Part 1 focused on the concept of getting a potential deal under contract. Part 2 covers the purchase timeline process for closing a deal, which is when your asset begins to work, run, and make money.
Be resourceful because real estate is a way to live your best life and create legacy wealth. Buckle up, buttercup!
Topics on Today’s Episode:
- Site Visit: Flights, hotels, and time ($1,500); if you don’t have the means, find a partner
- Hire lawyers ($2,500 per phase):
- Phase 1: Purchase and Sales Agreement (PSA)
- Phase 2: Title Search
- Phase 3: Closing
- Letter of Intent (LOI): Utilize template and submit interest to be accepted/signed
- Call lender and provide offering memorandum (OM) and current rent roll
- Ask your lawyer to write PSA draft and deliver it to seller’s lawyer
- Submit Cashflow Calculator numbers to management company
- Intervention: Attorneys, sellers, and buyers at impasse; nobody wants to give in
- PSA:
- Deposit earnest money
- Start private placement memorandum (PPM): ($15,000)
- Create and open LLCs
- Loan and insurance quotes
- Open five bank accounts: Operations, owners/investors distribution, deposits/earnest money, self-escrow, and capital expenditures (CapEx)
- Due Diligence:
- Perform on-site due diligence ($10,000-15,000)
- Apply for loan (up to $65,000)
- Environmental money
- Survey money
- Hard Money Line: Red for a reason
- All earnest money at risk
- “Golden Parachute” is non-negotiable
- Close deal to be profitable
- Built-in extension ($25,000)
Links and Resources Mentioned:
- Multifamily Legacy Episode 086: The Juice is Worth the Squeeze Part I
- Apartments 2 Millions Course
- Kahuna Cashflow Calculator
- Multifamily Legacy Podcast on YouTube
- Multifamily Legacy Podcast on Facebook
- Kahuna Boardroom
- Kahuna Investments
- Cashflow HQ
- Rich Dad Poor Dad by Robert Kiyosaki
- Fiverr
Quotes:
“Remember, you’re working with lawyers. So, there’s nothing that happens quickly.” Corey Peterson
“Why five bank accounts? If it’s not in the main account, then it doesn’t get spent.” Corey Peterson
“It typically is $10,000-15,000 to do a true, deep dive due diligence. I’ve seen it done for a little cheaper, but sometimes if you do cheap, you get screwed.” Corey Peterson
“Make sure that you know all the numbers on these deals. You’ll thank yourself, once you do it right. You don’t want to lose money.” Corey Peterson
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