Hey there real estate investors and aspiring moguls!
In the latest episode of the Raising Private Money podcast, we delved into the world of real estate investing and Private Money.
This episode was packed with valuable insights and eye-opening strategies for leveraging Private Money to maximize profits on real estate deals.
Here’s a sneak peek of what you’ll discover in this episode:
- Insightful Q&A: Jay, Chaffee, and Crystal share their expertise by answering real questions from both seasoned and new investors. From raising capital to managing rehab costs, they provide actionable tips and strategies to help you navigate the world of real estate investing.
- Leveraging Creative Financing: Crystal Baker shares how she creatively structures deals, including using smaller amounts of money from family members and setting minimum investments to align with business goals.
- Navigating Contractor Costs: Chaffee Thanh-Nguyen offers valuable advice on dealing with contractors and the importance of itemized quotes to ensure transparency and prevent unexpected costs.
- The Importance of Tenant Due Diligence: Crystal Baker recounts her experiences with tenant inheritance and highlights the necessity of thoroughly vetting tenants and obtaining accurate rent rolls.
- The Power of Credit Repair: Jay Conner explains the critical role of credit repair services, shedding light on the time and impact involved in repairing credit for potential buyers.
Ready to learn how to take your real estate investing to the next level?
This episode uncovers valuable strategies and lessons that can make a profound difference in your investment journey!
Timestamps:
00:01 – Talking about private money leads to more
03:58 – Paying contractors upfront: when and how much?
06:46 – Reviewing line items, and making business decisions.
10:38 – Seller honors lease, landlord receives rent, legal agreement.
13:13 – Tenant’s payment history led to disappointment.
14:22 – Jay Conner’s free money guide: www.JayConner.com/MoneyGuide
Connect With Jay Conner:
Private Money Academy Conference:
https://www.JaysLiveEvent.com
Free Report:
https://www.jayconner.com/MoneyReport
Join the Private Money Academy:
https://www.JayConner.com/trial/
Have you read Jay’s new book: Where to Get The Money Now?
It is available FREE (all you pay is the shipping and handling) at https://www.JayConner.com/Book
What is Private Money? Real Estate Investing with Jay Conner
http://www.JayConner.com/MoneyPodcast
Jay Conner is a proven real estate investment leader. Without using his own money or credit, Jay maximizes creative methods to buy and sell properties with profits averaging $67,000 per deal.
#RealEstate #PrivateMoney #FlipYourHouse #RealEstateInvestor
YouTube Channel:
https://www.youtube.com/c/RealEstateInvestingWithJayConner
Apple Podcast:
https://podcasts.apple.com/us/podcast/private-money-academy-real-estate-investing-with-jay/id1377723034
Facebook:
https://www.facebook.com/jay.conner.marketing
Twitter:
https://twitter.com/JayConner01
Pinterest:
https://www.pinterest.com/JConner_PrivateMoneyAuthority
Creative Use of Private Lenders for Real Estate Investment Deals
Narrator [00:00:01]:
If you’re a real estate investor and are wondering how to raise and leverage Private Money to make more profit on every deal, then you’re in the right place. On Raising Private Money, we’ll speak with new and seasoned investors to dissect their deals and extract the best tips, and strategies to help you get the money because the money comes first. Now here’s your host, Jay Conner.
Jay Conner [00:00:28]:
You know, one thing that I have learned is the more often I talk about the program and the more often I present, It’s a funny thing how there’s a direct correlation to the amount of Private Money I have coming my way. So the more often, right, That we put our teacher hat on, our Private Money teacher hat, and teach people what Private Money is all about, the more Private Money that we are going to attract. Alright. So on this p and a Zoom, We are talking about, of course, we always talk about Private Money. But what we’re talking about today is sharing some amazing moments and amazing questions that were asked business. Take advantage of the chat box That we have here on Zoom, and type in your question. And we will, for sure, get that answered while we’re here on Zoom.
Jay Conner [00:01:51]:
The question is, Can we invest in real estate deals even with small amounts of money, small funds? In other words, Is there a minimum investment that private lenders can loan to us?
Crystal Baker [00:02:07]:
Yeah. So, you know, That’s a great question. We all should have a minimum, because the thing is it’s gonna cost you You’re gonna have to pay for all the documents to be done, the closing process, etcetera, whether it’s $5,000 or it’s $500,000. So you do have to set a minimum and recognize what will work. So, you know, in my business, it’s 30,000. For some people, it’s 10 because they can use that towards the rehab where they have smaller purchase amounts. That being said, there are I do have investors who are, like, Family members. So I have, like, I have a grandmother and a granddaughter.
Crystal Baker [00:02:48]:
I have a father and I have a son. I have a mother and I have a son. They are on the same note So in that space, they can use smaller amounts. So, like, for instance, the the father and the son, the son only had 5,000, But the father had 150,000. So that worked. Now the math works. Right? Because now I do not have to pay to generate those notes. So, yes, you can use smaller amounts.
Crystal Baker [00:03:12]:
Sometimes you have to look at it and be a little creative. I would not put it together because we don’t pull private lenders’ funds. I would not put together Different private lenders, you know, this person over here and that person over there. But you do need to create a minimum investment and figure out what works for you for your business.
Jay Conner [00:03:29]:
Excellent. Thank you, Crystal. Chaffee, you get the next one. So next question, submitted by this was submitted by Richard, I think I was saying his name right. Silvious or Silvious. He was at the live event. The question was, Chaffee, do you purchase the materials for your rehab through your LLC, or does your Contractor, buy the materials?
Chaffee Thanh-Nguyen [00:03:58]:
Well, this has been a long time, since I’ve done some heavy rehabs, Jay. And, you know, when you are working with a good general contractor, they purchase the materials and everything up front., So I guess the real question should be, are you paying them upfront, and how much? In reality, if you’re working with a great contractor, you don’t pay them upfront. Only if you’re building a new relationship with somebody, you might wanna pay a small amount upfront. And a small amount, I would say, 10% of or less of the entire rehab up front. And, again, when you have a good general contractor, then they’re and you’re working with them, You know, they’re gonna front everything. They pay everything, and then they get paid via draws when you’re working with them after an inspection that they did what they said that they were gonna do.
Jay Conner [00:04:48]:
Exactly. The other part of that question I’ll take, the second part of the question says, if the materials are purchased by the contractor, are you expecting them to mark up the price? So here the answer is yes. But here’s how it works. And so this triggers some excellent, excellent, advice here. When you’re getting a quote or a bid From a contractor, never accept a quote or a bid with all the scope of work, and then just 1 figure at the bottom without each line item laid out. So what we want is we want each line item. How much is the flooring? That’s and that’s material and labor. Everything is material and labor by line item.
Jay Conner [00:05:33]:
How much are the windows? How much is the interior paint? And then at the bottom, I want my contractor to show me what is his markup or his profit. So I pay my contractor 15%. They also have a small percentage that they add on top of that for their workers comp. So that’s a line item. So let me share with you why this is so important. I have a new project. I got a new house that one of my general contractors is starting to work on. So I had him go out And do the line item quote.
Jay Conner [00:06:11]:
Now I already had my budget sheet put together by, my project manager. So I’d already made the offer. I already owned the house. I already know how much the rehab and renovation cost should be. So now I’ve got my contractor going out and giving it to me by line item. How much is the flooring, interior paint, etc.? How much is the water heater? You needed a new water heater. I had to put all new plumbing underneath the house. How much is that line item for plumbing? Well, the quote came in here by email to my office yesterday.
Jay Conner [00:06:46]:
I’m going through every line item. Alright? So that’s That’s one of my jobs. That’s one of the hats that I wear is to make sure when the quote comes in, am I approving the quote. I’m not delegating that out. That’s my business decision. I’m going to decide and negotiate that line out, unquote. Well, guess what? One of the line items came in for interior paint, including the ceiling, painting the whole thing, interior paint, and the ceiling of the house. Well, this house has only got 975 Square feet. His line item for the interior paint came in at $6,100.
Jay Conner [00:07:34]:
And I’m asking myself, where do you get that strong marijuana to smoke to come up with that kind of dollar figure For interior paint on a 975-square-foot house? So I sent him a little email back. And I said, let me remind you how I pay my crews for interior paint. Well, the cost of paint has gone up since COVID. For years, I used $3 a heated square foot. I’m not talking space on the walls. I’m talking Eighty square feet that you walk around on. We have used $3 a square foot for years.
Jay Conner [00:08:14]:
I now use $4 a square foot because prices are going up. Well, even at $4, that’s coming in at $3,888. So he’s about a little over, you know, 21, $22100 off-budget. So I sent my contractor back. By the way, he came in fantastic on some line items. I’m getting a brand-new sliding glass door for $800. I budgeted $1200. Good deal on that.
Jay Conner [00:08:45]:
And I called him out on that, and I said, man, that’s a very competitive price. So I emailed him and I told him I said, look, we’re off on this line item. And, so then he picked up the phone and he called me. And after we had our pleasantries, he said, man, I don’t know what I was Smoking, but I got that interior paint line wrong. Didn’t I? I said, yep, you sure did. And it did. We got the correct quote that, came back in. So look, that’s an example of you can’t set it and forget it.
Jay Conner [00:09:17]:
Right? You have got to inspect. You have to measure. You got to be looking at everything that’s going on there on your dollars. So anyway, good question there from, Richard. Rose submitted the question, how long do most people need for credit repair? Well, the question that Rose was speaking of is whether there’s a credit repair service that we use called screentenant.com. And that’s Paul Ritter up in Pennsylvania. And, been using him for years. But anyway, we use the credit repair when we’re selling a house On rent to own to a lease purchase buyer.
Jay Conner [00:09:56]:
And we’re helping them get ready for a mortgage. So the cost of that is $99 a month and typically it takes 6 to 9 months in credit repair. The average increase in score is about 85 points. So that’s for the question, how long is needed for credit repair? It depends on how much credit repair they need, but that’s the average, length of time. Tim Johnson submitted the next question. He says you gave an example of a tired landlord’s house that you bought. You bought it, from them in 7 days. We closed in 7 days, all cash.
Jay Conner [00:10:38]:
And I told the seller of the house that I would honor the lease Term that is between the landlord, the tired landlord, which by the way, side note, tired landlords Are one of my hottest categories I just bought a new list I’ve tired landlords yesterday, because it’s such a hot list right now. But anyway, I told the seller that I would honor the lease term between the seller, the landlord, and the current tenant. The question from Tim is, do you let rent until the lease is up, or did you honor the lease by letting the tenant stay until the lease was up? So the first part of that question, did you let them receive rent until the lease was up? Well, if you’re talking about the landlord receiving the rent, The answer is no. Whoever owns the house gets the rent. So here’s a rider downer. What we did is we had my real State attorney draw up what’s called an assignment of rents. Not an assignment of rent. We just saw a drop in an assignment of the rent or the rental agreement.
Jay Conner [00:11:48]:
So that is we don’t have to change anything with the lease agreement. We just had an assignment drawn up that the seller signed and I signed, Which assigned the lease over to my company. And so now the tenant is paying rental payments. So look, There’s a big lesson. There’s a big lesson here in this story. I have bought 3 houses within the past 90 days that came with tenants from tired landlords. And guess what? The tenants are still in the house. Why did I do the deals? Because the rent coming in has given me a positive cash flow, in, relation to the underlying debt that I’m paying the private lender.
Jay Conner [00:12:37]:
By the way, these were free and clear houses. So there was no subject to mortgage to take it over. So the lesson to learn here is, even when you’re talking to a seller that’s got a tenant in it, Don’t be afraid to inherit that tenant if, the math makes sense, and you’re gonna have a positive, you’re gonna have a positive cash flow.
Crystal Baker [00:13:01]:
One quick aside on that from a lesson learned, Jay, just to share with everyone. Do indeed do indeed make sure you get the rent rolls.
Jay Conner [00:13:10]:
And now tell everybody what you mean by that.
Crystal Baker [00:13:13]:
Evidence that the tenant has been paying them. So, I This 2 times I got burned, 2 times were little old southern bell ladies that just were sugary sweet. They were all sweet tea. But they got burned on, inheriting a tenant. I’ve had a great inheritance of tenants, by the way. But I got burned on inheriting in tenant by the little old lady who just assured me upside down and inside out that they were great tenants, and they always paid. And those tenants Never paid. Like, there’s no way they just stop paying that day.
Crystal Baker [00:13:51]:
They never paid. So make sure you get Make sure you get the rent rolls. It’s really important.
Chaffee Thanh-Nguyen [00:13:56]:
So the lesson learned is it’s okay to, keep the tenant unless they’re little old ladies, you gotta get rid of them.
Crystal Baker [00:14:03]:
No. It’s the little old ladies who are the sellers, Chaffee.
Chaffee Thanh-Nguyen [00:14:06]:
Oh, okay. Got it.
Jay Conner [00:14:09]:
Bless their heart.
Crystal Baker [00:14:12]:
There was some blessing in their heart going on. Woo.
Jay Conner [00:14:16]:
Excellent advice, Crystal. Excellent advice. Thank you for, thank you for sharing.
Narrator [00:14:23]:
Are you feeling inspired by the knowledge you gained in this episode? Then head over to jconner.com/moneyguide. That’s www.JayConner.com/MoneyGuide download your free guide that shares 7 reasons why Private Money will skyrocket your real estate investing business right now. Again, that’s www.JayConner.com/MoneyGuide to get your free guide. We’ll see you next time on Raising Private Money with Jay Conner.