My Network

About a week ago I officially joined biggerpockets.com and it has been the most rewarding investment of my time. I was really nervous to post, thinking no one would want to answer my stupid questions, but I stepped up to the plate and posted to the Forum "Newbee" to share my story. I had a few replies in minutes, a few more in hours, and about 10 by the end of the day. Everyone spoke so positively and gave fabulous advice. As cheesey as it sounds it felt like I up and joined a family!!

Day two I ventured even further to get some general advice about how to begin. This fella, Tim Soto -  an investor from California, commented on the thread and gave some incredible advice. Here are some of the things he said:

 "It's great that you and your wife are eager to take action. Do you know the the number of units you both are interested in pursuing?"

Well, I'm thinking I should start with one, I mean, we've got to start somewhere. Goals are on another post so maybe I'll send him there.

"I would start by networking with multifamily property owner(s) in my area, attend my local Real Estate Investor Association/Club...  [or] Property Management Association and network. Maybe there's a Multifamily property owner who I can network with."

The specific advice in first person sounds funny to read but I love what it says. I searched through Google to see if I could find anything,

• After being taken back to BP website I followed a bunch of links to here : https://uvreia.com/events/uvreia-february-luncheon So, I told SIRI to add an event and scheduled it in. I guess I'll post later about how it goes!! 
• I found another site called http://www.wareia.com/3.html a website for all real estate investors. Well specifically Wasach Area Real Estate Investors Association. I signed up for the news letter, we will see how that goes. 

"You say that you have some savings that, I'm thinking, you want to used toward a down payment, but not strong enough income to finance the balance."

On this topic, I was given a book by Dave Ramsey Total Money Makeover. It's a tough read because Dave basically tries to train the reader to redefine financial norms. He really hates on credit card debt and says buyers should only consider buying if they have the cash to do so. His has a page banner along the bottom of each page that reads "Live like no one else now, so you have live like no one else later". Meaning, put off the beating out the Jones's and retire wealthy and happy. I'm not sure I agree with all of his ideas, but one that I did like and plan to apply to my life was his structure of the Emergency Fund. He recommends having a liquid cash account with 3 to 6 months of monthly expenses saved. For example, Steve and Stacey have a mortgage, car payment, phone bill, utilities, student loan payments and living cost that total $1,800 a month. Dave Ramsey says to have an emergency fund to cover those costs for 3 to 6 months - about $5,500 - $10,000 saved away for that 'rainy day'. Amanda and I are planning on living with that kind of emergency fund based on our monthly expenses.

"You're more likely going to want to look into seller financing or some other creative financing. If you can't get financing, maybe you can partner with someone who can." 

This advice takes a lot more home work than his other instructions have taken. BP website has some awesome forums about these topics. I'd like to write some of the 'financing options' I have been able to find.

• Brokers at a Banks and Mortgage Lenders. 
• I came across an email for a guy named Steve Bond with Utah Featured Homes who I am set up to meet with today 1/26/15 at 2:30 pm. I can not wait to hear more about where I stand in the lender world. I have good credit, a really good DTI ( debt to Income Ratio), but a poor W2 income proof. Just working that part time gig... Steve here may be a mortgage lender who teams up with a real estate the Remax Real Estate team. 
• I'm also going to go talk to Wells Fargo, UCCU, Bank of American Fork, and Zions Bank. If you can think of any other banks I should go to let me know. 
• Seller Financing 
• This will be a tricky one to plan for. Basically what this means is the seller takes the risk on my investment instead of the bank. These are expensive and tough to get with no experience.  
• Hard Money Loan 
• Like seller financing these are tough for beginners, they are expensive a private lender will charge upwards of 20% return. Whereas the bank only requires you pay 3%. These loans work well for the 'fix-and-flip" guys.

  

Again, in your situation, I would start looking at and evaluating multifamily properties in the area I want to invest in and decide how many units would meet my investment tolerance because that'll also give me an indication how much of my own money I'll need to come in with, in the event I can obtain seller financing.  

I would contact a local Realtor to pull some properties for me. I suggest a Commercial Realtor with the designation CCIM (Certified Commercial Investment Manager), who can also give me guidance and may also know of a motivated seller, who'll consider seller financing. I would also go on LoopNet, CBRE, NAI, etc. to browse and pull multifamily listings that meet my criteria and look at the Offering Memorandums (OM), which contain detailed information of the properties. Commercial Realtors can be contacted through theses sites as well. Although all of these properties on these sites are offered at retail prices, I would study them so that I know my market, including price per unit, market rents, cap rates, NOIs, etc.  

Once I know I'm ready to make offers, I would ask my Realtor to pull old listing of multifamily properties and have him/her contact those Listing Agents to see if the seller would consider seller financing for a short period of time with a reasonable down payment. I would make sure to communicate that after some seasoning of the ownership, I would be able to refinance with a traditional lender as an owner, not as a buyer, making it possible to cash out the seller with reasonable terms.      

I would also meet with a local title/escrow company and start that business relationship. I would ask if they can pull a list of 5+ units in my area for my direct mail campaign and mail post cards or letters to these owners.   

Hopefully some of this info was helpful and not overwhelming. This is just based on my personal experience and opinion, and this is information I would have wanted to know when I was first starting out. Good luck!"

Tim