Partner With Me on Single Family House Deals

Since I just had another person reach out to me and ask how we could work together so she might make a higher return on her savings and IRA, I thought it would make sense to talk a bit about what I do and how we might work together to do the same thing for you.

First off, I’m a buy and hold investor. I buy apartment buildings and single family houses with the intention of holding them until I own the houses free and clear or exhaust the depreciation deductions on the apartment properties.

My goal is cash flow. Stable, predictable, and safe cash flow.

So I don’t have an “exit strategy” per se. At present I’m not doing flips, wholesaling, or any other short-term real estate investing.

What that means is that I’m looking to use money for a longer term than my flipping brethren. For single family houses that means at least five years (or preferably longer). With the turmoil in the economy and financial markets, I’m sure you’ll agree that right now locking in a good interest rate for me and an excellent, low risk return for you for that length of time is smart business.

Because of the turmoil I mentioned, I’m doing what I can to minimize the risk of what I buy. That means buying in the best school district in the state, and buying the best homes with the best configurations and amenities that are rent-ready the day I close.

Notice that I didn’t say “buying the best houses that are available”. I didn’t say that because my strict criteria has nothing to do with what’s available. I only buy houses that meet my criteria 100%. Or else I don’t buy anything.

This has proven to be a sound strategy. Since I buy high-demand houses in a high-demand school district my tenants stay longer, and when they do move I have been able to move someone else in the following month and minimize my vacancies.

My challenge is that I reached the limit on the number of mortgages that I can get from banks several years ago.

Since there were still great homes to buy in my area that fully met my criteria, when I hit that limit I started reaching out to private individuals to “play the bank” and provide mortgages on my properties. That has been fantastically successful. I’ve bought several houses (some examples below) and the individuals that have lent to me have been able to make stable and consistent returns that exceeded what they could have made with their savings and IRAs, and it has provided them a way to diversify away from an increasingly unstable stock market.

I don’t want to go into a great deal of detail here on the process, because this isn’t a sales pitch. I do, however, want to tell you three of the ways that every one of the individuals that have lent to me are protected.

First – as I mentioned, I only buy properties in one particular area that have very specific configurations and amenities. This ensures that the properties should always be some of the most desirable rental homes in the entire area.

This is important for two reasons. It has helped me keep the homes rented consistently, with consistent rents, even in the chaotic economy that we have. And second, were something catastrophic to happen to me and I default, my lenders would get a very desirable home free and clear that would generate substantial positive cash flow. In fact some of the individuals that have lent to me have (jokingly) complained about getting their payments on time, because the houses are so nice they’d like to take them back.

Second – my lenders get “first lien” on the properties with a legally written agreement that I will not put second liens, such as an equity loan, on the properties.

This is important because again, if something were to happen and I default, they would have the only claim on the property.

And third, I have waived my foreclosure rights in writing.

This is important because in the event of my default my lenders won’t have to suffer through a long foreclosure process or incur any legal fees to take the house. I have essentially agreed to give the keys back immediately if that were to happen.

I know I’ve talked a lot about the downside, but I do so because my #1 concern is reducing the risk to my lenders.

Again – this isn’t a sales pitch as I already have a number of private individuals that I work with regularly.

But because I get asked semi-regularly about working together, I thought it made sense to sketch out at a high level what I do. If you have more questions and would like to have a conversation, send me an email at dennis at CFMAcademy dot com with your phone number and we’ll set up a time to talk in more detail.

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Single Family House