Real estate didn't work for me - Posted by Too embarassed

import · February 14, 2006, 3:55pm

Re: Sorry, Difference of Opinion… - Posted by Ed Garcia

Posted by Ed Garcia on February 14, 2006 at 16:55:49:

Mr. Chin,

Since it?s you who is responding to my post before I respond I?d like to take a minute to tell you that your helping people on this site does not go unrecognized. I know you spend a lot of time helping others and I tip my hat to you.

Now I?ll attempt to respond to some of your comments.

Frank says,

Having met you, and hear you speak at two CREOnline conventions, I find you thoroughly entertaining. Add that to good business sense, and we got someone who can do well, anywhere, in good markets or bad. The point being, not anyone can be a “Ed Garcia”.

Ed says,

Thank you Frank I take what you?ve said as a compliment. However I?m a firm believer that we?re all product of our environment. I had the opportunity to work some very strong people. When doing so you either get strong or fall by the wayside. I also view REI as a business. I think most come into as part time investors and go from there. If you notice, the ones who are really good at it develop a passion for it. I really noticed that as a common dominator of the more successful investors.

Frank says,

In the last convention, I was at a session where you spoke, and you had students discuss your course, particularly about the use of the “working line of credit”. I recall one fella, short and fat, speaking with an accent, commenting afterwards that he’ll have a hard time doing deals as he even has trouble getting himself hired at a “seven 11”.
Having said that though, he said he had no choice but to do RE a he can’t get himself employed

Ed says,

Frank, Terry and I offer our students so much more than a WLOC. The WLOC is what were noted for, but one of our goals is to take each individual student to their next level. That?s not always as easy as said.
The WLOC ?Working Line Of Credit?, Commercial Line Of Credit, Guidance Line, Warehouse Line, is really for the full time investors.
It?s the type of financing that is not offered by the bank at the counter. It?s designed for investors who do multiple deals. There are requirements such as time in the business, income verification, financing at 80% of purchase price or appraised value which is ever lower, that can be circumvented. One of the main things I need is to show the ability to do at least 6 deals a year. The fun part for me is when an investor has been turned down for a WLOC prior to the workshop and then I help them get one. Over the years this workshop has taken on a life of its own. At our last work shop in California we had over 17 Alumni, the workshop prior in Atlanta Ga. We had over 20. For students to want to come back a second time on their own says it all. The networking has created camaraderie as well as creativity among the attendees.

Frank says,

Having tried hands getting to the “real” deals, at least around here, in NYC, where it exists, but hard to find, it’s usually snapped up by investors, ALL CASH. These deals are exactly the type of deal that your “working line of credit” is aimed at, isnt’t it??

Ed says,

Yes, it gives an investor the edge on another investor who?s fumbling to get financing through a Mortgage broker or other lenders.
Frank says,
But, it seems that even you, and banks for that matter, would only consider “experienced” investors for these lines, a novice starting out would have a hard time competing against the experienced, for the GOOD deals.

Ed says,

Not really Frank. Remember, the minimum requirement of the workshop attendees is to have done at least one investor deal before attending. For the most part these students are pretty serious about REI. There either part time investors who what to go full time or full time investors who have come to terms that financing and the ability to get money is paramount of investing and is going to be an on going problem.

Frank, Crassus, seems to be a really nice guy. But he?s really not an in the trenches REI. He?s what I call, ?in the right place at the right time investor?. Because of that, I don?t feel he has the right to advise other investors or I should say is a good source for investing information. What we need is more people like you.

It?s been my pleasure to have this correspondence with you and keep up the good work Frank,

Ed Garcia

import · February 12, 2006, 10:57pm

Re: Poseur Alert… - Posted by Crassus

Posted by Crassus on February 12, 2006 at 23:57:34:

It’s odd you accuse me of being a poseur when others posting on this thread are so obviously posting for affect. I’m also not posting to impress you with my genius, originality or style. I suggest you post constructive criticism or nothing at all.

C’mon–scrounge up a few more dull cliches and you’d have enough material for Part 3.

I particularly like your tip regarding not putting your eggs in one basket—pure genius

import · February 12, 2006, 4:39pm

Re: Excellent (nt) - Posted by John

Posted by John on February 12, 2006 at 17:39:37:

I totally agree with Crassus. Investors here in SoCal made about $350,000 per house in appreciation over the last 5 years or so. How many $200 a month cash flow properties does that equate to? And yes I know it’s not profit until you sell but most smart ones DID sell. Crassus, I’m thinking of moving to Denver too, buying my personal residence there and then buying rental property in Austin and North Carolina. The best buys are in the Southeast but I just can’t stand the humid summers. Good to rent out but not live. The market here in San Diego is already starting to crack in the east county and it will spread to the coast. You got out just in the nick of time. Have we met? Email me for market info.

import · February 12, 2006, 5:40am

Re: There are no huge discounts - Posted by Tim

Posted by Tim on February 12, 2006 at 06:40:36:

I guess you haven’t got much luck with this business then. You should see how I performed last year. I would never trade anything for this business. I started doing this full time only for 2 years. I can sit here and confidently say that I have made over 400k last year. Need prove? Email me privately and I’ll show you.

Tim

import · February 12, 2006, 5:45am

Re: Don’t worry, you’ll get a 2nd chance … - Posted by TIm

Posted by TIm on February 12, 2006 at 06:45:56:

I don’t know how long you have been in this business but I find houses with huge discount continually. It’s good to have great vision in this business. For instance, I bought a house on an L1 zoning that sits right smack in the middle of the lot. If I were to fix it up and sell it, I’ll probably make only about 50k. But if I spend 25k to move it forward about 10 feet, I’d have an extra lot that would be worth 140k alone. How much did I buy this house for? $235k. If I move the house then build on the extra lot, I’d make about 300k in profit.

If you truly know what you’re doing in this business, it’s indeed true that you can find more deals than you can handle…

Tim

import · February 15, 2006, 7:16pm

Re: Real estate didn’t work for me - Posted by rehabber7

Posted by rehabber7 on February 15, 2006 at 20:16:08:

Mr. Garcia,

I have enjoyed reading your posts lately, and I have also read about your financing course. I have a question, but first a little background: I completed my first rehab and flip last year. I now have three in process. I have great credit and a good, steady job. I have two lines of credit, one a HELOC on my residence, and the second an unsecured business line. I also have some cash to work with. Now the question. The three houses that I am now working on have me maxed out (at least psychologically). I have good enough credit and income to obtain more bank financing, but I am using all of my cash paying for repairs and carrying costs. I’m sure I could get a higher credit line if I were to find a great deal, but it seems that I would be using borrowed money to pay the interest on borrowed money (and also using borrowed money to pay the electric and water bills). This just doesn’t feel right to me. Your thoughts would be appreciated. Thanks.

import · February 15, 2006, 6:52am

You’re a Gentlemen - Posted by Frank Chin

Posted by Frank Chin on February 15, 2006 at 07:52:11:

Ed:

Thanks for adding so much invaluable experience to this discussion, and I was hoping you’ll be able to add an additional perspective to a great discussion when I made the post.

In defense of our friend Crassus, I know many frends and relatives, who did well as part time investors. One thing about RE investing is:

For the Ed Garcia’s Ray Alcorns, John Behle to name a few, you can be transaction engineers, and craft deals and make money coming and going.
For those with no time, no business sense, and even with no sense, in many areas, one can count on prices to go up OVER THE LONG RUN, even if it goes down a few short years.
Most people have enough common sense to know that a market is peaking, and know enough not to start with negative cash flow, that FOR MOST, Real Estate is a relatively safe investment over the long run.

My mother in law always wanted to do RE, but her husband always thought it was too risky. After he passed away, in 1981, she bought herself a 3-family with the proceeds form his insurance, and paid 110K cash on the property.

While she didn’t have the wonders of leverage working for her, the property cash flowed nicely from day one. She did it when she was nearly 60 years on age back in 1981, and she’s no transaction engineer.

Now in her eighties, she decided to cash out at the peak of the market, sold the place, and closed on it last October for 850K.

For a women collecting social security, and a small pension, its indeed a great payday. She bought and sold it on the simple belief that over the long run, RE prices will go up. She wasn’t looking for a great payday, and she didn’t care how much she’ll get eventually when she bought. Besides, the gross rent for the place for the last few years was almost $4,000/month (netting over $3,000), given that in NYC each of the apartments rents for over $1,600/month.

Adding up cash flow, appreciation, in the last 25 years, I don’t think one can do any better with 110K in 1981, leverage or no leverage.

And she didn’t need fancy business plans, look for motivated sellers, get seller carrybacks, none of them.

Of course, with properties selling for 850K in NYC, and a hot market going since 1997 here, the question for an investor here is WHERE to go to put down 110K and make the same returns for the next 25 years. Certainly, not with the property that she sold.

Frank Chin

import · February 14, 2006, 5:47pm

Re: Sorry, Difference of Opinion… - Posted by crassus

Posted by crassus on February 14, 2006 at 18:47:34:

Mr. Garcia,
I looked over my original post in response to the guy who was discouraged and now realize I came across not very impressively. Let me give a cheap excuse and blame it on a heavy lunch and a big mouth.

I’ll be the first to admit I’m not a professional, in-the-trenches, deal-making real estate investor. Therefore, I have no business giving advice, encouragement or discouragement in this area.

I do however stand by my contention that it’s very hard, obviously, to find great deals in a euphoric market. Of course a real pro can put his skill, experience and creativity to use in any market and make things happen, but most of us aren’t deal makers. We’re full-time employees or business owners who simply haven’t had the time or inclination to seriously study creative techniques and, even more importantly, learn by doing. I’ll admit much of it has been path of least resistance thinking. It’s been almost too easy making money in RE the last few years

That said, when an RE market is on an uptrend, prices are going up -or even better about to go up- I don’t see anything wrong with an average couch-potato speculator trying to make some money on appreciation IF he has the sense to realize he’s making a lot of money on paper not because of genius but fortunate timing and he better eventually sell and realize profits before the market turns the other way. When he deposits his profit in the bank, he won’t be asked if he was a right-time-right place guy or a savvy dealmaker.

I do think appreciation chasing is going to be very tough in the near-future and the prime way to make money in RE is going to be the buy very below market price-sell for below market price or the buy for cash flow method. Both techniques are right up your alley.

I’m not lazy, am eager to learn and think in new ways, and will start out reading every article on this site.

import · February 13, 2006, 9:10am

Re: There are no huge discounts - Posted by Christen

Posted by Christen on February 13, 2006 at 10:10:08:

I believe you, I work maybe 10 hrs per wk if that and make 180K per yr. I mainly rehab. I make about 15K per property and do one per month. I could do more, but I have a crew that’s been with me forever. I talk on the phone with my main guy about once a week just to get a status report. I have no trouble finding the properties, I just go off the mls, then I sell owner financing and sell the mortgage. I usually do multi-families. I put an add in the paper “fully rented, fully refinished 3 family for sale. Owner financing $500 down, fantastic cashflow” I never have to run the ad more than 2 days. I could expand and put ads in the paper, the we buy houses cash ads, or call on vacant properties, there are a lot of them, or call on tired landlords, but I just don’t feel like it. I’m good for now, maybe I’ll get the “bug” in a few months and decide to step outside my comfort zone but for now I’m content.

I think the problem is people tend to overthink things. I read a book, one of my favorite RE books is Are you dumb enough to be rich? It really struck a cord with me. Did I start out like this 4 years ago, no it was a bit@#. Contractors screwed me over, I couldn’t find a realtor to take me seriously, my bank only let me do one project at a time, etc. But you just keep going, you learn from the mistakes, celebrate the victories no matter how few and far between they are and you always keep an eye on your end goal.

So Tim, what do you do to make your 400K per yr?

import · February 12, 2006, 5:15pm

Wow!!! - Posted by Robert Campbell

Posted by Robert Campbell on February 12, 2006 at 18:15:14:

Tim,

All I can say is “Wow.” This is TV informercial type of success.

Tell you what, with your real estate success and my entreprenial brains, I think we should consider doing a TV informatial. Seriously. 50/50 all the way. I’ve got a few connections.

With any luck, you could possibly have another income stream of $400K per year.

Email me your proof of success and we’ll take it from there.

Robert Campbell

import · February 16, 2006, 8:56am

Re: Real estate didn’t work for me - Posted by Ed Garcia

Posted by Ed Garcia on February 16, 2006 at 09:56:55:

Rehabber7,
I need a little more information then you volunteered.
For instance I need to know the numbers on the three houses that
you?ve discussed, the market and what?s happening in the market.

What you plan to do with the three houses, hold or flip etc.
If you like you can call me at (909) 944-0199 and we can chat.

Ed Garcia

import · February 17, 2006, 4:52am

Re: You’re a Gentlemen - Posted by Bigfoot

Posted by Bigfoot on February 17, 2006 at 05:52:36:

Mr. Chin, Just wanted to say that I enjoy your posts. I think on this post about your mother in law you’ve hit on the one big truth to RE investing. Namely patience. I see so many posts, where the underlying theme is “how do I make quick money”? While your mother in laws’ story is one of extrodinary appreciation, even in a less vigourous market, 25 years of cash flow and a tripleing or quadrupling of value would be nothing to sneeze at. Brgrds

import · February 14, 2006, 10:37pm

Re: Sorry, Difference of Opinion… - Posted by Ed Garcia

Posted by Ed Garcia on February 14, 2006 at 23:37:57:

Crassus,

I beg to differ with you. Your opinion is just as valuable as anyone else?s. I think I was out of line when I made my remark to Frank and I certainly don?t want you to take it personal.

This board use to be a place where someone could come and get good solid REI information from experienced investors helping the none experienced and exchanging knowledge amongst themselves. Maybe it?s me, but it seems that like the quality of answers are just not there.

Crassus, there were guys like John Behle who has forgot more about REI then the guys who are answering questions now know, Ray Alcorn who has a mind like a steel trap and still participates on the Commercial forum. A guy named Jim Piper who had REI knowledge second to none and could articulate it and break it down so that a newbie could digest it. At the time he was CREonlines E.F. Hutton and you paid attention when he would post. Joe Kaiser, who would always come up with a different twist, Bill Gatten who had a fine command of the English language.

These men all knew their stuff and if you should differ with what they had to say you better pack a lunch, for you would realize that you bit off more then you could chew. They?d fire on you and had the experience and knowledge to back it up.

And of course there was me and a few others. I?ve had a shoot out with everyone of these gentlemen at one time or another and loved it. I really miss the times I had with these guys and wish they were cruising the site sharing what they knew with our people today.

Crassus, I guess I got a little carried away, everything I just wrote means nothing to you because you weren?t there. But bottom line is what?s bothering me has nothing to do with you and so just disregard what I had to say.

I respect your sincerity and know you?re doing the best you can and wish you well in your REI endeavors,

Ed Garcia

import · February 13, 2006, 9:33am

Re: There are no huge discounts - Posted by Tim

Posted by Tim on February 13, 2006 at 10:33:30:

Christen,

I need to learn from you in term of the seller financing and selling the mortgage part. Perhaps we could help one another in some extend. I’m good with finding deals but suck at selling them. I usually sell them for too much of a discount and ended up making much less. I need to learn how to sell at a premium.

Please read the latest post… http://www.creonline.com/wwwboard/messages/9315.html

To be more profitable, you need to stay away from the MLS in term of looking for deals. One deal that came from a motivated source can be worth 3 deals off the MLS. But if you have a nice system going, you should continue focusing on it.

Tim

import · February 13, 2006, 11:18am

Re: Wow!!! - Posted by Sean

Posted by Sean on February 13, 2006 at 12:18:38:

I know when at our 2 year mark, we had paper profits of 300k-400k+ in a dead market… most of that was equity.

In a rapidly appreciating market, making 400k wouldn’t neccessarily be tough… buy a few houses retail price and hold em for a year or two and sell for 100k profit each.

import · February 12, 2006, 7:46pm

Re: Wow!!! - Posted by John

Posted by John on February 12, 2006 at 20:46:53:

Thats the problem people want to do info courses after short success, keep up with what your doing and dont listen to that guy

import · February 12, 2006, 7:09pm

Re: Wow!!! - Posted by Tim

Posted by Tim on February 12, 2006 at 20:09:51:

Perhaps to you 400k is a lot. Other successful investors out there do make that amount, if not more. Perhaps I can show you a thing or two. Don’t worry cuz I’m not going to sell you anything. I just want to prove to people that this thing truly does work.

I’ll email you a follow-up.

Tim

import · February 13, 2006, 10:16am

Re: There are no huge discounts - Posted by Christen

Posted by Christen on February 13, 2006 at 11:16:09:

yeah, I’ve been told, I know I am taking the easy way out going through the mls. But it’s easy my realtors great. He scopes them out for me, so I only get of my butt for a very viable deal. Sure I could beat the street and make twice as much but like I said I am in my comfort zone for now.

import · February 12, 2006, 8:31pm

Re: Wow!!! - Posted by Crassus

Posted by Crassus on February 12, 2006 at 21:31:12:

You should seriously consider the infomercial offer.
Your writing style…with the “cuz and such…” indicates to me you’re a hip, young successful investor, probably too busy wheeling and dealing to have time for adequate female companianship.
These infomercials often feature young, successful RE moguls accompanied by quite fetching, scantily clad women who would likely be very interested in a cool cat like you making 400 grand a year. Not a bad way to “pick up some chicks”.

import · February 12, 2006, 8:01pm

Re: Wow!!! - Posted by withheld

Posted by withheld on February 12, 2006 at 21:01:16:

I hear ya’, cousin. I’ve done the same thing for the last 2 years. I grossed over $400k my first year full time after finally telling my drug dealing boss goodbye and did about $370k gross this past year.

Hang in there, buddy. I know you’re working hard. So am I. I’m working my kahonas off, but I’m aiming for $600K this year. We’ll see. Already got 1 in the books and another in the pipe.

PS- Treat people (sellers) ethically and with true kindness and watch what happens.

Unknown Comic