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

Random Ramblings
21

REIR,
You nailed it…

All,
As Chris W will verify I have cc’d him on my emails to my attorney’s paralegal pretaining to this matter…Because of what unfolded in the last 12 hours I had to do this because I made deal to sell one property for 40k cash…Chris W has the emails,the buyers name,the buyers email address,the buyers phone number which he can call if he likes…I made a quick deal with someone I know who is active in the area and is LIQUID…I hit the bid as we say on Wall st…( I sold the property for %30 below market value)…I couldve waited 1-2 years and got another 10k-12k but I dont do that…With my luck the boiler will go,the roof will need repairing,the tenants will throw bowling balls through my walls,the water bill will come…Blank that…I hit the bid…Chris W will also verify that I have requested email pdf files on the entire deal which I will forward to him for even more evidence…Lets go over the deal one more time…I collected 21k on the original flip (which I supplied Chris W with the address to show the property was deeded to me and then to the new buyer)…20k in interest for the HM loan…15k down payment on my other property…Now 40k for the sale of the free property…Thats $96,000 NET so far and I still my other 2 family property back to (re) sell and or collect the nightmare filled rent until I do…Am I liar Chris W???

UPDATE…I just emailed Chris W the signed and notarized DEED IN LIEU of foreclosure on this deal…Showing the property being deeded back to me and Im the person that was holding the mortgage…PDF file…Just sent to Chris W…

22

As has been said here before…

Rookie is the REAL DEAL…No BS…ALL BUSINESS…Has no time for nit wits…and THAT’S what I like about him. :beer

In addition to what has already been stated…Take a look back 2 or more YEARS in Rookies past posts. The entire UPSTATE NY business plan is laid out in DETAIL for EVERYONE to read…From his intial purchases, to the property management, to the eventual move into “being the bank” 100% TRUE…A L L O F I T!!!

And the BEST PART???

If you guys needed a TEMPLATE for doing one of these deals, this guy would have it in an email to you…T O D A Y!!

It DOES NOT get any better than that. :beer

23

Ty Fdjake…You are correct…I have no time for nitwits…I feel embarrassed that I have to resort to emailing every document…contract…pdf file (and all corresponding emails) to my friend Chris W (a moderator)for verification because someone doubts me…What should annoy everyone on this forum that is trying to learn is this… When people that actually bring something to the table are harrassed and belittled they may not post again…I post to help people…Dont take this wrong way but I don’t need pats on the back…Im here to help people like I was helped and mentored…So when I’m treated like some jerkoff it enrages me…I thank the people that came to my defense and I appreciate the friends I have here…IMO at this point Dave should man up and apologize but I won’t hold my breath…For the future I’m not a BSer…Never was…Never will be…Im a humble guy til provoked then I will take the gloves off…Im here to help anyone anytime here…Thats what I’m about…

24

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!!

25

I’ll believe you pulled it off when I see it. Not before.

26

Dave,
So now not only are you calling me a liar you are calling a moderator a liar as well…Dave why dont you put yourself out of the daily misery you live with everyday…Those big buildings you claim to own in your dreams should be high enough for you to take a nice swan dive off…No one will miss,I can promise you that…You are smalltime bud

27

Now you’re putting words in my mouth. I didn’t say “liar.” I don’t know what exactly someone else saw or if it even looks real to my standard or is altered. I only know from what I’ve seen and what you’ve told me doesn’t make a whole lot of sense.

Swan dive? Ha, I’ve always wanted to base jump off of tall buildings. Sounds like fun. Not adverse to danger or trying new things. Might be good prep for when I do get that 100th storey office and there’s an emergency.

I’m like the Roman General Vespasian. I’ve lived in the trenches and I’ve lived misery. But, I’ve rose through the ranks and gotten respect from a lot of my peers. I’m not the kind of person who had to rely on daddy’s trust fund or worry about breaking a nail .

28

LOL…You mean this is the person who I need to verify that I made money …You are still in that supposed trench…Chris W has seen more contracts and HM agreements in 1 year than you have in a lifetime…And yes you are calling him a liar…I dont trust to expose my personal information to a hater like you…Fact of the matter is you are broke and very very angry that as smart and in the know you claim to be you got your ball$ chopped off in a deal that you were underfunded to be in…That smells of sheer stupidity…Nice move :flush

It took me 8 years to move from buying my first duplex and other converted houses into buying an 18 unit building. I’m taking a huge financial loss over a building I’m dumping this year (probably in the $200K range–money that could have been used as a downpayment for something better) and it’s sending me back years from where I thought I’d be, but I’m still happy. It kinda burns at my heart and soul when I think about how much time I spent rehabbing for less than min. wage, but no regrets. I value the learning experience, regardless of whether it was financially rewarding or not. Ask yourself, are you that kind of person? Can you come to terms with this

I dont think you can come to terms with this…If we wanted to find out how to lose money on a deal and set ourselves back 8 years and work for less than minimum wage I promise you I will seek out your expertise…Or I just might ask the homeless guy that lives on 40th and 6th…Unlike you I make money…

And anytime you want to find out what a trust fund baby that grew up in Alphabet City acts like in person come to NYC and I leave your laptop at home…I have a strong feeling you wont be flapping your gums in person…The internet was built for cowards like you…

29

Why would I waste my time coming down to NYC to see a trust fund baby like you? To polish my nails? You haven’t earned my respect. I don’t think you’ve proven you have the balls or initiative in real estate. I’ve take broken things like an 18 unit apartment building with 5 tenants, fixed it up and got it fully rented. I create things. I build things. I make things happen. I bring dying things back to life. You, on the other hand, are an emotional basket case. You’ve never lived in the trenches. You try to claim glory you don’t deserve while hiding behind your daddy’s trust fund.

30

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

31

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.

32

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! :beer

33

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.

34

:slight_smile: 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…

35

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

36

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.

37

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.

38

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…

39

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.

40

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…