Build a real estate company in a D area

[Bigguns50]

Hey @JohnD Realestate ... I was in the biz 4 years before the 'crash'. Not in it now. However, I did learn a LOT. Hard money lending isn't regulated like conventional lending.

The simple version, and you can DM me if you want more details....Start a business, get investors, get borrowers, make a LOT of money. You don't have to use your own money.

You make money on the initial loan fee, point spread (you charge the borrower say 15%, the investor gets 12%, you get 3%), inspection fees, etc. Typically 3yr loans w/balloon payment. Most pay back as soon as they flip the property.

The company I worked for never advertised. Word spreads fast when investors are making money.

 

[SteveO]

Sure, drug dealers aren't very creative with their free location ads. They've been using the old shoes draped over the power lines for the last 30 years!

.... and it always amazes me that everyone does not know this... But, here it is in this picture in front of God and everyone. And, they are getting busted.

 

[JohnD Realestate]

I never found the police to be very helpful.

I had that experience as well.
I’ve had a bit of success though also. At least in newburgh I’ve been a bit more successful at it. In Brooklyn my first property was next to a halfway house. I called the cops many times and had mixed results.

I had some success once I found one boss to communicate my problems to. It’s hit and miss if you call. A lot of times they are just stressed and busy and they don’t want to be bothered.

I’ve been dealing with a higher up and he has gotten my Building added to the schedule for sweeps on an inconsistent basis. So a few times a week they pass by and sweep the hallway for trespassers. 4 arrests so far. That has helped me a lot.

 

[itsemdub]

@JohnD Realestate I’d ask the question that @WJK already asked you: why don’t you sell? It appears that you stabilized the multi family piece (50–> 90% occupancy). Capping that out you should be able to at least get out with your cash and cover any potential loss on the commercial component. Are all of the properties wrapped in the same loan?
Unlike WJK’s example of stabilizing his property and getting higher rents, it doesn’t sound like this is the sub market that will happen in (speaking only from the info you’ve provided). What are the economic drivers/long term sub market growth opportunities? Along the similar vein as the LNG plant for WJ... if there are none, you can expect the future of your property to always be like this. Having the best building on the worst block, which it sounds like you’re pushing for, is the worst investment you can have. I don’t own, but have sold properties in similar scenarios. They continue to change hands for years. Push the headache on someone else, or you’ll likely come back to this thread a year from now and be in a worse place. Sleepless nights suck and I empathize with you man.

 

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[JohnD Realestate]

@JohnD Realestate I’d ask the question that @WJK already asked you: why don’t you sell? It appears that you stabilized the multi family piece (50–> 90% occupancy). Capping that out you should be able to at least get out with your cash and cover any potential loss on the commercial component.

Are all of the properties wrapped in the same loan?

Unlike WJK’s example of stabilizing his property and getting higher rents, it doesn’t sound like this is the sub market that will happen in (speaking only from the info you’ve provided). What are the economic drivers/long term sub market growth opportunities? Along the similar vein as the LNG plant for WJ... if there are none, you can expect the future of your property to always be like this. Having the best building on the worst block, which it sounds like you’re pushing for, is the worst investment you can have. I don’t own, but have sold properties in similar scenarios. They continue to change hands for years. Push the headache on someone else, or you’ll likely come back to this thread a year from now and be in a worse place. Sleepless nights suck and I empathize with you man.

Those are good questions. I’m not complaining that I made a mistake and I want out. Maybe I will be in a year. I’m more mad at myself for not handling things better. There were a few times I made the wrong decision and I caused myself a lot of my troubles.

It is one loan. It’s possible that I could sell now and break even or incur a reasonably small loss.

After taking this beating I might have to sell something, just to stay solvent. I’m thinking over the numbers right now. I have six months before the losses get to be too much. I’m losing 5-8k a month. Much over 50k then I will have to start selling stuff. I’d start looking to list them by June if the numbers don’t change.

I bought knowing the headache. I’ve been here before and last time I was just as close to giving up. Onto the reason I bought it. If you didn’t think I was nuts. This will surely settle it. I’ve lived in gentrifying neighborhoods for close to 30 years. I have a few theories. I have been studying this for so long at this point I’m certain that I can see it coming years before it happens. I worked in a REI firm and they were convinced I was out of my mind, on this. I tried to explain what i did to come up with my reasoning. No matter they did not buy it. Even after many, many times being proven right. They say I’m lucky. Maybe so but it’s one of the few things I’m really good at. Picking an area and buying and managing properties for 10-20 years are different animals.

If I’m wrong I’ll lose some money and have to deal with a ton of bs.

 

[JohnD Realestate]

Working on a store now. It’s my last unrented store. I have had it listed on CL for 6 months. I’ve showed it to a few people but it needs a lot of work. I was hoping to get a tenant then do some work on it once I had a customer. But at this point I decided I had to do something. I posted it in Instagram as a free pop up to anyone that would take it for a week. Got 3 interested freeloaders. Just kidding at this point I need some action there. At least get some feedback.

For some reason I don’t have a good shot of the front. It’s looks different now. Windows are cleaned up and all signs are down. Started gutting today. Except for a sinus headache feels better already.

 

[ZCP]

Steady progress.
Find a way.

You are teaching a Master's course.

 

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[JohnD Realestate]

That'd be right. Cities end up as cesspits because their governments deliberately make them so. People don't just go and make a sh*t city. They go and inhabit a good city and then deliberately drive it into the ground. Maybe you've got to grease some people into not being you-know-whats and getting out of your way.


Your life sounds epic exciting. You should write a kindle book about it at some point.


Your wife sounds pretty wise, I'd follow her orders.

I left about about two millennia of stuff.

I was showing an agent one of my properties a few weeks ago. For months we had a lot of flies in the building. Normally I’m a little more proactive but this building only has shit tenants. So I wrote it off. Turns out there was a hole in the main sewer. There was 2 feet of raw sewage in the Crawl space. Finally got the idea when none of the plumbing was working. I’m under the floor cleaning out the crap with an inadequate pair of rubber gloves when the agent shows. I hop out and start my car salesman act when I Street guy gets the idea to hit me up for cash. I see him a lot. Usually duck him. But this time he’s got me back against the wall. In a corner. Him and the agent leaving me exit. Starts telling me he’s a killer. Tough guy. Well I’m pretty frustrated at this point. I feel like mike Douglas in falling down. 30 seconds later my thumbs are buried in his eyes and the agent is running for the car. Finances might be kicking my a$$. But no one is going to kick me a$$ while my back is against my own property.


I have 5 vacant apartments right now, 2 vacant commercial. Two evictions in process. And I’m still spending every dollar I can to drag my properties out of rhe filth and make them attractive, secure and affordable. Not giving up.

 

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[JohnD Realestate]

Things are good. About two weeks should be closing on sale. Profit is in the 40s. Bought only have about 7k in the house at this point.

Meanwhile I finally got rid of a few really bad tenants. The last of the worst. When I bought those houses those tenants were what I considered keepers at the time. They all were drug addicts which wasn’t apparent in the beginning but later became clear.

Waiting on plans from an architect for a big project. Have all the contractors lined up probably start in a week or two. Starting to see real progress in a 3 bedroom and a 4 bedroom renovation right now. Hvac being finished this weekend and Sheetrock is taped. Painting flooring and trim is up next. Oh yeah and windows. I’ve been waiting to find a good installer with a good price and I finally found one. Usually windows go in first I let the historical approvals slow me down and more of a problem I procrastinated.

The building I’ve been doing most of my work in is stopped. The neighbors sewer is backing up and it’s backing up into my house. So when he flushed the toilet it comes to my house. Been working on getting it fixed. Getting ready to make a complaint if he doesn’t get it fixed today.

 

[JohnD Realestate]

This guy stole some copper from me the other day. He was working for me. No biggie. Small setback. Not stopping for a second.

Passed a framing inspection on a 4 family Reno of the big bad building. A few weeks more and I’m in the clear. All down hill on this one now.

 

[SteveO]

Partners usually suck.

 

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[JohnD Realestate]

Grateful to be lucky. Good timing as well.

 

[JohnD Realestate]

flipping mobile home parks?

the real estate world in general sort of ignores it because its not seen as "sexy" but, thats sort of your bread and butter. Due dilligence is a bitch though (even a small deal could have you busy 6 to 12 months waiting for inspections and things)

Funny you say that. My old partner in NYC real estate deals approached me with a plan to acquire parks and build a management company with plans to package and sell it. Sounded like a good idea but the travel aspect bc I’m in the suburbs of NYC wasnt for me.

I passed
I have five years left in my pension job. I never planned to finish it bc I planned to be rich....lol. So I’ll be working that five years. Like what I do tho so it’s not painful.

I’ve been helping my wife with her business...the serial entrepreneur now has two brick and mortar stores, a sales agency, a new traveling trade show...and a women’s clothing brand that’s rocketing towards a million in sales it’s first year.
I’m doing the Eccom, social media, web stuff. Interesting to me. New stuff.
she’s an expert in her field, that’s a fun change. Usually I’m taking some garbage and shining it up...now I’m just fixing stuff and making it easier to take orders.

 

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[WJK]

Yes that sounds like a handful! All that family stuff just makes it harder.
Working on the numbers now. I was thinking on which properties I would sell. I’m trying to hold off right now because it’s spring. With all my vacant units this time of year is not the right to lease up. Once or two months could make a big difference.

I appreciate the input. Just told the wife we should go out tmr.

Sleep is tough right now. But I’ve been moving a bit more and some things have already gotten better. Juts writing that helped. Up till now I was mostly pretending to all that everything was A-Ok. I spent a few days working on the commercial stuff cold calling and canvassing for tenants on foot. Didn’t get anyone but it made me remember everything is my reaction...not the situation. So now I need to like you said work smarter.


Drug bust photo below. At the time made me nervous. Week or two out feeling a bit better.

John, you do need the shoes down from the power lines next to your building -- as noted in these posts. You're right, your building is marked, both figuratively and literally. Remember, those are live wires and the companies who own those lines have to take them down.

 

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[SteveO]

This was a much better week. I got a few vacant apartments/rooms rented. Evicted the last hooker from my 14 room boarding house. I also brought a partner in on two houses that needed some work. He’s going to put some cash up and manage the Reno. That will help. The larger portfolio will stay intact....for now. Got some bills paid.

Best was that somehow managed to go in the black this month. First time in 6 months. Combination of filling vacancies mid month and getting some back rent in. Two tenants that were being evicted came up with 4/5 months rent each. I would have gone for eviction normally but the money was so needed. Kicking that can down the road.

I used the todo list on the inside that @MJ DeMarco put together. Highly recommend it.

Great job! Keep up the good work.

 

[JohnD Realestate]

OLT
Starting a food and wine festival too. My wife really wants to kill me now. I was noticing that all the cool upstate cities have good events and we have some sock knitting and hippie head scratching events. I used to own an events space so creating events while a time sucker are no biggie. So I called some of my old partners and said hey. “ I have a 10k sf space up here and a bunch of vacant lots. Want free space? Then I posted the hell out of it on Instagram. Keep you posted. Might bankrupt and divorce me.

 

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[JohnD Realestate]

You just keep swing! Good fI or you.
That bill for guy's electrical service just means that you need to check on that issue next time with the electric company. Maybe a check list for each tenant. I know, I know -- you've been up to your a$$ in alligators...
Did you get the shoes off of the wires in front of your building?
You're doing great. You still have you head above water.
I just wrote a blog about a mobile home that was so bad, we had to tear it down. If you get time, read it. I attached it to the "read it" in red. It's funny now -- it wasn't then. I sure know how you feel. Hang tough!

@WJK yes I know what you mean. I’ll read it I skimmed it and realize your right.


Short story. Years ago it was a very cold winter days of -4 or -6 f. That’s really cold. My water pipe froze up in nyc. My heating was steam. So no water no heat. There is a subway stop in front of my house. The tenants had left for hotels. Bc the subway it would cost 20k or more to repair. I was broke. Through some research and a bunch of 12 hour days I fixed the problem for 1500. Or so. I was cold and wet for days. We had a 3 year old a 1 year old and my wife was pregant.

No we look back and not yet laugh but one day we will.

Thanks for the knowledge and feedback.

No sneakers are still up. But this is the room the drug dealers were in. Before and after.

 

[GoGetter24]

The second tenant and I had an agreement that I would install heat and a bathroom in his space. I made the deal quickly and later learned the city wouldn’t approve my plans.

That'd be right. Cities end up as cesspits because their governments deliberately make them so. People don't just go and make a shit city. They go and inhabit a good city and then deliberately drive it into the ground. Maybe you've got to grease some people into not being you-know-whats and getting out of your way.

So now I’m evicting more people. The dealers got busted in a drug raid. Tanks, helicopters, swat team. The came in with combat gear and swept the place clean. That night after the cops left neighborhood folks busted my front door broke in to the dealers apt and stole all his stuff and trashed the place. Next day I found two people barricaded in a junk filled room with a refrigerator wedged up against the door.

Your life sounds epic exciting. You should write a kindle book about it at some point.

She wanted a full accounting.

Your wife sounds pretty wise, I'd follow her orders.

 

[WJK]

@WJK thanks.

Been a while. Haven’t been back. no good news.

Few updates. Some things went well. Got the house with the boards into contract. Paid 47k last may. put in about 25 plus holding costs. Have two partners. In contact for 159k, so that one should be a good one.

Overall tho I’m still in trouble. Little profit for two months the but then this months with taxes, water, sewer due I’ll lose about 8k this month.

Got 4 vacant apts right now. Money and time are tight and I’m having trouble getting them ready. Doing them 1 at a time. Crews i usually use are busy.

Got 3 other houses on the market right now. Bought one for 75 put in 20k. It’s had a vacant commercial space. I rented that to a deli that’s well known in the area. Very stable tenant. It’s on the market for 150k.

Last one is the the rooming house. Paid 465. I evicted almost all the tenants and did lipstick Reno as I went. This one also has a store on the fiat floor. The crime problem in the building is cleaned up. It’s on the market for 659.

Bought another for 45k on the market for 154. Fixed the roof and cleaned it out.

Been a few weeks on the market on two. The oher for a month. I think they are all overpriced....except the one in contract. I had the agents drop the prices already but they are fighting me on dropping more.

My live in onsite agent stole about 2500$ this month in cash. Think he’s gotten involved in drugs. Hit him with a 30 day notice and working on getting him arrested.

Wife’s clothing store is open and doing well so far. At least one of us is doing something that cash flows. She’s not bothering me about working late anymore tho. She’s working late now.

Working on getting focused, but seems every time I do I have another fire or flood. Lists of important things get pushed aside by ceilings collapsing, stores getting robbed etc.

Need to focus.

Things with you sound normal to me. Keep on stepping. It's hard to see clearly when you're up to a$$ in alligators.

 

[JohnD Realestate]

Might see if we can change this posting title to watch this guy get a haircut.

This is ugly. The six months on the sheet below are the better 6 of 10 months. There is none of the Reno money I brought to the deal or money that borrowed lately on this sheet. to keep things moving along. When you factor in that money It’s creeping up on a 230k loss for 10 months. I owe about 1.5 m on loans on 2.7 in property right now. I also owe about 150k in Personal or cc. Mostly biz stuff. If I was a professional RE guy this would be a hiccup. But my 9-5 i take home about 750 a weak.

Closing on a sale next week fingers crossed. That one will be a small profit for me. I had partners. Percentage wise it’s sick deal but small so it doesn’t matter too much.

I had 4 properties on the market. But the market is getting soft right now. My broker called me last week. Good News! I had a cash offer 500k. no contingency on the rooming house. I would have lost about 50k (I paid 464k and did some Reno) selling at that price. I’m selling for 3 reasons. It’s a major PIA. I couldn’t refi the SRO, and it’s (62% occupancy) losing money every month bc I’m strict with new tenants. Heavy duty background checks no Sex offenders, no social service tenants. Only tenants with verifiable income. If I wasn’t strict I’d have 100% occupancy.

When I got the offer they were putting down 10% with a financing and inspection contingency. So i told them to get the cash they said they had together. I had major trouble doing a refi with the sro. That’s why I put it on the market.

So I’m taking a beating financially. I’be been a bit depressed and anxious again hard to sleep. Have to take deep breaths and calm myself sometimes. Getting anxiety a bit.

So I stopped to take a look at what I’m doing wrong. Of course this is all my fault. I made the wrong choices to get myself here.


Working on a way back to success. Been on a diet. Low sugar, low alcohol( I was drinking a ridiculous anount a day for a few months) getting a bit of focus lately.

My retreat plan had been to sell about half what I hold in portfolio. Then pay bills, taxes etc.


The soft market killed that plan. There are son many properties on the market mine are not even getting many showings.

Working on the new plan.

 

[JohnD Realestate]

Sold that house. Exactly 40k profit. Not too bad percentage wise but not what I was planning.

Started up a meetup a while ago to help other investors get going in newburgh.....so I’m not the only crazy guy fighting drug dealers in the ghetto. Had a bit of success with it. Def helped me get leverage with contractors. Anyone trying to do a lot of work long term
Should consider it. It gets me major discounts....

Got two projects that are coming to completion.

 

[JohnD Realestate]

Sorry to hear about that guy stealing from you - it's a shame, but good you're just moving on and chuggin' along.

I'm curious about the last two photos in your post - are you basically building a new subfloor on top of the previous material? Just putting some strapping down, plywood on top, and creating a new level and flush surface to work on?

I caught him doing the deed so I took what I needed from him. I don’t feel like I got the short end. He’s a big kid. Ex marine but I carry pepper spray when I caught him I was applying that generously.

That’s exactly what we’re doijg on the floors. Usually we level them
With jacking but in this case the first two floors of the building are occupied. So we take 2x8 and rip them down from 0-2.5 inches to make up for the uneven sub floor. Then we put the new wood floors on top of that.

 

[JohnD Realestate]

Man you have balls of steel. I admire your tough mindedness,keep on keeping on

Thanks man. I don’t tho. Just set high goals dive into the deep end and figure it out. Def have tested and proved my theory that you can gentrify an area at will.

 

[MakeItHappen]

@JohnD Realestate I just wanted to say that I really love your thread. Your action taking is inspirational! One of my favorite progress threads.

 

[JohnD Realestate]

@JohnD Realestate I just wanted to say that I really love your thread. Your action taking is inspirational! One of my favorite progress threads.

Thanks for the support.

So much of the credit belongs to my wife. We both work full time. She runs two companies that up till now have for the most part supported us.

My full time job the pay is decent but I’ve borrowed so much from my pension that the paychecks are laughable for our lifestyle.

Soon. We’ll be there soon. Right now it’s very tough. We’re at the end of 2 projects which is great but money is so tight and bills are stacked to the ceiling. All my Credit cards are maxed. Just trying to get to the next refi.

 

[Dianne Cohen]

Great job and Congrats!

I am a Realtor in South Florida and you would be amazed at how many people here call themselves "investors". They want big profits with no risk. You took the risk and were rewarded for it. These "investors" could learn a lot from you.

 

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[JohnD Realestate]

 

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[JohnD Realestate]

Update on what’s going.

I got sued by a minor partner he had 10%. He was supposed to come in and help me get projects finished. He put up a bit of money but nothing like what I put down. He was supposed to be on site for every project till completion. His strenuous party schedule interfered too much so i offered to buy him out for about 40% gain. After 8 months.

He declined and He put liens on most of my properties.

Most of those properties were under hard money loans. Half finished and at 12% interest things got ugly quick.

Thankfully I was able to navigate

 

[WJK]

What do you mean can you give any suggestions?

At 15, you cannot contract. You are barred due to your age. You might want to start with learning about buying, selling, escrowing, fixing, appraising, locating, and making contracts... and that's just to start. Just jumping in is a dangerous leap! You may need an apprentice situation with someone who is doing it. Actually, you need a whole string of different experiences before you try it on your own.

PS. How do I know that? 37 years of experience in the RE business.

 

[WJK]

The good news is that since you are 15, you have 3 whole years that you can't even do it yet and you can dedicate all 3 of those years to pure learning and education! That means at 18 you should come out swinging, full steam ahead. @Kevin.o Read some books about buying fixer uppers under value, what makes a good deal, then figure out how to market to sellers and get those deals. And learn about the transaction process.

Are you interested in residential or commercial properties? There are many segments and disciplines in the business.

Yes, read everything that you can. There's a lot of information available. Read until you know what they're going to say next. Then you know that you know the material.

Find someone to follow around and learn what they do. Don't ask for money from them. Work hard and make their life easier. Your labor is how you pay for their time. Oh yes, dragging you around will slow them down.

Talk to people. Ask them for their life stories. How did they get into the business? What was their best deal? What was their worst? If they were to start over again today, what would they do differently? What do they know now that they wish they had known then? That's a jumping-off start. Add to the list and keep asking.

You are starting on a long road. You have a lot to learn. It's much easier to lose rather than make money.

Oh, I fudged my experience by a little bit in my former post. I started as a salesperson in 1976 and that makes 47 years in the RE business. It was before computers and most copy machines. We used typewriters and offset printing. I was a commercial RE appraiser before we were licensed. And I'm a girl -- we only had 7% women in that segment of the business. As I went along, I was doing flips in the Los Angeles ghetto when we still called them "Equity Purchases". The term "flip" hadn't been invented. Before I saved up, I "wholesaled" the deals to my investors. I got a commission for bringing in the deals. Later I kept my deals for myself and flipped them. I started with little houses and moved up to apartment buildings. Then it was small commercial buildings. I've made fortunes and then lost spectacularly. I'm an expert at starting over again and/or living through the downturns. I have learned about different financial cycles and how to play the market for the long haul. And that's been my RE life in a nutshell.

Someone like me will be your competition. We quietly just keep on keeping on. If you were to casually meet me, you'd never know what I do or how I do it. I'm very successful at flying under the radar and maintaining my privacy.

 

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