Process Debate - Finding First Properties

14 Replies

My wife and I are trying to find our first rehab. We have done tons of research and have 3 realtors working with us. My wife is getting frustrated and wants to immediately go to bandit signs, yellow letters (list source), web site formation, company name, LLC formation etc. I, on the other hand, just want to keep searching diligently and feel like we'll find our 1st flip soon enough (we've really only been looking for about 1 month.) Once we get through our first flip (and really our 1st 3 or 4), I feel like we'll have a better understanding of the approach we want to take and will be better suited to move forward with a purpose. Am I being too hesitant or is she putting the cart before the horse?

@Bill Morris  I tend to be a person of extremes, but I'm in the process of rehabbing!!!

So, I'll suggest a middle ground here. I don't know the market where you are. However, if it's anything like a lot of the rest of the country, you're going to struggle to find a flow of deals via the MLS. If you don't want to jump all in to the marketing game, have you considered working with some local wholesalers? That way you get the best of both worlds. Just a thought.

@Hattie Dizmond Thanks Hattie. We have been using MLS, auction sites, newspaper announcements, Craigslist etc., but there is a lot of competition here in Richmond and you are correct, it has been a struggle. I guess we're going to have to jump in with both feet in the marketing dept. (we have also looked at some wholesaler properties and that's a great suggestion....we'll keep doing that) Thanks! - Bill

You do have to act, but you most act too soon. I like your approach better than the other half's. Don't be in such a hurry that you end up taking something just because it's there. Putting an entity in place and advertising is not necessary, but it makes you feel like you're in business, often a false sense of reality.

While most don't prepare with a good education first, you can't read forever to learn everything. Understanding RE fundamentals (which is not on this site) will make what is discussed on BP much clearer and will give you confidence in applying techniques investors use.

My guess is that the wife has been bitten by the bug, but part of their job is to motivate the guy! Good luck :)

@Bill Morris 

Forget MLS. Too much competition from rookie investors who will over bid you every time, skimp on repair costs and put a bad product back on the market. That's not how you want to do business. Deal flow is horrible too and the numbers just never work out right. Plus, how long do you want to drive around with the agents looking at properties you likely won't get anyway? It's a terrible wast of time. You want sellers to come to you.

Not sure what @Bill G meant, but there is tons of fundamental education on this site.  Dive in to the podcasts if you haven't already.  

Thanks Adam. We've listened to dozens of the podcasts, read J Scott's books and several others. We want this to be a business and I think we've done most of our homework, but we also realize that we have tons more to learn....just that a lot of it will be on the job learning. You are exactly right...we've been driving around meeting realtors, looking at houses and yes, most of the #'s just don't work or are way too tight....and the ones we do like get overbid. We're thinking of using listsource and also bandit signs as a way to attract buyers. If you have any other suggestions, we're all ears. Thanks


Another source of leads that you may want to explore is from probate filings. Every state is different, so you will need to research how property is handled in Virginia under these circumstances. Probate filings are public record, so you can usually track down related property through the tax record and contact the parties involved, preferably family members instead of attorneys.  This is not a quick process, so you have to be patient and have a process to stay in-touch with the leads. Good luck.

@Bill Dyer is right.  There are so many different ways to find deals.  I've learned that once you get a clue to how this all works, agents are more of a hinderance than a helper.  So if you haven't yet, get your license.  

I'm a big fan of figuring out where the heard is going and do the exact opposite.

@Adam Stanton   I can see that. My wife is actually in the process of getting her license. There are several benefits, but we're already realizing that one of the biggest will be not having to wait around or schedule appts on someone else's time. We'll be able to go by and look at whatever we want, when we want....for the most part.  Funny, a guy on the trading desk here at work just bought a "mobile home" in a park by the beach as an investment....we'll see.

Originally posted by @Adam Stanton:

Not sure what @Bill G meant, but there is tons of fundamental education on this site.  Dive in to the podcasts if you haven't already.  

 Fundamentals of real estate are those aspects taught in state approved schools for those seeking a license, that type of education is non-existent here but there are comments in forums to that you may pick up,  if you recognize them.

Most here can't define real property and why it is valuable or explain why RE is unique and different fro other investments, The basis for valuations, nor have I seen much on the three valuation techniques of property and why one is given more weight than another. Markets are not defined nor is there much understanding of pricing to market, many can't define market value as it is legally defined. Not many understand how title is transferred nor what deeds are appropriate, what rights are transferred with a lease or option or installment sale or any outright transfer. I have seen anyone explain the theory of the bundle of rights. I think I'm the only one that has mentioned bi-lateral and unilateral contracts and what requirements there are to assign such contracts. Options aren't what the gurus tell you they are really, most don't understand what an option really conveys or how it is valued over time. I'd guess that most here have no idea of what meets and bounds would be about, much less links and chains, but that is how the property they might be buying is described. Won't even speak of a legal description "closing" as you can have title problems if they don't. Do most know what title insurance is? What's the difference between an encumbrance, easement or encroachment? Many folks here want to assign financing contracts, what is the priority of liens and how are they perfected? Need to buy a property that has a life estate? What the heck is that, they spend two weeks messing with some little old lady and then find out! We aren't even at agency law or basic contract law. And, there is much more.

I don't pull out 80% of my answers out of my ashtray, it comes from the basic fundamentals or RE. It's the big picture. Ever try to put a puzzle together without the box top picture? That's what most are trying to do, trying to fit pieces together without the bigger picture.

What we talk about here mainly are strategies, methods, of how pieces fit together. All strategies or methods used in RE have been around for hundreds and some thousands of years, yet the guru tells you it's new, the big secret, how to or they add some twist to an old idea, smoke and mirrors. If it weren't so pathetic it would be funny being able to see through the stuff spun out on new folks.

These fundamentals are the foundation of everything done in the industry. Folks don't see this area as making them any money next week. I dabbled in RE for about ten years before I began studying what RE really was all about, looking back I can tell folks they don't have a clue by trying to do strategies or some niche type deal. After I started all over and learned these aspects, it was like a light going off, everything fell into place, every type of transaction could then be organized and set in a logical order to address any opportunity I bumped into, you can then see if certain circumstances exist you move this direction. I didn't really start making great money until after I really learned. Before I thought I was making money.....I had no idea!

 Now, some of the old timers may recognize these fundamentals, mostly forgotten, but there are those that have been mulling along in RE for decades never knowing what they were really doing, they just knew how to fit many of the pieces together and could make some kind of picture with what they used. You can learn a lot over decades but street smarts costs you dearly. I don't see any of them playing in the Super Bowl, for that you need a play book and a rule book.

Things change in RE, we are constantly having to adapt and keep up. If you don't have these basics down, you won't be adapting in the big picture, everything will seem like a road block at every turn, unhappy, most will fall out of RE in 3 years!

I've been on BP for a few years now, I see them coming and going, only a very few who were here 5 years ago are still around. We also have the amateurs, the once in a while types, most in RE are, this is not their profession or main source of income and it supplements many very well. RE doesn't have to be a full time job, but a better education in the fundamentals will sure save them time, money and in many cases their reputations. You'll also see many of the amateurs turn guru or mentor or coach, it's much easier telling how it could be done than doing it or speaking from actual experience.

After being around this stuff for 40+ years, being involved in more aspects than I can mention, having suffered in the world of academia as well as the school of hard knocks, doesn't take me long to spot the fakes, the wannabe, the shyster, the inexperienced, the honest student, those with integrity and knowledge or the real professionals. Actually, I think I'm pretty forgiving......but that's why fire shoots from my fingertips as one member put it in another thread.

Everyone wants to know the secrets and just the part about making or taking money, just the easy stuff.    

Of course, none of this is directed at any one person or group, it's just my daily rant trying to light a fire under folks so they will get serious or get off the pot. :)     

@Bill Gulley   Wow...OK, I just went and read your profile and I am impressed and feeling just a tad under-educated. I am admittedly a real estate investing novice, but I have worked for a large bank on the institutional equity trading desk for over 10 years and I used to trade agency securities (FNMA, FMC, SLM.) I also ran a good size hedge fund's trading desk in NYC for several years. My brother has been a mortgaged-backed trader for over 20 years and my father was a bond salesman his entire life. So, I have a decent finance/economics background and I cover some of the largest REIT funds in the country, so I have a bit of knowledge there as well.

I stumbled upon this site a few months ago as my wife and I were trying to get up to speed in order to start this venture. I understand how frustrating some of the posts must be to someone with the experience and knowledge that you have and quite frankly, I'm surprised (happily) that you took the time to respond to my question. After reading your post above, I would love to know what you would suggest as far as RE education for us and if you have any prior posts about this, just point me in their direction. My wife is currently getting her license. I wasn't planning to as I am going to keep my current job (we have 4 young children) until such time as our real estate business enables me to leave.... if that day should ever come....

Thanks for the feedback and I really appreciate the "fire from your fingertips."  It's refreshing to hear from "the real deal" and not the "flavor of the month." That is not in any way directed at you Adam, but just to the guru's and make a quick buck guys in general....

Bill M. then there can be great hopes for you! Then you understand that real estate falls under finance, that RE is a small slice of the finance industry, not the other way around as most think of it. Study with your wife, understand what's in the text book and work book, if any. If you have questions, post them and mention me if you like and I'll address them.

Good luck! :)

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.