pick up bank owned homes in the fly over states for 10K a piece if you want to buy 50 of them. Apartment complexes in NW Ohio for 7K a unit. Think about that. Imagine buying a 50 unit complex for 7K a unit and then investing in a condo conversion and selling them for even 50K a unit. So now you paid 350K for the whole thing. invest 15K per unit to fix it up nice (granite, recessed lighting, under mount sinks, etc...) and so now you have 1.1M in the deal. Once you have sold 22 of them you are already running in the black. That means the other 28 are PURE PROFIT. 1.4 M profit. You gotta have the cash and the know how to make the first deal work. after that people will see you know what your doing and they will find you.

Check out

www.powerproperties.com

They are using this same formula. Wash. Rinse. Repeat.

Peace out everyone I am heading to the Bahamas for a week!!

I was in Lakewood the other day meeting a GC. I really like that area. Older style craftsman homes.

[IRO]

I’ve been on this forum for a while.  I’ve read all of rookieNYC’s posts, and his input is invaluable.  I see deals like the ones that he is describing here occurring all the time in my local market.  In fact, the ONLY people who have managed to make it through the last 5 years in this business without LOSING huge amounts of money or net worth are people who are engaged in deals like this.

davewindsor, you call yourself an “investor.”  I was wondering if you could share with us a deal where you took money, put it into an investment instrument, and made more money.  At this point, that’s the only real reason why I like to read these forums.  There is a long history of people who have generously  shared their knowledge and experience to help people who want to learn how to handle their money this way.

Getting your head handed to you in a bucket does not make you an “investor” it makes you a loser.  Literally.  That is very harsh isn’t it?  It’s the truth.  Only a relentless search for the truth can improve performance and results.  I would like to improve my performance and results with regard to making money and growing my wealth.  I would appreciate it if you would refrain from attacking people and making them feel like their sound investment advice is being lost on a group of ungrateful money losers.

I would rather hear your success stories and ideas than your venomous attacks on people who are sharing theirs.

[tatertot]

I swear, you guys can fight about anything.

If I said my maple leaves are turning red, you guys could turn that into a fight, and then a dozen other people would pile on and it would be a huge melee.

News for all of you: if you think someone is a bullsh***er, you do not have to point it out.  Anyone with any experience can see storytelling for what it is. So roll your eyes, don't believe what they say, and get on with your life. You don't have to start crying "Mommy, he told a lie!!!" (Are you hoping he'll get grounded, or lose his ice cream privileges?)

If you don't like someone, don't do business with them. You don't have to make it your favorite hobby to try to turn the rest of the world against them. All you are accomplishing is to make the rest of the world notice that you yourself are bad tempered or ill-mannered.

Give the rest of us a break. I am very tired of it, and I suspect I am not the only one.

[rookieNYC]

IRO,
I’ve been on this forum for a while.  I’ve read all of rookieNYC’s posts, and his input is invaluable.  I see deals like the ones that he is describing here occurring all the time in my local market.  In fact, the ONLY people who have managed to make it through the last 5 years in this business without LOSING huge amounts of money or net worth are people who are engaged in deals like this

Thank you for the kind words and I enjoy contributing to this forum...I have engaged in these type of scenarios on a *much* larger scale with my career but I cant talk about the specifics and I didnt directly profit because they were work related...At the same time this is why I chose to get into the funding end of the business vs trying to *catch* it right being a RE investor...I have seen the pitfalls from many people involved in the RE investing end  of the business but all the same the collateralized lenders for the most part seem to *always* profit rather than sometimes of the RE investor (but it does take significantly more capital than RE investing as you know but I feel the risk is significantly lower)..It was propertymanager (Mike) and fdjake that really opened my eyes to other side of landlording/cashflow investing etc..I don't *knowingly* practice and seek out *loan to own* situations but I wont lie and say that my deals are not set up to be so my capital is *very* safe...Each deal has to be structured that the investor wants to pay off the borrowed capital because their equity/capital invested is at risk..This is why I constantly say *skin in the game* is the only way to lend to someone..I have no problem making the deadbeat borrower the loser if its between me losing capital or them...I dont have to tell you that business is a zero sum game...

tatertot,
 I do apologize to the direction this thread has gone...It was never my intention for it to be an open battle..I started this thread to explain how I profited from a certain *small* RE transaction...Instead it turned into an episode of conspiracy theory..Chris W will return from the Bahamas with a full email inbox of other deals I have been doing also which are irrelevant to this thread...Once again I apologize for my behavior..As professional as I am I do have my street side still which rears its ugly head when challenged or disrespected..

[InvstrPaul]

At the same time this is why I chose to get into the funding end of the business vs trying to *catch* it right being a RE investor...I have seen the pitfalls from many people involved in the RE investing end  of the business but all the same the collateralized lenders for the most part seem to *always* profit rather than sometimes of the RE investor (but it does take significantly more capital than RE investing as you know but I feel the risk is significantly lower)..It was propertymanager (Mike) and fdjake that really opened my eyes to other side of landlording/cashflow investing etc..I don't *knowingly* practice and seek out *loan to own* situations but I wont lie and say that my deals are not set up to be so my capital is *very* safe...Each deal has to be structured that the investor wants to pay off the borrowed capital because their equity/capital invested is at risk..This is why I constantly say *skin in the game* is the only way to lend to someone..I have no problem making the deadbeat borrower the loser if its between me losing capital or them...I dont have to tell you that business is a zero sum game...

The funding part of business has always been interesting to me.  I don't even come close to having enough capital but that's the area I'd eventually like to focus on.  I'll probably start low with paying liens, or mobile homes, etc.  I've even pondered about those payday loans or cash for your car title type of places.  Yeah most of your customers are probably making bad decisions but the return on investment is crazy.

I enjoy hearing about the finance side and other imaginative ways to make money so lets try and keep this discussion going.

A question I have is what would you all think a decent entry level amount of money would be required to start being a HML?  I know it probably depends on your area and how quickly you think each deal is going to be turned around.  I was thinking you'd probably want to have at least enough cash to buy a median priced home for the area and set up the loan for 3-5 years max.  You probably wouldn't be able to quit your day job if you started out with only enough money to bankroll one deal.  But, you'd probably get a decent ROI and it'd snowball down the road.  Would lease to own and seller financing maybe be the better way, especially starting out?  This way you could buy a junker, fix it up, and then make the note for more than what you spent on the place.

[rookieNYC]

A question I have is what would you all think a decent entry level amount of money would be required to start being a HML?

This is a question that I have answered to my friends before...Being a private *collateralized* lender requires a decent amount of capital...Can I put a specific number on that statement...Basically you have to figure what you feel you want to make and figure your returns on the deals you are doing..If you are happy making 50k a year you will need 200k-300k to start lending,if you want to make 200k-300k a year you need 1.2-1.5 in funds....And you cant really look at the defaults that happen because in reality they are rare in the business because if you are structuring your deals correctly the default rate should be low...Not because you run credit reports,background checks etc of the borrower..Only because you valued the property correctly and lent correctly...If the borrower is going to take extensive financial loss they will try anything they can to pay you back *before* the option of default occurs to them..

Lease to own and seller financing?...I only lend on NOO properties...(for the most part)..I have done deals where I bought homes at a deep discount and sold to people (at a higher price and at low double digit % mortgage rates) who live in the home and I hold the mortgage (with a call option)..But its a very small part of my portfolio of loans.The reason being I like a faster turnover of my capital to make it compound faster..The entire premise to making money compound is to make sure you keep putting it out in deals...I do know people who have huge amounts of money locked in %6-%7 mortgages for 30 years and they are happy..I'm not one of those people...%95 of my loans are 6 months to 1 year...And no more than %40-%50 LTV...I currently have 23 loans in my portfolio...I want loans coming due monthly and I created new ones just as fast...Rotating the capital as best I can in highly collateralized deals...Another method I use is I dont want an enormous amount of capital tied into any one loan...I'd rather have 20+ ($100k+) loans than 1-- $2,000,000 loan..The reasoning is the odds of all 20 loans having an issue is close to %0 vs the odds of having an issue with one large loan...Dont get me wrong there are exceptions to every method but you have to find what works for you...There are some great books I have read on private mortgage investing...

Private Mortgage Investing: How to Earn 12% or More on Your Savings, Investments, IRA Accounts and Personal Equity--A Complete Resource Guide with 100s ....Secrets From the Experts Who Do It Every Day [Paperback]
Teri B. Clark (Author), Matthew Stewart Tabacchi (Author)

Make Your Money Make Money For You: A Step-by-Step Guide to Trust Deed Investments and Financial Independence [Paperback]
Amarjit Ahluwalia

Private Mortgage Wealth: Simple Strategies for Making Double Digit Returns [Hardcover]
Charles A. Aziegbemhin

and this book also...  http://www.prosperbooks.com/home.html

I did read (skim) through each of these 4 books an found them valuable to me...Dont get me wrong,I dont know it all but I like to learn as much as I can...The most important part of this business is getting the intrinsic value of the property( you have to search if the area has foreclosures for sale around the borrowers property)..You need to know what these foreclosures have sold for or are selling for to insure you dont over lend on the property which is the worst mistake you can make.....That has to be done by yourself and your own due diligence (but I also work with RE brokers and commercial brokers if a property is tough to nail down a real intrinsic value to)..I use BPO's sometimes,only because on the rare occasion its hard to get comps for commercial properties..Dont take anyones word...Learn to do your own due diligence...Have great attorneys that know about the state laws and usury limits..Make sure they understand what your intentions are...The more loans you do the stronger your team will become...I have feeder brokers,RE brokers,appraisers,attorneys, and basically contacts for every aspect of my deals...I also make sure to take care of every person involved in my business $$....I want them to respond to me asap when I call for advice on a deal..The only way a person will stay involved with you is if they are benefitting financially...The paralegals at the law firm I work with are all taken care of during the holidays..I want everyone to go the extra mile for me when researching my deals and preparing my contracts...After all I'm in this business for the longterm and I'm building a foundation for my future..No matter which law firm I call I want to be known to the people and have a mutual respect..I know it sounds corny but I know *all* of my  attornies secretaries on a first name basis and take the time to be cordial to them..


Fwiw I dont like to engage in rehabs or rehab loans...I dont want to babysit a project...I like purchases..Example...A borrower comes to me saying they are interested in a NNN property..Cost $550,000 and they are willing to put in $275,000 of their own money and they are looking for financing for the other half..This type of deal I like...I only lend to people with money...Or someone who has a *free and clear* NOO investment property and they want to a cash out refi...I do extensive research on the property and lend at %40-%50 LTV after my attorneys and paralegals do the legal work..I like *low risk* loans....

[allagash]

Another buddy of mine was selling ultrasounds to podiatrists. Noticed the whole foot fungus laser treatment thing that is starting to happen. Called a laser company. Signed up to be a distributor. Immediately started marketing to his podiatrist client list and sold 12 in a month. The commission on each one is 10K. 120K in a month. It sounds like total BS but its true. I have seen the checks. Plus the guy is my oldest friend. Here is link to his web-site.

http://www.medicallasersolutions.com/about.html

great post Chris...

-Mike