Writing a blog, has helped me learn new investing techniques, meet new business contacts and helped me achieve my goals. I didn’t plan to write a blog, in fact the blog just materialized from a couple random ideas in early 2013. I learned from reading and listening to self-help/wealth gurus to keep an eye out for any opportunity no matter how small or big. A few months ago I was thinking about my investing and how I could get more than four loans on properties, while many other investors could not. I thought what if I could start a bank that offered financing across the country with portfolio money. It would be an instant success because so many investors want to purchase many properties, but have trouble with financing. I have no banking background, but I do have a degree in business finance so I checked into it a little more. I started doing research on banking and found a few websites with resources for banks and start-up banks. I sent quite a few emails out asking about how banking worked and why there were not national portfolio lenders. For some reason no one responded to my inquiries about starting a bank that offered financing for investors. I guess they figured a random person with no banking background and no investors probably shouldn’t start a bank.
I didn’t give up entirely on the idea, I talked with my friend about it and slowly the idea evolved into a website that found portfolio lenders. It would take some work, but if I could provide a one stop shop for people around the country to find a portfolio lender, that would be a great website. It turns out that would be a ton of work tracking down and confirming portfolio lenders for every part of the country. My idea then evolved into a blog about finding portfolio lenders, hence the name Invest Four More, because you can get mortgages on more than four properties. I started writing and have not stopped!
Now that I have followers and comments it is becoming a lot more fun to write And see the reactions. Not only is the blog fun, but I have learned more about investing in the last three months than I have in the last three years. Before the blog I had read a lot of books and talked to many local people but I had not done much else. I always used forums as a source of information for my car hobby, in fact I found my Porsche 928
for sale in a forum and I happened to be the first one to say I want it! I then had to fly out to New York while my wife was pregnant to inspect and pay for the car (that didn’t go over well). For some reason I have ever used forums to research investing techniques before my blog. I discovered Bigger Pockets
, a great investing site while researching for my blog and it has been an incredible source of information. I have also attended investor meetings and talked to hard money lenders
and learned massive amounts of information. Here are the techniques I have learned since I started the blog.
Before the blog I had always found my deals through MLS or the foreclosure auction. I always worried in the back of my mind what would happen if all the deals dried up and foreclosures went away. in fact, we are starting to see that now in many areas of the country with lower and lower inventories. Through my research and forums I have learned the good investor can always find a deal. Many investors don’t use MLS or the foreclosure sales to find any of their deals. They rely on direct marketing to targeted sellers. They may be absentee owners, pre foreclosures or people who have inherited a property. If you send enough letters or postcards to the right people you will get leads and with enough leads you will find properties. I am sending out my first direct marketing next week and I would never have known about it without my blog.
I didn’t have any idea wholesalers existed before my blog. The only experience I had with wholesalers was I had heard of some investors who bought a house from the we buy ugly houses people. I thought it was strange that there was enough room in a deal for one set of houses flippers to sell to another set of house flippers who then fixed up the house and made a nice profit. I didn know at the time but the we buy ugly houses people wholesaled the house. For whatever reason they chose to flip it quick for a quick profit without doing any work. After going to my first Real Estate investor meeting I realized there are a lot of wholesalers in the business. They usually wholesale as a way to get started in real estate. They may not have enough money saved up to flip or buy and hold or they may prefer the quick profit and don’t want the hassle associated with repairs and selling with an agent. Wholesalers can be a great source of deals although I have yet to see anything come my way. To be fair it has only been a few weeks since I met my first wholesalers in person.
There are a ton of ways to finance a house. My portfolio lender is great, but there are other ways to get around the four mortgage rule. Many investors will buy a home subject to the existing mortgage. How a “subject too” works is the investor buys a property and takes over the seller’s loan and makes the payments. The risk with this is the bank doesn’t always like someone else taking over the loan and they could call the loan due immediately. If the bank calls the loan due, the investor has to pay off the entire balance of the loan. There is also hard money, which is more expensive than conventional financing but also much more flexible. Pine Financial
is going to be writing an awesome article for me next week about how to use hard money to buy long-term rentals with little to no money down. I won’t spoil it so you’re going to have to wait until next week for the details. Commercial wraps. If you have more than ten mortgages it gets even harder to finance properties. My portfolio lender will loan on more than ten, but most banks won’t even think about it. It is possible to wrap multiple rental properties into a commercial loan
. I need to research this subject more and it may be a future article. Private financing is another option we were already using, but I didn’t think about it too much. My sister loan us money to complete our flips, she gets a higher interest rate on her money than a bank would give her and we get cheaper money than a hard money-lender would lend us. I am hoping to find enough new deals that I will have to search out new private money sources!
What lesson have I learned?
I have learned to explore all options of whatever I am interested in no matter how much I think I know. I thought I knew a lot about investing. I thought flipping houses for ten years and buying long-term rentals had taught me everything I needed to know. It turns out there was an entirely different world out there for flippers and buy and hold investors. Writing and researching this blog opened up that world to me. If there is something you are interested in, want to get involved in or are already doing. Take the time to explore the subject further and see what other people can teach you. The internet has made so much information available it is ridiculous. We need to take advantage of all the information available, even if we think we already know it all.
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