REI 012 » Anatomy of a Buy, Fix and Hold Investor

Investor Power!In this episode of Real Estate Investing Simplified we take an up-close and personal look at the anatomy of a successful buy, fix and hold investor.

You’ll enjoy an eye-opening, off-the-cuff conversation with an investor friend of mine named Daniil — a former, highfalutin Wall St bond trader who jumped ship, then carved out a nice little cashflow corner for himself in today’s real estate arena.

Rather than always chasing transactional income (flips) like so many of us do, Daniil’s all about building cash flow and long-term wealth. He’s got a specific plan of action he’s been executing for a while now and it’s working brilliantly for him.

What You’ll Learn…

I’ve invited Daniil to join me so I can give him the 3rd degree. Which has special meaning for him, since he was born and raised in Moscow. (Too soon?)  We’ll crack open his business together, dissect it, find out what makes it tick, and why works so well for him. We’ll talk numbers, criteria, formulas, the whole shebang.

  • Back Story: How he went from Wall St. bond trader to full-time real estate investor, and huge lessons learned through the process
  • Dissecting: His exact business model, step by step
  • Non-Negotiable: The 2 essential things he must see immediately in every deal
  • Calculating: His exact formula for cherry picking the right deals
  • Clarity: Speculating vs. Investing
  • Show Me the Money: Using private money vs. using his own cash
  • Financing: Exactly how he finances his deals (who to talk to, where to find them)
  • Breakthrough: How to completely bust the 10 property limit
  • Mythical Beast: Does the “cash out refi” actually still exist?
  • Where the Magic Happens: Regional, portfolio lenders
  • The Least: Min cash flow and equity he must see for any deal
  • Where: Area types he’s drawn to most, and why
  • Ups & Downs: Section 8, student housing, apts
  • Virtual: Can this be done long distance, or local only?
  • Managing & Leasing: Outsource or DIY?
  • Historic Secret: Using the Historic Tax Credit to slash your tax bill by tens-of-thousands
  • Exact Software: He uses to assess rehab costs
  • Taming the Beast: How to keep this model from owning you, common pitfalls to avoid

This is some good stuff. Candid, off the cuff and vitamin packed. Daniil drops quite a few tasty nuggets for you, so I hope you enjoy crawling around inside his head with me for a little while.

Listen Now

Play

Video:

Stuff Mentioned in This Episode

  • Free Download: Daniil’s “Rehab Valuator” real estate deal analysis software (for Inner Circle members – see below)
  • Watch: A short video revealing how Daniil evaluates rehab costs (Coming Soon)
  • Portfolio Lenders: Try using a credit union directory, credit unions online, TheLocalBanker.com or the FDIC to jump-start your own search. Also see additional resource from SLL in Inner Circle resource links below.
  • Fed Tax Credits: National Park Service
  • State Tax Credits:  Google “DHR + State” for the Dept of Historic Resources site for your state.

Private Resource for This Episode

  • [Content protected for Inner Circle members only]

Bonus: Watch Daniil’s Rehab Valuator on One of His Deals

[Content protected for Inner Circle members only]
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13 Responses to “REI 012 » Anatomy of a Buy, Fix and Hold Investor”

  1. In Russia, you don’t flip house, house flip YOU!

  2. I really enjoyed this webcast! I am currently in my first year of rehabbing. Sold one already (never even hit the MLS), working on two more to sell retail and picking up #4 to hold long term (and live in). I was wondering how I could leverage these great risk-to-value deals to hold long term to increase my portfolio. Local portfolio lenders, here I come! And I am DEFINATELY checking into the local tax credits as I am completely re-thinking historical renovations here and will begin looking into it immediately. Thank you Daniil!!

    • Awesome, Candyce! Congrats on your first rehab deal – hope it was a home run! Keep up that momentum. And hey, thanks for leaving a comment!

  3. Nicely done JP! I love everything Daniil provides and also highly recommend to all!

    Jim

  4. Every Podcast should cover many different areas of real estate advantages. For this one, I tuned in to learn only one thing from Daniil’s sharing which is renovation. I really like that he never underestimates the renovation for his property. Have it done thoroughly and we never have to worry about it for a long time.

    Thanks Daniil and JP.

  5. The link for “Rehab Valuator” software doesn’t seem to work. Could you please help fix it?
    Thanks for you guys putting up all these great info. It’s been a great help!

  6. I believe it’s working again, Louieee. Looks like it was a temporary glitch. Give it another go!

  7. Awesome insights into portfolio lenders. I’ve already contacted one and will call more tomorrow to see what they’re lending policies are. But JP…is having multiple mortgages something that you would be interested in personally?

  8. Hey J.P. — another great podcast!!

    On the use of local lenders, two concerns I’ve had relate to rate risk and rollover risk. Most of these little banks only want to do 5-10 year loans, so using them to finance an asset you expect to hold a long time exposes you to the danger that rates shoot way up in 5-10 years when you need to refinance.

    Also, if your property value has declined (I know, we hope not, but I’m talking about black swan events in the economy), then the bank might not be willing to refinance, or may require you to bring money to the table to get it done. This could potentially topple your empire.

    So I’d like to hear how Daniil mitigates these risks when dealing with local banks.

    Also curious about the breakdown of his deal source: Agents/MLS, direct marketing, auctions, other?

    Thanks!

  9. David – indeed, most of my banks require a 5-year call, which exposes me to rate-reset risk. It’s definitely a concern, but a price that I am willing to pay for cheap cheap money (I’m getting ready to refi about 16-18 investment properties at 4.5%!).

    The way I mitigate this risk is as follows:

    1) Most of these loans are 20-year amortizing loans, so over 5 years, I end up paying down anywhere between 14-18% of the note (depends on the interest rate). So even if the rate resets higher, it’s mitigated by the fact that your payment is now based off a lower loan amount.

    2) If we are in a situation where I know my loan is getting ready to reset much higher, I will pay down a given note from my cashflow as much as I can before reset, to lower to my new payment.

    3) At the end of the day, we are buying deals at the market lows, so in 5 years I don’t consider the risk of a lower value to be significant.

    As far as your other question, these days I am sourcing my deals primarily from wholesalers. MLSs has dried up and so have auctions in my area.

  10. Daniil excellent interview! This is the same strategy I’m using and I was all ears when listening to this podcast.

    I’m using a chunk of change from a HELOC on my primary and I’ve got my first 3 deals going. In the process of the first cash out refi right now and soon I’ll have a track record to approach some private money to get more simultaneous deals going.

    I’ve been approaching with 70% ARV cost basis but shooting for 65% won’t hurt!

    Question: Do you feel cashing out at 80% LTV still looks good as far as keeping my portfolio attractive? The properties will still cash flow well, but taking some off the top to have more working capital seems enticing. Your thoughts?

    Seems like I’m late to the party on this podcast but hopefully you get an email alert on this comment!

  11. Michael Baldwin

    Completely new to this world and this is the first podcast I have listened to. This is the type of investor I want to be this is why I started here.

    I found this podcast very engaging and helpful. The host and the guest are easy to like and trust. A lot of information was put out for me to look further into. There was lingo that I’m not familiar with that I also need to look into! It was great because I feel I need that real world feel while listening to the conversation. Keep up the GREAT WORK! I will definately be coming back for more!