Today is going to be a fun episode because we talk about how to fund your deals. There are a lot of little pieces to the total funding package. I’m going to give you the juicy details of how it works and how to remember everything. We’ve talked about how to find deals and make offers. Now it is time to talk about how to get funding. We will go over where to get private funding, how much of it to use, the capital stack, and more.

I am so excited about this because I love the cashflow life. When you start from nothing it is really exciting to become successful and have successful real estate deals. I also appreciate all of the new listeners and reviews. I have a fun episode coming up where my wife is going to join me and share a little about me. She has supported me, and this has been a partnership with her. She is my best friend and the upcoming episode will be real and authentic.

Topics on Today’s Episode:

• The capital stack is the total amount of money it takes to fund a deal.
• Example: 2 million dollar deal purchase price. Start underwriting with .75
• That’s a 75{c35051b4442fafb55b74468ce151e373ddcc3f5b6c0bbc4cc62a5de9551ee3ef} loan-to-value rate. This depends on occupancy.
• The bank finances 1.5 million, so we still need $500,000 of private funding money.
• We borrow all it takes for the down payment, closing costs, inspection costs, legal costs, and capital expenditures or money to fix up the property.
• We borrow more than we are purchasing.
• It’s our job to find all the right problems that are fixable and then fund it with all the money we need.
• Acquisition fee is 3 to 5{c35051b4442fafb55b74468ce151e373ddcc3f5b6c0bbc4cc62a5de9551ee3ef}. It depends on how good a deal we found. 4{c35051b4442fafb55b74468ce151e373ddcc3f5b6c0bbc4cc62a5de9551ee3ef} of a 2 million deal is $80,000. That is some fix and flip money.
• Investors want to get their money back with interest. Private money cost more than loans from the bank. Bank money is cheaper, so get as much as you can.
• Don’t get discouraged when raising private money. Ask people about who they know because that takes the pressure away.
• Pencil a higher interest rate. If the deal still works at these numbers, it is still a deal. Don’t fine tune the numbers until the deal is ready to close.
• Under promise and over deliver. This is a hidden art that most people don’t do.
• Showing people better numbers makes them believe and trust in you and become raving fans.
• Always be conservative with your projections.
• I’m also creating software to that will show you how to structure a deal.
• Find a commercial mortgage broker.
• Never undervalue the benefit of asking for help. Get a referral to the right person and ask the hard questions.
• Keep expanding your network and be the conductor of your team.

Links and Resources Mentioned:

• Quick Start Video Series
• Eric Stewart Mortgage Broker
• Steve Jobs

Quotes:

“I run my multi-million dollar business from my home, and I have kept it simple for a reason. I don’t want to have to check in to the office.” Corey Peterson

“I am the conductor. I take all the pieces that I need to assemble my team and then make sure they are playing right.” Corey Peterson

“It’s how you put the jigsaw puzzle together to find the solution.” Corey Peterson

Don’t forget to download my Free Workshop Quickstart Video Series, and if you like what you have heard please leave a review on iTunes. On the next episode, I am going to give a quick shout out to some of my reviewers.  

Welcome to episode number six of the Multi Family Legacy podcast. Today, I am talking about believing in yourself. So often when we share our dreams with people, and they try to tell us all of the reasons why we can’t achieve them.

I want to tell you that you are worth it, and you can do whatever you put your mind to. Just keep in mind that people will let you down, so don’t let them steal your dreams. Once you accept this, people can’t hurt you with their words.

Topics on Today’s Episode:

• The power of being mindful of who you share your dreams and goals with.
• How family can say some of the meanest things, but once you understand why they are saying them those things won’t be hurtful anymore.
• When you share your dreams and goal friends and family think they are supposed to be the voice of reason.
• They say these things to deter you so that you don’t get hurt.
• Many times they are not qualified to give you business advice. They may be coming from a place of not knowing what they don’t know.
• They may try to derail you because they don’t want you to get hurt.
• Sometimes people don’t want to see you get ahead of them and they try to water down your dreams.
• When I got into real estate full-tilt, I was very careful about who I opened up to about my dreams and goals.
• Be careful about sharing what is going on in your life with people. They might ruin you, but they don’t mean to do it on purpose.
• My video Believe and the first time I felt doubt.
• I want you to shine and boldly proclaim what you are going to do to yourself.
• When you truly believe you can, that is when your life starts to change.

Links and Resources Mentioned:

• Quickstart Video Series

Quotes:

“Imagine what life would be like if you didn’t have to worry about money.” Corey Peterson

“When you understand why friends and family may say hurtful things, you can take their power away.” Corey Peterson

“If you want counsel, don’t share your dreams and goals or ask advice from people who aren’t qualified to answer.” Corey Peterson

Don’t forget to download my Free Workshop Quickstart Video Series, and if you like what you have heard please leave a review on iTunes. On the next episode, I am going to give a quick shout out to some of my reviewers.  

Today, we are talking about offers and how to get your offer accepted by a broker. I would like to think I understand brokers, but I don’t always. I do know what gets them excited, and it is money and commissions. What they are concerned with is if you have the ability to close and how much money they are going to make. If you want to have a deal that the broker will recommend to the seller, give the broker both sides of the commission. That means not using your realtor or your real estate license for half of the commission.

I also talk about finding commonality and making relationships. You want to be friends with your broker by talking about something interesting other than real estate. Once you find that commonality take notes and keep in touch. I also talk about sending an LOI or letter of intent and what is included in it. Along with a sample LOI that I use. You want your LOI to be precise. I also talk about the importance of having a good management team in place with a solid credibility kit. I also talk about having your own credibility kit and having a proof of funds. After this episode, you should have a good understanding of how to get your offer accepted by a broker.

Topics on Today’s Episode:

• Giving a broker “double juice” or all of the commission
• Make friends with your broker by finding a commonality and taking notes
• The importance of building relationships and getting to know people
• You really want your broker to like you and consider you as a friend
• Creating an LOI or letter of intent
• LOI – Three page document that features who is buying, selling, price, inspection period, days to close after inspection, signature, and list of things wanted during due diligence phase.
• Finding a great management company with a credibility kit or bio on their abilities to do the job
• How momentum plays are usually solved by having good management on board
• Having good management in place usually matters to the seller
• Have your own credibility kit or show that you are successful at what you do with a 3 or 4 page document
• Having a proof of funds a screenshot of a bank account or a document with numbers
• Call the broker at 5:00 pm on friday and be the last guy to submit an LOI. “Hey, I’m looking for some pricing guidance.” Play hot and cold to make it to best and final and find the correct range.
• Having friends is the key to the game
• $100,000 earnest money can lock up a 7 million dollar deal

Links and Resources Mentioned:

• Quickstart Workshop
• LOI Document and Credibility Kit

Don’t forget to download my Free Workshop Quickstart Video Series, and if you like what you have heard please leave a review on iTunes. On the next episode, I am going to give a quick shout out to some of my reviewers.  

Welcome to the multifamily apartments investing podcast, I am your host Corey Peterson. Today, we are talking about how to analyze deals. The key to a successful apartment deal is understanding how to make sense of the numbers. This is the third part of the six pillars of success series. You need to know when a deal is a good deal and with multifamily apartment investing it is all about the numbers. Putting the numbers into the right system will tell you when a deal is worthwhile or not.

Having the right software will make the process a whole lot easier. I’m in the process of creating a Kahuna Underwriting Template. As of the time of this recording it is not available, but it will be soon. I’m taking all of the best of the things that I use and throwing out the things I don’t like about the current systems I use. This is going to be a really great product. Today, I’m giving you a 50,000 foot level view of what makes a deal a deal. Starting with two types of deals the momentum play and a repositioning play. Keep in mind the ultimate goal in each one is always cash flow.

Topics on Today’s Episode:

• Momentum play or buying a deal that is already doing well, making it a bit better, and carrying on the momentum
• Micro positioning or improving the apartments a little bit with landscaping or other things
• These properties can cash flow the day you buy them and they provide safety
• Repositioning play or doing a very big rehab this can have lot’s of turnover
• This requires lot’s of cash, but can make a lot of money
• A repositioning play involves more risk
• An example of a momentum play deal with 80{c35051b4442fafb55b74468ce151e373ddcc3f5b6c0bbc4cc62a5de9551ee3ef} leverage
• 80{c35051b4442fafb55b74468ce151e373ddcc3f5b6c0bbc4cc62a5de9551ee3ef} leverage means getting a loan at 80{c35051b4442fafb55b74468ce151e373ddcc3f5b6c0bbc4cc62a5de9551ee3ef} LTV and putting 20{c35051b4442fafb55b74468ce151e373ddcc3f5b6c0bbc4cc62a5de9551ee3ef} down
• Property packet and the financial numbers
• What their numbers are – compared to what you think they should be
• Gross potential rents – total number of rents that you could collect
• Vacancy – percentage of units not rented – determine in dollar amount
• Total concessions like $100 off first month’s rent
• Total rental income
• Other income – coin operated washers, vending machines, etc
• Residential utility bill backs or RUBs are income
• Total income – all of the income the property generates in a year
• Operating expenses – Salaries, advertising, maintenance, office admin, management fees, utilities, insurance, and taxes.
• Deduct operating expenses from the total income and you get net operating income or NOI
• Deduct your loan or debt service and reserve account from the NOI
• CFBT or Cash Flow Before Taxes – you want the biggest amount you can get going into your account
• Taking the time to vet a great property manager who has great systems in place
• Getting your feet wet with a nice solid momentum play

Links and Resources Mentioned:

• Quickstart Workshop

Quotes:

“Cash flow is really what it is all about and what should drive you in all of your decision making in this process.” Corey Peterson

“The biggest expense you have on any property is the payroll of the people who work for your property.” Corey Peterson

“If utilities such as water are abnormally high, look at things like leaky toilets. They are literally throwing money down the drain.” Corey Peterson

Don’t forget to download my Free Workshop Quickstart Video Series, and if you like what you have heard please leave a review on iTunes. On the next episode, I am going to give a quick shout out to some of my reviewers.