A quick tip for real estate investors of all sizes…this is BIG common issue that happens in most deals that go bad. LACK OF CAPITAL. Everything always costs more and takes more time, as well the unexpected always happens. If you follow this, you will prevent 95% of potential problems.
“Hi, it’s Jack Miller. I decided to make this. I want to make a series of tips for real estate investors and rehabbers because we really, we’ve done over 10,000 loans. I’m guessing 5-7,000 rehab loans. We’ve been involved with either as the lender or partner or borrower in some way, shape, or form. We have a lot of history not just through these times, through bad times as well. We stuck out the recession, God knows how, but we did. Been doing it for 30 years, so you learn a lot along those thirty years.
The one common mistake that I see real estate investors make all the time is they underestimate the cash needs. The work always costs more, and it always takes longer. Things just happen in life. Even if you buy a property and it doesn’t need work, tenants go bad, roofs break. Real estate is just a very capital-intensive business. So what happens is what I find, and what we find is that most deals fail not because the borrower overpaid another five or ten grand or five or ten percent or whatever the heck it is, but it’s because they don’t have enough capital to sustain them through challenging times. If you borrow from us and you let us know, we’ll advance you that capital 99% of the time, but most of the borrowers don’t tell us, to be candid, until it’s too late.
So my number one tip for real estate investors, whether it be big projects or small projects, is to make sure you have adequate capital to see you through the bad times. Don’t be too optimistic, be a little negative, and be a little pessimistic in the deal because bad stuff always happens. In terms of everything takes longer than you think, everything is a lot more money than you think, and this not only happens with big companies. We’ve been involved with deals where we’ve been involved with a publicly traded company, huge company owned buildings. One of the buildings was like eighty or ninety million dollars. Their ultimate downfall, thank God, they paid us off first, but it was because they didn’t have enough capital.
We were recently involved with a bankruptcy, a fund out of Philadelphia, same thing. They didn’t have enough capital. Keep a lot of capital on hand. However much you think, keep more capital. It’s the king and is the best safety program, the best protection, and the best safety when buying real estate. Capital gets you through the bad times. So tip number one is keep a lot of capital. Things always take longer than you think and are always more expensive. I’ll publish more tips. Hopefully, you’ll learn from our experience. Don’t forget to like this video and hit the bell or the button or whatever it is so you’re notified of more tips and when we post them on YouTube. Take care and have a great day. Call us any way, anytime, by the way, at 561-221-0900, or look us up at geltfinancial.com on the web. Take care and have a great day.”
Category: Borrowers
Tag: pro tip
