Goals: September goals

[Bilgefisher]

I enjoy goal threads. They are very self motivating. To help, I print out my goals and tape them up next to my computer.

Big Goal: Ready to flip my first residential property(as in narrowing down the property)
Steps to achieve my goal:
1. Determine method, by continued research into different systems of flipping properties.
2. I don't feel I even have a 1/100 the knowledge I need, so I will read the following books suggested.
Flipping properties:Robert Dahlstrom, William Bronchick
How to pick up foreclosures: Wade Cook
The Pre-Foreclosure Handbook: Frankie Orlando

Small Goals:
-Every time I come across a real estate term I don't know, I will be writing it down to look up later. I purchased a real estate dictionary to help. I also have wiki search at my disposal.
-Take my foot of the brakes. I am a very cautious learner.

Time to take a look at what goals I accomplished.
-I read all 3 books suggested. I understand much more in RE then I did before, but my experience is lacking.
-I have looked up most terms I don't know. Thankfully many terms are becoming familiar to me now.
-I haven't narrowed down an investment property yet. Talked to a lawyer and may have to change how I plan on investing in RE. It seems the pre-foreclosure market in Colorado has become very touchy with new state laws. I plan on having a sit down with an attorney to discuss my options.
-My foot is still on the brakes, but its getting better.

 

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[andviv]

ATW, how did it go in the Exchangor's conference? Anything interesting to report?

 

[AroundTheWorld]

ATW, how did it go in the Exchangor's conference? Anything interesting to report?

There were a ton of completed or half way completed development properties being presented. This was a change from 6 months ago when we were seeing a lot of apartments. Not many apartments at all this time.

Also a lot of "SFR Portfolios" - many of them in a negative cashflow situations.

The best part of the gathering were the "problem solving" sessions (as always).

Many of the problems presented are - I would guess being experienced by many across the nation today so I will give a general overview of a few of those problems. I won't give details about where, how much, etc....

PROBLEM:

A builder had a condo development - about 40 units. A few were pre-sold during construction but the deals fell through. The entire building is now sitting vacant - none are selling. Debt service is extremely high and the condo units must move in a month or two.

SOLUTIONS:

Many people focused in on the loan and the lender - and were trying to figure out how this owner could work with the bank on the debt.

The one that was most obvious to me was this one: The builder is not a condo developer. He is an apartment owner. At market rent - and asking price the building would be a 7.5 cap. Any other take on it didn't make sense. Because of the market change, it is highly unlikely the individual condos will sell anywhere near his required price.

PROBLEM: Investor has a portfolio of SFR that have "perceived" equity but negative cashflow.

SOLUTIONS:

1. If the houses will appraise for enough - take out a HELOC and invest with a hard money lender. The difference between the rate on the HELOC (say 7%) and the earnings from a hard money lender (say 12%) will provide additional monthly cashflow.

2. Deliver the houses free and clear as a down payment on an income property. Lets take some hypotheticals here for ease of explination:

Say you've got 5 houses each worth 200. - So you've got 1,000,000 in total value.
Now say you've got 400,000 total debt on the properties.

Now lets say you find a property you would like to have for 2,000,000 free and clear.

You can borrow 1,400,000 from a bank on that property. Use 400,000 of that to pay off your SFR's. The houses now get transfered to the owner of the property you are taking in the exchange. - That is 1,000,000. The other 1,000,000 pays off the balance to the other party.

This is a great strategy if the replacement property can cashflow with the 1.4 M debt OR the replacement property is in an area poised for growth Steve O style.

 

[andviv]

There were a ton of completed or half way completed development properties being presented. This was a change from 6 months ago when we were seeing a lot of apartments. Not many apartments at all this time.

Also a lot of "SFR Portfolios" - many of them in a negative cashflow situations.

This is just another indicator that tells me that apartment buildings are now in high demand and new developments are the ugly duck.

Those cases are always interesting. The solution to the second one opens many doors and helps me thinking outside my square head. That's what I like about their newsletter.

Thanks for sharing.

 

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[AroundTheWorld]

ATW, how did it go in the Exchangor's conference? Anything interesting to report?

Oh, the other little tid bit I picked up is that there appears to be a pocket of opportunity for SFR buyers in Denver. Houses selling for about 1/2 of what they were a few years ago.... now about 70K - and renting for about $1100.

Worth digging a little deeper and looking into for SFR buyers in that area.

 

[Bilgefisher]

Oh, the other little tid bit I picked up is that there appears to be a pocket of opportunity for SFR buyers in Denver. Houses selling for about 1/2 of what they were a few years ago.... now about 70K - and renting for about $1100.

Worth digging a little deeper and looking into for SFR buyers in that area.

My ears perked a bit when you posted this earlier. Any idea of where in the Denver area? Like many big cities, the there is a huge difference between one neighborhood and the next.

Interesting note though: Been going to Bronco games for over 20 years now and the neighborhood around it has been in shambles. We park half a mile away to avoid parking costs. We walk through it on different routes to and from the game. I wouldn't walk through it at night except on game nights when there are plenty of people within shouting distance. Within the last 3 years, home renovations have increasingly taken place, a new home development on vacant land, and even some old houses being torn down to build much larger and more expensive homes in their place. The neighborhood was built in the 30-40's. Actually, I'm quite impressed with the turnaround and cleanup in this area. Bar on windows have been taken down, new duplexes built, new homes. Safer overall feel.

 

[AroundTheWorld]

My ears perked a bit when you posted this earlier. Any idea of where in the Denver area? Like many big cities, the there is a huge difference between one neighborhood and the next.

No, I really don't know. I didn't ask the in depth questions as SFR's in Denver don't fit into my plan... but is is SO HARD to sit on your hands and watch an amazing opportunity to go buy. I'll feel so much better about doing nothing if I can atleast point it out to someone else that goes on to find success in that area. If an investor played it right - this - on a 10 year plan could be a ticket to wealth.

The guy that told me about it does have the specifics though and I can give you his contact info if you PM me. Really... any realtor from the Denver area that is also a member of NCE could probably get you plugged in.

What I do know is that they are the "starter homes" Most probably built in the 70's or 80's. Rectangle in shape. 3/2 type of deal.

 

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[Yankees338]

Well, my plans actually pretty similar to Nerd's!

1. Get started on the right foot in school (to please my dad...I really couldn't care less.)
2. Pitch well in my fall baseball games. Work on getting better and staying healthy.
3. Continue learning about real estate and business by staying up to date on the forums here, reading any useful information I can find, and talking to [knowledgable] people.
4. Come up with a long-term plan (with several different options in them) to post on the forums here for you all to critique!

I'll add anything that I can think of.

To recap:
1. I definitely started off on the right foot. I'm doing well in all of my classes except AP Economics, which is because I got caught cheating on the summer assignment and lost points for that. (Wasn't really cheating...I sent MY work to other people who didn't change it.) Didn't do great on my 1st English test because I didn't read the summer reading book. Still doing well in the class, though.
2. I pitched well in the games I played. However, I hurt my elbow for a period of time during the season. Hopefully this doesn't becoming an ongoing problem.
3. I've kept active on the forums here, even with some technical difficulties (computer broke). I also went to look for Berges and Vollucci's books, but only could find a different Berges book today at Barnes & Noble. I'll check the library or Borders.
4. Completed. Have to work on executing it now, though!