Two months ago, I had the pleasure of being on a buy-and-hold panel at a local real estate club. In addition to sharing best practices to new investors, I was also able to connect with other investors on the panel. One of those investors was Janet French.
During our brief time together, I was able to ask her many different questions regarding her business and acquisition strategy. After talking with her at length, I realized that she emulates the type of business I would like to have one day – after I leave corporate america
Some of the insights she shared with me were so intriguing that I naturally thought readers of this blog would benefit from hearing them also. I approached Janet about doing a guest post on the blog and she graciously agreed. Please enjoy!
Here is a little background on Janet:
Janet and her husband Larry currently run SilverMoon Entities, a real estate acquisitions company. They purchase cash-flowing rentals in Southern California. In addition, they occasionally rehab and re-sell properties to generate additional capital for their business.
Without further ado, here is my interview with Janet French from SilverMoon Entities . . .
How did you get started investing in real estate?
In my previous life, I owned a mortgage brokerage and while I was working in this business, I realized that by owning rentals, I wouldn’t need to work for the next 20 years. Real Estate for me was the path to assets, cash flow & passive income.
I want to travel and live in different parts of the world for an indefinite amount time while the checks keep rolling in every month. I do flips and this pays the bills until I build up enough cash flowing rental properties to keep my budget covered and flush. =)
When did you decide it was time to jump into the RE investing business full-time?
3 years ago when the mortgage industry tanked and my business went down hill fast. I shut the doors and started working full time. It was the best decision I ever made and wish I would have done it much sooner.
What does your business model look like? Do you think this will change over time?
Currently I purchase 10-15 rental properties per year and flip 4-6 houses. I buy in 1 specific market and buy almost exclusively SFRs. Our business model on how we look for properties to purchase changes frequently as REOs, auctions etc, become more difficult. In addition to the typical MLS searching, I do direct mail and most importantly, develop relationships with local agents & wholesalers.
How do you distribute the workload between you and your husband? What are your biggest strengths and how do you use those in your business?
Although we do have some cross over in stuff that we both like to do…mainly I handle running the business. I look for properties, evaluate properties, make offers, do the books, pay the bills etc. I work mainly w/our assistant who manages our rentals unless it’s a repair question / issue and then Larry handles that part.
Larry, my husband, talks to sellers, agents & leads. He works mainly w/the contractors, building department etc. He runs the properties to estimate repairs.
We both design our remodels for rentals and flips. And we both end up working with the contractors on the design, the final look and feel.
I’m very good at organizing and creating systems. Our business runs very smoothly because of the online systems that I’ve developed to handle our rentals and working with our assistant who handles rental calls, leads and rental open houses. With flips, our online systems work great w/our contractors who work directly in our shared documents to bid, make change requests and keep track of the progress on our rehabs.
Larry is excellent at developing relationships and yacking on the phone w/ sellers, agents etc. He’s good at working w/contractors and continually making sure they are doing what they say they will and making sure the project goes smoothly.
You are a big believer in systems. Can you give us a few examples of how you implement systems in your business?
I learned from the E-Myth..I love checklists.
For instance. When we get a property under contract, I create a “Property site” this is an online workbook that has a page for all of the property specific details, everyone’s contact info, escrow close date, purchase price, lockbox info etc. It has a checklist for all of the things that need to happen between contract to closing escrow. It has a worksheet to track the history of the deal.
It has a worksheet to compare financing options depending on if the property is a flip or rental and how much profit / cash flow it will produce. If it’s a flip property, it has a checklist on everything that needs to happen to get it back on the MLS to sell to closing escrow.
For our rehabs. I have a “Rehab Worksheet” that will detail out all of the repair items that we would like to happen on our remodels. The contractor will put his bid directly in the sheet. It also has a materials list, measurements and specs sheet and any particular contact info that is needed. This way we always know what our our total ongoing cost of the project is…no surprises!
For our rentals. I have a checklist on the steps our assistant needs to complete in order to get a property rented up. It logs all of our residents contact info, their kids, birthdays, move-in date, rent amount / security amount etc. We also use calendar reminders constantly for resident birthdays, follow up visits just after a resident has move-in etc.
All of these online sheets are done in Google Docs and I can’t tell you how many times we’ve accessed them on our phones out in the field. It’s saved countless hours and headaches.
In Dropbox, I’ve created shared folders that house all of our rental documents needed when we get a new property and then all of the signed leases, applications, move-in checklists, addendums etc are shared so all of our team has access at all times.
And finally, I created the “UBS” Ultimate Business System in Google Docs…Actually I worked up all of our process step by step, wrote them out and then had my assistant create all of these documents in the UBS so she would learn how we want our business to run. Our team can access at any time to review all of our processes.
It’s all worked great and we are constantly making improvements. The lasted one I did last week. I created a new tab in the rental workbook that tracts major repair expenses on each rental property so that we have a quick reference on when we had to fix the HVAC….I think last week was definitely the week of HVAC repairs..we had 3 go out…ouch!
So to be clear, each property has it’s own workbook(s) depending on what type of property it is and we can access them from anywhere in the world because it’s done in Google docs and/or Dropbox.
What type of asset class (SFR, Multi, Commercial, etc.) do you most like to invest in? Why?
We purchase SFRs. Not to say the we haven’t purchased a condo, no multi’s at this point. We only buy SFRs because down the road if / when we decide to sell, we’ll have the most buyers who will buy out of emotion and not for profit.
Living in a home will always be fashionable, appreciation will be good & cash flow is good. I can’t build a home now for what I can buy for….as you already know. =) We learn from our mentors and the one’s I know who have done fabulous buy mainly SFRs.
What are a few strategies you are using in today’s market to raise private money? Can you give us an example from one of your latest deals?
We’ve done very well raising private funds. Be social. Get out in your community or neighborhood. Volunteer. Be trusting & reliable.
Our latest flip property was funded by our best investor..best because he’s the easiest to work with and the most flush. We emailed him while he was in France that we had a new property to put his money to work on. We needed $325k to cover the purchase and part of rehab. He said he would call the following week when we returned.
We met w/him, showed him where the property was located, the rate we could pay, what the project required, time etc…this is after we are already in escrow. We said we can pay him, 12% on this deal because we aren’t making any payments along the way, he gets paid when we close the selling escrow. Other times we pay him 10% when we make monthly payments.
He said ok and transferred the funds the next week when we needed them. We created the note w/terms to borrow and extra $40k if needed to cover the rest of the rehab but we didn’t need it now so no need to pay on the funds when not using.
Over the past year or so, we’ve paid this investor about $70k and he loves it. He can’t make this % anywhere else. We do own a couple of rental properties that we’ve split 50/50 with him as well.
For the best private financing, work with people outside of the real estate investor world. You will get better rates, no points and can definitely offer people a much better return than most would get elsewhere. From my experience, when we offered too high of a rate, it would make our investor nervous as if the investment is more risky. Offer a very good return, much better than banks but keep it “reasonable” in their eyes and awesome in yours!
Generally for flips, we pay 10-12%, no points.Long term holds we pay 7-8% for minimum 7 years. 30 year amortization or IO. We also have a couple of properties that we split w/a couple who qualifies for conventional financing. We are doing one now. Grab as many of these incredible fixed rate loans as you can before they go up.
Do you currently use partnerships?
We do not form partnerships. We do option agreements, equity share agreements and trust deeds.
Do you have any advice you would like to share with our readers regarding building a successful real estate business?
Never be afraid to ask for help and partner with someone who is more experienced. Loosing money and writing a check in the end is NEVER worth giving up some of your profit to do it right. It’s much better to partner than not get a deal. Give away equity or profits over missing the deal.
You don’t have to spend and arm and a leg to get excellent real estate training. Attend your local clubs, talk to people who do this daily and always keep learning….go to classes & seminars.
Lastly, how can people stay in touch with you?
Readers – thoughts, questions, insights??
No related posts.