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What got you interested in it and what was your first deal?
So one of those resolutions was that I would read 50 books in six months. And many fash cash of those actually ended up being BiggerPockets books because I was interested in real estate at the time and I wanted to be able to get into it. And I remember one morning I was reading a book called The Book on Investing in Real Estate with No (and Low) Money Down, written by Brandon Turner who is smiling- Daniel:I love that book. So you know exactly where this is going then, Brandon.
I remember I came home early that day, so I could finish that book later that night.
But it also caught my attention because it really pulled back the curtain on real estate financing for me. There are many kinds of banks and you can always do things a little bit differently. Daniel:But one constant across all of the different banks and financial institutions is that you are the customer. And once I realized this, it was like I found this power and everything just clicked. Daniel:So once I figured this out, I started scaling and buying properties as quickly as I could, not with a bunch of money, but by leveraging what I knew about banks and credit already. Daniel:And FHA loan is one of the most powerful ways to build wealth in real estate, but is available to the public. Daniel:It needed some cosmetic updates, which very easy I was able to bang them out in a couple of weeks, not a big deal. With just a little bit of money that I had, I was able to control a large amount of assets and basically scale my investment with the principle of leverage. But I created this blueprints, knowing what I knew about the FHA loan and the other loan programs possible and how I could continue to scale in the future.
And what really made sense to me was that the FHA loan was a first time loan only. They have a lot of restrictions to prevent investors from being able to use an FHA loan to scale their real estate portfolio.
David:Now, you can get a second FHA loan if … well, you can only have one at a time, I should say. So if you have an FHA loan, if you refinance it into conventional or sell that property, you can use the FHA loan for another house.
There are some restrictions, you have to be very careful with that. And I always recommend talking to a mortgage specialist before you try to immediate loans pull a fast one. But once you understand that that has to be your first one and the restrictions related to it, you can go and plan your steps for your second or third property based off of that. And so what were some of those strategies you came up with?
So one of them was being able to purchase a property based on its appraised value rather than its purchase price. And for that, you need to find a credit union or a bank who is flexible enough to lend to you based on that.
And of course, for me, this had to be a different credit union, a different bank from the one that I used with my FHA loan, which was just a big standard large bank that you see. Like the Bank of America, Wells Fargo type of things. And I created the strategy relying on the direct lender payday loans bad credit small banks to fund my investments. So I would go to them and present them a property, which had a very high valuation, but I was able bad credit banks that offer personal loans payday loans no fees to purchase at a discount and treat that spread as my equity, as opposed to a down payment. How did you find your early properties or even all your properties? Daniel:Finding them, well, most of them, I just found on Facebook Marketplace or Zillow. But specifically in my market, Facebook Marketplace and Craigslist really work well. Often what you see is a very poorly taken picture of the front of the house banks that offer personal loans with a bunch of junk out in front of it. And we just went through a lot of those contacting a lot of the sellers asking about more information.
Just set up a regular reminder, every day or every other day or every once a week.
Go check your Facebook Marketplace and see what properties are for sale on there.
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Is, we are ambitious people and we are very big thinkers.
And then you realize like, there are a lot of systems that go with scaling. How is that principle of the idea of taking time back to stabilize?
What it feels like … I was thinking about this yesterday. And then you got to run and put all your attention on, so I got to stabilize it, I got to manage them, I have to create spreadsheets and software and people and tools and change the way I think so that I can actually prevent mistakes from happening. I often use a phrase, fish catching versus fish cleaning. And then fish cleaning would be servicing that business you got or managing your property. You actually have to manage that asset or those groups of assets.
David:And it sort of works like, your left hand pulls you up on the mountain, then your right hand banks that offer personal loans grabs and then it pulls you up, and you go back and forth between the two. For me, for the years, I like the book The One Thing.
He talks about not work-life balance, but work-life balancing.
Is that first year for me was very much focused on buying and payday loans lenders online buying and buying, scaling as quickly as possible. Daniel:But it was very much focused on just acquiring as many properties as quickly as possible. And so, one of the things direct installment loan lenders online that I actually did first was acquire as much available credit banks that offer personal loans as possible. Your credit report shows your available revolving credits and how much you have available to you on your credit cards. And so I rushed, creating a separate system, a separate blueprints for applying for all the right credit cards in all the right orders so I could maximize my credit limits and I could get a lot of available credits.
And I actually ended up getting a little over 100,000 just on my credit cards available to me.
And then I took that and I took it even further to search for the best banks I could find. And since I am the customer, of course I had every right to shop around.
Daniel:I just found it through a very good real estate realtor referral and they had great terms and I knew that they would be able to fund the type of deals that I was looking to do and they would still be able to accommodate for all the flexibility I needed. And actually, on the first phone call with this bank, I spent like 40 minutes talking to the person and telling them about my story and my investments and everything that I wanted to be able to do in the near future with them. And only after keeping the person on the phone for almost an hour, did I realize this was the CEO of the credit union. Daniel:And once I hung up, he told me, once I hung up that phone, I knew instantly that I had hit the jackpot with this credit union. Because they were small enough to let me get away with things and they were still big enough to let me fund bad credit payday payday loans racine wi advance everything that I needed to in the next year with the purchases that I was planning. Can you share something about what you learnt creating systems and how you ended up now managing them for the people that may take a similar path? Sending a couple of lease agreements to the right emails, showing the properties. So very standby, very passive, not even management. But we did have experience in that and we molded a lot of systems on how we managed that sixplex for them. So we created a lot of very strict rules that we need to borrow money would follow and we had them written out for us. So much so that we even knew what to respond when a tenant requested one thing or another thing. Even though there might be some extenuating circumstance that wants you to not charge a late fee for someone because you do really feel bad.
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