Partnering up

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Partnering up

Tanya Lam
Lender · Dallas, TX · Member since 2014 · 6 posts · 0 votes
Hi! I am very new to real estate investing but I want to jump into already. I'd love to meet up with anyone in Dallas to start a fix and flip! I have some capital, I just want to learn how to find deals and the whole process. I will work for free 😂
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Hattie Dizmond
Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes
10y

@Tanya Lam

@Jay Hinrichs just gave you some very valuable advice about dealing with folks you find on BP.  I'm going to take it a step farther and suggest you not, particularly as a newbie, deal with anyone who approaches you.  Instead, get educated and active in the forums.  There are plenty of uber active folks from the DFW area.  Read their posts.  Follow their activity.  Find a couple of folks that you like what they are doing and saying.  Strike up a conversation with them and build a relationship.  See if there is a fit.  Then open the door to discussing a partnership.  You are in a much better position than a lot of the folks who jump on and start asking to partner up or be mentored in return for....oh yeah...nothing.  They are bringing nothing of value to the table.  You have capital.  That shows you are serious and would not be wasting someone's time.  Just take it slow.  This is different than the analysis paralysis that is warned against.  This is like getting married.  You need to date the person first, just to make sure they are who they say they are and you're compatible.

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  • Daniel Hedges
    Investor · Albuquerque, NM · Member since 2014 · 47 posts · 11 votes
    10y

    Just thought I would say that you have a good attitude about investing and wholesaling.  Please be careful of anyone that wants to use your money and not contribute themselves.  As far as attitude and approach goes, I can remember wholesaling deals in the beginning for $500 at a time. I say this to tell you that you have to start somewhere. Once you have several wholesale deals under your belt ( and a good cash reserve) you can decide to move onto flipping and holding long term. Hope this helps.

    1Reply
  • Linval T.
    Investor · Bay Shore, NY · Member since 2014 · 1k+ posts · 688 votes
    10y

    @Tanya Lam

    Welcome to the vibrant BP community. Ok, now that you have taken your initial step, below are some quick links to get engaged.

    I added a link on flips below as you wait to be locally connected.

    http://www.biggerpockets.com/renewsblog/2014/01/07/flipping-houses/ (step by step guide to flips)

    https://www.udemy.com/biggerpockets-real-estate-investing-course/ (video with 64 lectures and approx 6hrs of material)

    https://www.biggerpockets.com/real-estate-investing (Ultimate beginner's guide to REI)

    REI can be very daunting, but, before you go searching for that 1st buy, please take a few minutes to bone up on the tips in link below.

    https://www.biggerpockets.com/renewsblog/2014/12/19/real-estate-investing-success-smart-tips/

    REI books suggested by BPers

    https://www.biggerpockets.com/renewsblog/2015/11/13/7-real-estate-books-beginner-investors/ (7 absolute must read books for beginner REI)

    http://www.biggerpockets.com/renewsblog/2013/04/14/best-real-estate-books/?utm_source=search&utm_medium=internal&utm_campaign=books (books recommended by BPers)

    Simply, bone up on the areas that you need to expand knowledge in such as, Forums, Marketplace, Learn, Network, Analyze and Resources.

    Feast on the Podcasts, #askbp Podcasts, blogs and webinars

    Lastly, this site thrives on interactions and as such we encourage two way exchanges and look forward to educational and thought provoking ideas relevant to REI.

    1Reply
  • Hattie Dizmond
    Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes
    10y

    Tanya...take everything that Daniel said and multiply it exponentially!

    You've got a great attitude, and it's refreshing, since a lot of people show up with nothing, asking for everything.

    However, there are a lot of people who will pass themselves off as experts and want to use what you bring to the table.  Unfortunately, some of those folks are hacks, and I don't mean house hackers.  They don't know what they are doing, don't have their own capital, and will gladly take cavalier risks with yours.  So...choose your partners very carefully.

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Tanya Lam  exercise care when your a lender or money partner. a couple of quick things to do when vetting someone your going to do a deal with and your the money.

    1. REquire a background check that you pay for. along with a recent credit report. Just like you would do for a tenant.  you will get two responses... One will be for sure no problem glad to do it.. the other will be I am not doing that blah blah blah... you decide which is best.

    2. on your first deals make sure you get a thorough home inspection and go through it with the inspector .. Especially texas foundation issues.. want to nip those up front. I have been doing deals in Dallas las 16 months and virtually each home has had some foundation issue. 

    3. Be very careful on your ARV again my experience in Dallas has been underwhelming when it comes to ARV we get the best ARV we can.. but appraisals are coming in light and that could be that the market is moving faster than the appraisers will allow it. But when your a few weeks from closing you tend to suck it up and have to sell for cheaper and your profit that looked OK to start becomes very pedestrian to not enough given risk.

    Lastly if its your own money and your work partner is only brining in time ,, you take full 100% ownership of the asset.. you enter into a performance based contract with the ground partner.. if it does not go right you want to be able to exit without having anyone muddle your deal.

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  • Hattie Dizmond
    Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes
    10y
    Originally posted by @Jay Hinrichs:

    @Tanya Lam  exercise care when your a lender or money partner. a couple of quick things to do when vetting someone your going to do a deal with and your the money.

    1. REquire a background check that you pay for. along with a recent credit report. Just like you would do for a tenant.  you will get two responses... One will be for sure no problem glad to do it.. the other will be I am not doing that blah blah blah... you decide which is best.

    2. on your first deals make sure you get a thorough home inspection and go through it with the inspector .. Especially texas foundation issues.. want to nip those up front. I have been doing deals in Dallas las 16 months and virtually each home has had some foundation issue. 

    3. Be very careful on your ARV again my experience in Dallas has been underwhelming when it comes to ARV we get the best ARV we can.. but appraisals are coming in light and that could be that the market is moving faster than the appraisers will allow it. But when your a few weeks from closing you tend to suck it up and have to sell for cheaper and your profit that looked OK to start becomes very pedestrian to not enough given risk.

    Lastly if its your own money and your work partner is only brining in time ,, you take full 100% ownership of the asset.. you enter into a performance based contract with the ground partner.. if it does not go right you want to be able to exit without having anyone muddle your deal.

     Yes to everything Jay said!  Foundation issues are nothing to be scared of.  If you're going to play real estate in most of Texas, you will have to deal with them.  A good inspector and learning what to look for is the key.  1 in every 3 houses here will have foundations issues at some point.

    Jay...you're spot on with the appraisers and the ARV. One thing we've found that helps is providing the appraiser with the address of the comps we used to generate the ARV and our reasoning (i.e. which houses of those comps were flips or what the required updates of each comp was).  Appraisers have gotten lazy.  They are simply pulling solds and not looking at whether they are comparing apples to apples.  Most of the area has enough investor pressure we've been able to find at least 1 flip as a comp for the majority of our properties.  That was all on refi's for buy & hold properties, so I don't know how well it will work for a buyer's appraisal, but that information in the hands of the buyer's agent could get it over the threshold.  The last thing I'll say on the ARV is that the market here appears to be softening a bit.  Buyers are not being nearly as aggressive, and sellers are having to drop their asking prices back to a more market friendly level, as opposed to earlier this year and most of 2014, when properties were regularly selling 10% - 15% above asking.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Hattie Dizmond  all of our stuff is sale to Owner Occ and we have been in knock down drag out fights with appraisers and we lose.

    We are exiting the 200k and under product.. I closed 2 in november were exit is 450k ish.. we are thinking with bigger spreads and nicer product it will bring in a different buyer other than a first time buyer . time will tell if we made the correct move.. or will exit Texas for now..

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  • Hattie Dizmond
    Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes
    10y

    Jay...that's a sound approach. We don't look at anything under $200k for flips. The buy & hold stuff we're doing is mostly wholesale, but we stay engaged with the buyers throughout the process, so that's where our knowledge of the ARV vs. appraisal comes in.

    Our reasoning with the higher value is that it allows us to focus on areas that move quickly...even more quickly than the lower priced homes.

    I didn't realize you were working in the DFW area.

    0Reply
  • Simon Cox
    Rental Property Investor · Dearborn, MI · Member since 2015 · 177 posts · 48 votes
    10y

    This has been an extremely educational post so far, keep the responses coming! Learning a ton :D

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Hattie Dizmond   yup  have done about 15 to 18 deals there.  with mixed results.

    hoping this higher price point will be our new model

    I also just bought 2 lots in San Antonio experimenting with new builds at the 200 to 225k price points.. Infill 

    the builder we are funding is very experienced and the build cost are so low that I have a hard time believing they can build new for that.  I am basically doing these to see if it can really be done.  LOL.

    If for some reason they don't work we will rent them and sell them off as new construction turn key buy and hold.. .might even create a little TK new construction division ourselves.. I have not really wanted to get into the selling side of turn key I like financing it better. And I can't be competing with my cleints I have been funding for 15 years.. but San Antonio would not be competition to my guys in the mid west etc

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  • Larry Fried
    Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes
    10y

    @Hattie Dizmond  1 in 3 houses in DFW will have foundation issues?  Why is that?  What is it about the area that creates so many foundation problems?

    0Reply
  • Hattie Dizmond
    Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes
    10y
    Originally posted by @Larry Fried:

    @Hattie Dizmond  1 in 3 houses in DFW will have foundation issues?  Why is that?  What is it about the area that creates so many foundation problems?

     Larry...most of the soil here has a very heavy clay base.  A great deal of it is an extremely dark brown clay we call "black dirt", which is gummier than anything you would use for pottery!  The other is a deep rust colored clay.  The ag extension services here estimate that the clay based soil in North Texas can expand and contract up to 10" (+/-) based solely on moisture content.  Our wet periods are right before & right after the hot dry summer months.  It is no uncommon to find 4" cracks in your backyard, during the summer, if you're not watering. 

    I could go into a lot of geology of the Metroplex, but it basically breaks down into 2 main culprits...the heavy clay content of a lot of the soil, and the fact a lot of the area sits in the original basin of the Trinity River.  Far north Grand Prairie and South Irving are prime examples of low-lying areas where cheap fill was used, before development.  As a result, some of those houses have seen massive foundation issues.  (There was a house in "International Estates" in north GP, where the left side of the house dropped 1.5 feet, when I was in high school.  I drove by it all the time.

    Houses in older neighborhoods, where the building was mostly pier & beam are pretty safe.  There you get settling, but - as long as the house was well constructed - the piers settle independently.  I grew up in a house like that, which sit on solid "black dirt".  In the summer you would notice that some doors would stick, while others would not stay open on their own.  In the winter they would all pretty much return to normal.  The areas of real concern for me are the subdivision that were mass built on slabs.  Most of those slabs are not supported by piers.  They are poured directly on the ground.  That's not going to cut it for most of the DFW are.  Higher quality neighborhoods &/or custom areas tend (not guaranteed) to have foundations that were built with supporting piers.  It doesn't mean they won't ever need work, but it does lessen the likelihood that work will be extensive.  

    In the end, I'm less concerned about the actual foundation issues themselves, and I'm more concerned about the collateral damage that shifting and moving will do to plumbing that is running through those slab foundations.  It can lead to serious sub-slab leaks, which are neither fun nor cheap to repair.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    one of the reason buy and hold has another level of risk in that market   No one accounts for this in there. Proformas.   

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  • Larry Fried
    Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes
    10y

    @Hattie Dizmond Wow! Thank you for that very enlightening analysis.  It gave new meaning to the phrase "on the ground knowledge."  @Jay Hinrichs you are quite right, something to really look out for.

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  • Account Closed
    Flipper/Rehabber · Chicago, IL · Member since 2014 · 108 posts · 51 votes
    10y

    Well Said @Jay Hinrichs & @Hattie Dizmond !! That is the advice I'd offer a family member in @Tanya Lam's position.  

    0Reply
  • Mark Allen
    Real Estate Investor/Broker · Irving, TX · Member since 2015 · 520 posts · 263 votes
    10y
    Hattie Dizmond wood (frame/door) swells with increasing temperatures, hence the door sticking. That has nothing to do with foundation.
    0Reply
  • Tanya Lam
    OP
    Lender · Dallas, TX · Member since 2014 · 6 posts · 0 votes
    10y

    Thank you @Jay Hinrichs & @Hattie Dizmond your posts have been very helpful. I had a BPer email me to possibly partner up. I will definitely do everything you suggested I do Jay.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Tanya Lam  Be extremely careful with offers from those on BP... I have had great luck and also ran into some very bad actors .. and I am highly experienced. I have quit working with anyone I find on BP unless its someone I have been following for a long time. 

    The folks that are experienced enough usually have their money lined up.. So what you get here is a bunch of first timers or out right scammers... So please please be careful

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  • Hattie Dizmond
    Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes
    10y
    Originally posted by @Mark Allen:

    Hattie Dizmond wood (frame/door) swells with increasing temperatures, hence the door sticking. That has nothing to do with foundation.

     Well, Mark...you are correct...and not.  They will swell & contract with temperatures & humidity levels.  However, when the door is sticking because the leading edge of a previously level door is now dragging on the floor...yeah...that's generally a foundation settlement issue, not a swelling issue.  And, when a previously level door that stands open all by itself suddenly decides it needs to swing slowly shut each time you open it, that's also a good sign one or more of the piers have settled again.  

    But I do so enjoy being corrected by everyone, all the time.

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  • Hattie Dizmond
    Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes
    10y

    @Tanya Lam

    @Jay Hinrichs just gave you some very valuable advice about dealing with folks you find on BP.  I'm going to take it a step farther and suggest you not, particularly as a newbie, deal with anyone who approaches you.  Instead, get educated and active in the forums.  There are plenty of uber active folks from the DFW area.  Read their posts.  Follow their activity.  Find a couple of folks that you like what they are doing and saying.  Strike up a conversation with them and build a relationship.  See if there is a fit.  Then open the door to discussing a partnership.  You are in a much better position than a lot of the folks who jump on and start asking to partner up or be mentored in return for....oh yeah...nothing.  They are bringing nothing of value to the table.  You have capital.  That shows you are serious and would not be wasting someone's time.  Just take it slow.  This is different than the analysis paralysis that is warned against.  This is like getting married.  You need to date the person first, just to make sure they are who they say they are and you're compatible.

    3Reply
  • Mark Nolan
    Professional · Carlsbad, CA · Member since 2012 · 12k+ posts · 1k+ votes
    10y

    @Tanya Lam

    Welcome to Bigger Pockets. BP is full of resources. You will find resources here from blogs to pod casts and forums. You can also send messages to members. This is one of my favorite features of Bigger Pockets especially for asking specific questions.

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