rookie…fdjake…
thanks again for trashing the landlord vs. banker scenario…
leagues ahead…
all the more reason to figure out how to generate boatloads of cash…
-Mike
Jay,
do you recall the online posting discussion that you had with Fadi?
I remember glancing at it…where he was describing to you the nightmare he had with owner financing…
any thoughts on how to avoid what he ran into…or a link to what was discussed.
thanks,
-Mike
my 7 year old’s contribution… :banghead :banghead
Yes, I remember. “Buyer filed Chapter 13, balloon payment due” in the Subject To, etc forum section or http://www.reiclub.com/forums/index.php/topic,49824.0.html
It’s really hilarious to listen to all the naysaying about property management. It’s not that hard. However, I can understand how it would be a nightmare, if the first thing you did was ignore the terms of the contract, if not the due dates… [shaking head] And the over-the-top description of the money pitt from hell that rentals are described as being is really unnecessary and inaccurate for half-way competent investors.
I’m willing to admit that maybe sheer bad experiences have refined my approach and so it doesn’t seem to be a problem for me, but also it’s that I insulate myself from day to day operations with competent management that I’ve trained, and in turn can dispassionately insist on 100% compliance from my renters …and end/user buyers, which any investor should do.
Meantime, I manage my managers and I manage my note servicers, too. However, I do personally manage one property for my church, which is a personal favor and ‘donation’ of my time (and talents), but that’s the exception.
Meanwhile, I deliberately market my rentals and flips to credit challenged buyers and renters. Why? Because I know how to market to and negotiate for more money with this niche of customers.
I kind of held my powder, because I wanted to see where this thread would go as far as the bragging rights on returns, etc. I am hard-pressed to settle for the returns mentioned here with note investing. No offense. I’m very glad everyone is making lots of money. That’s the beauty of free market capitalism. Everybody can have a piece of the pie, if they work for it.
Meanwhile, I also seller finance real estate. However, I can’t really calculate the return, since there’s not enough zeros on my calculator. However, maybe you can help me figure it out…
I invested just enough money into a nice, $300,000, 5/3/3 house to get the seller out. The seller owed $260,000. I gave him twenty bucks for his equity (never mind here how I found the seller who was ready to walk from $40,000 and give me his deed for twenty bucks … I sell that information). :biggrin
Meantime, I re-marketed the property for $330,000 with no qualifying, no credit check, no income check, and asked for (and received) $30,000 down. BTW, this was an attractive, value-added home in a new neighborhood.
Now, I realistically ‘invested’ about $2,500 in this house, when I include the twenty bucks I gave the seller, the total ‘closing’ costs (which I minimize in my own special way), and finally paid for my marketing.
I still have no idea what this actual return is, because my calculator won’t go that high. But I got my $2.5k back with the down payments, and pocketed the remaining $27.5k. Now I collect both the spread on the payments, the interest on the remaining equity (that I created out of thin air), and now hope my buyer continues paying me until the loan pays off. And yes, at $330,000, I’m not expecting to be paid off anytime soon, but I do have some triggered deadlines built in.
So, I completely appreciate and understand the ‘note’ business being discussed. However, at this point, I’ve got enough energy to continue making money with extremely high leverage, hands-on, deals that yield infinite returns.
That said, the thought of leaving 30k in a $150k deal, just stinks like a herpes infected prostitute to me (just to class things up). Why not borrow the money back out and rinse and repeat…? Then we’re talking huge leverage with truly great returns. Still, it requires lots of cash…and credit up front…and lots of dealing, so this probably isn’t the beginner’s choice in my mind.
Another reason I like ‘owning (and managing) real estate’ is that the good deals are, as we’ve discussed, so hard to come by. So, I want the work I put in to pay and pay and pay.
Meanwhile, management should not be a big deal. It isn’t for me. All of the testimony I’m hearing just reflects a failure to deal with it professionally, because it’s not intrinsically, or impossibly, complicated, or a risky part of investing. Lack of management is a problem…
Man…WHAT A DEAL!!!
$330K…WOW
That sounds like one of those ARMONDO MONTELONGO no money down DEALS!!! :flush :flush
What’s the monthly PAYMENT on the home that YOU have to FLOAT each and EVERY MONTH if your BUYER stops paying??? MY monthly payment on my $30K is ZERO…And the REASON I don’t BORROW that money is simple, I DON’T NEED TO!! I’ve done 4 wholesale flips this MONTH that generated $197,000 in NET profits…THIS MONTH…I will GLADLY forward the 8 HUD1’s to a MODERATOR here who can confirm the prices, the deals, and the spreads with State real estate sales recordings. AS I’ve said here before…If you know what you’re doing, the game eventually becomes FINDING a HOME for your CASH. When you get to the point where you need to spread your PETTY CASH accounts among 4 different banks so as to not run up to the $250,000 FDIC insurance limits…$30K is FU MONEY! Or my personal favorite…SANDWICH MONEY as my friend Rookie calls it.
As to your BEAUTY of a deal…What are you RECEIVING from the buyer for the…
Interest rate???
Length of loan???
MONTHLY PAYMENT???
What’s YOUR PAYMENT on the $260K???
You gave us N O T H I N G. :banghead :banghead :banghead
But WAIT…You did give us a LITTLE GEM…A SLIP…A WINDOW into your BS…
"I gave him $20 bucks for his equity (never mind here how I found the seller who was ready to walk from $40,000 and give me his deed for twenty bucks…I SELL THAT INFORMATION.)
And THERE it is folks…THE TRUTH. This guy is SELLING A PROGRAM!!! :shocked :shocked
I bet he REVEALS all his SECRETS with the GOLDEN CIRCLE JERK LEVEL MEMBERSHIP!!! :bs :bs
Buddy…SELL IT SOMEWHERE ELSE…
Rookie
Bluemoon
Chris W
ME
and a BUNCH of other members here DON’T SELL PROGRAMS or INFORMATION
We S H A R E IT with people here who are SMART enough to see through your COMMERCIAL!!!
Does ANYONE here buy into this GARBAGE??? We’ve all seen this BULLSH*T STORY before…
I have MANAGERS running my properties so it’s EASY for me. :bs
I don’t deal with my TENANTS :bs
I did this deal with NO MONEY DOWN :bs
I purchased a $330,000 house for $20 :bs
Managing RESIDENTIAL RENTALS is EASY, all you need is my “SYSTEM” :bs
I can’t TELL YOU how I found this deal…But I can SELL YOU that INFO :bs
Sounds like an INFOMERCIAL Doesn’t it???
It’s PATHETIC.
Take the ROAD SHOW somewhere else…PLEASE…We’ve all seen the PITCH before and it’s OLD.
Remember folks…
You can’t POLISH A TURD!!!
the REASON I don't BORROW that money is simple, I DON'T NEED TO!! I've done 4 wholesale flips this MONTH that generated $197,000 in NET profits....
there’s the key right there…a free and clear approach to fueling the fire.
thanks…
-Mike
There is nothing wrong with investing in the manner that you are most comfortable with…Fdjake happens to be well versed in all aspects of RE investing…I am not…From the looks of it Javipa isnt either…It seems like we can argue endlessly over nonsense…Its hard pressed to make anyone believe that landlording is a more efficient option than creating short term first position loans at mid teens interest rates against quality properties at a low LTV…Its insulting for javipa to come here and question our business savvy in our field of expertise…We all have experience in his area,but he has zero in ours…Yet he is making outlandish claims and to boot only selling the information…I liken him selling his program to these black box trading systems…Why sell it instead of keeping it to yourself and raking in millions all the while???..The real answer is because its WOOD…
There is little doubt that cash is a rare commodity nowadays…But the idea that any business can be done with no capital outlay is complete nonsense…You need money to make money…Plain and simple…
I commend people like fdjake who come here and post the inside track to his deals for FREE…Thats what this forum is for and IMHO the moderators should not allow others to market and sell deceptive products to unsavvy newbie investors…I have also noticed not one person is here vouching for javipa… :bs
As rookie has informed us, I don’t have to post on this forum. However, I like to help people. Evidently, I’m of zero help to any of you, if not worthy of the worst attacks on my motives and integrity, if not irritating, too.
Well, I won’t attack your motives or integrity on this forum, but bragging that you make so much money that keeping track of your income is just a nuisance, or gets in the way of your relationship with your customers… is just so laughable, I can hardly breath.
I’m not addressing any of the other bilge you posted, because it’s a waste of time, and more importantly to me, takes away from the enjoyment I get in helping those that actually do appreciate what I post.
Oh, and yes, I definitely sell what I know, and if you check any of my 300-odd posts here since 2005, you’ll discover that it’s rare that I mention it. In fact I couldn’t find any posts where I mention it. Meantime, hawking my stuff, by posting has got to be the most time-consuming, least effective marketing I can think of …besides taking someone by the hair and forcing them to buy from me. That would be less effective …although less time-consuming, but I digress. Meantime, that is not why I post here.
It would be much better for everyone, if you thought twice about questioning anyone’s motives or integrity on this forum.
And with that, I’m done posting on this thread.
I think the 3 of you should take this fight out to the alley…
Seriously, I enjoyed the back-and-forth volley of “Yes, mine IS SO bigger than yours!” – financially speaking.
You are all great posters and we need you all to continue enriching us other peons with your proven systems and ideas.
I’m with Javipa that systems can make your work much easier. Please continue to share them.
I’m with rookieNYC in that I too, make exceptions for eccentric rent payors like the ER Doc that we just had for 3 years–he juggled ex-wives, tuition, girlfriends, 72-hour shifts, and us. But we always got paid.
I’m with fdjake as he teaches us his simple and brilliant techniques.
You posters pushed me to get out and get that house I bought last Spring short-sale for 30K. Renovated and furnished it. Now rented this week at $2310/month.
This was the first property that I bought using just my line of credit. Against advice of family and friends–“THE MARKET IS TERRIBLE-- ARE YOU KIDDING?!”
I kept investing, in my small way, as you were all investing.
Now a dilemma. I need advice. The furnished rental market here is NOT terrible, it is going crazy–hospitals hiring travelers, Border Patrol instructors pouring in and I HAVE NO MORE HOUSES. Everything is full. They are begging.
15 phone calls in one morning. Our Wait List clipboard is so heavy we can barely pick it up.
I don’t want to try leasing and sub-leasing again as it was too much work for too little gain. Any big ideas from anyone? Now that I hijacked this?!
Furnishedowner
OK guys…enough of the petty quibbling - “No Profanity or Name Calling - if you disagree, that’s fine, but do so in a professional manner. This includes private messages and emails.”
All of you make positive impacts to these Forums in your own ways. Please don’t ruin that with the bickering.
Thanx,
Keith
Good stuff Keith…
I agree at times we can be more professional and civil…Im guilty as charged…Im passionate about business,probably too passionate…My apologies to the forum…
You posters pushed me to get out and get that house I bought last Spring short-sale for 30K. Renovated and furnished it. Now rented this week at $2310/month.
that little adobe hut?
-Mike
Mike,
No, that was the previous rehab. It was a 1-bedroom that we now rent for $1395/month.
This one, the “Bluehouse” is a 2-bedroom.
You have a good memory!.
Furnishedowner
What part of the country are you furnished owner?
Southeast New Mexico.
This has always been a boom or bust area, depending on what is going on.
Now the oilfields are pumping, Border Patrol ramping up, medical is larger than ever, solar construction and airplane renovations going on.
We are having a Boom in rental housing, and in my business, furnished rental housing.
How do you prepare for a boom? Other than scrambling as fast as you can?!
Furnishedowner
I have no experience AT ALL with furnished rentals…But I’ve always admired you and your business Furnished!
One thing I do have experience with is advertising and marketing.
I wonder if there is an underlying market for your business model that you could exploit???
I would assume that in any State there are a certain number of homes that are always “seasonal” I would also think that your warmer climate would hold a number of homes owned by “snowbirds” (people who spend just the winters in New Mexico)
IF…and it’s a big IF because I have NO IDEA if these properties even exist in your area…BUT…If they do…Why not actively seek out these homeowners through advertising and direct mail. Your entire operation is set up perfectly for this already…The home owner would benefit in a few ways…First…INCOME, their property could put MONEY in their pocket when not being used…Second, they literally do NOTHING…Your company could handle the management, the screening process, and the rent collection.
Your business benefits because you owe NOTHING on these properties…You DON’T OWN THEM!!!
The other HUGE advantage for you is in the answer to your question…
How do you prepare for a BOOM???
You prepare by changing your business plan SLIGHTLY to take advantage of opportunities WHEN they occur. The beauty of actively ADVERTISING for unoccupied homes is…When the BOOM goes BUST, you don’t OWN the homes you profited from…They simply become unoccupied again!!! If you don’t own them, you’re not making PAYMENTS on them. In fact…the ONLY payments you make are to the OWNERS at whatever percentage of the collected rent you negotiate with them…THEY pay the TAXES, INSURANCE, ECT.
One of the smartest men I ever met said this to me and it is 100% true, 100% of the time…
“Right now, How many people know you want to buy houses???”
My answer…NONE.
“Well how the hell do you expect them to call you if they don’t even know you want them to.”
I can see a very effective ad campaign explaining what you do ALREADY and how THEY can benefit from it. Keep it short and sweet. The BEAUTY of this is once you get ONE home in a neighborhood under contract, word will spread FAST when those owners start getting their MONEY!!! At that point more properties will come to you through word of mouth. AND…I would imagine the repeat business could be HUGE!! Think about this…A new family moves into a home via one of your NON OWNED furnished rentals and they meet their neighbors…The first thing those neighbors are going to ask is…When did you BUY the Smith’s House??? The renters tell them WE DIDN’T BUY IT…We found it through…
FINELY FURNISHED RENTALS!!! Or whatever you call the business…
At that point… a LOT of LIGHTBULBS will start going off.
Furnished,
I have to agree with FDJake here and say that you have a BEAUTIFUL niche business. More so, it seems like you’ve got a great business system, that takes advantage of your local supply and demand. Another great thing is, there is limited supply which is outpaced by demand, so you should easily be able to steadily increase your prices.
I think the real value and profitability in your business is your over all system. You know, your management system, the way you’ve furnished your properties, your contacts. THAT is where you should be focusing your efforts, at this point, to take advantage of the demand. Buying up properties, financing them, fixing them and furnishing them takes too much time, effort and resources in order to satisfy that starving crowd and decreasing your returns, so why not put the effort into contacting owners of properties that fit your criteria and subleasing them to adapt the “furnishedowner” system in place? Or maybe contact owners of currently rented spaces, pitch them with your system and show them how they can make a higher return by setting things up your way, they lease your furniture and they pay you a management fee. Just make sure you have an iron clad business agreement in place. This way, if and when demand drops, the owner can opt out and you can pull all your furniture out and go back to renting like he did before. Very little overhead and risk on your part and increased profits.
Remember, the value is in the way you run the system, you’ve figured out how to run this business down to the small details for above average returns.
I’ve been actually thinking of doing something similar to your system on my rental located in walking distance from a prestigious junior ivy league university and about 10 minutes from the hospital that just built an expanded new wing ER. Unfortunately I have not been able to properly tap into the lead sources in either locations. As of late I have not been too happy with the tenant pool passing through, too many dreamers and time wasters.
Thanks for the input. I am more than busy (newly licensed foster parent to 16-year-old twins, yes, I am now certified crazy?!) so this boom caught me by surprise.
This same happened here about 4 years ago. Lots of people bought big single family homes with mortgages, and totally furnished them. The plan worked great until the market (US Border Patrol mainly) dried up. My CPA told me that many homeowners lost their houses to foreclosure. Others pulled out the furniture and tried to sell the houses or rent them.
This was just as the re-sale market was tanking all over the US. And here.
In 2008 we had about 20 leased homes with the contractual right to sub-lease them. In addition to our business-owned homes. We started shedding those leases like mad when our vacancy rate hit 25%.
Now we are down to the bare bones. 25 owned homes, and 3 held vacant and unrenovated.
Staff dropped from 5 to 2 and a part-timer. Stress and overhead dropped. Profit stayed about the same.
So, yes, we could do it all again. But I would have to charge about 50% of gross rents this time. Owners would scream. I would have to deal with the OWNERS who are often worse than tenants: “I don’t see why I have to furnish a toaster. Why can’t they use the broiler- oven like I do?” There is just always all kinds of petty money-saving crap feed-back from owners. So we end up instead sending out our cleaners and our handyman to maintain the quality and our reputation.
There IS a bunch of fully-furnished homes just sitting around…grandma’s in the rest home, grandma moved in with relatives, the winter snowbird house. Again, grandma’s house looks just like grandma’s. Doilies everywhere. And it is not gonna have the big flat screen TV that our tenants gotta have. So guess who goes shopping to try to raise the quality of that home?
On top of it all, back then, we had to undergo a state tax audit that ate up thousands of bucks in time and attorney’s fees as the state had never seen my business model and thought we were a hotel and subject to state gross receipts tax. We did get a ruling that leased homes were simply leases and that we could do that. But it cost us.
So I sit here pondering what to do. Simple leases with an option to purchase? Converting and renovating every vacant space that we have with full-on crews? Do nothing and enjoy our 100% full status? There is just not enough powder in my pistols just now to take on the major leasing push that we did before. It wasn’t profitable enough. And it ate us up in time and energy spent.
Furnishedowner