Now that the new year has started I am looking to reach my goals of getting my first couple of deals this year, specifically through wholesaling. I have currently connected with a polished real estate investor and am trying to bird dog for him and bring in good deals. The problem is I don't think I fully understand a good deal when I see one and what essentially I should be looking for when getting started. I also am looking for my first live-in-flip house so anyone with experience or advice in this, your help would be much appreciated. Thanks in advance for the info.
I’ve done live-in flips and am happy to answer any questions you may have about that. I also do buy and holds now. Not the guy for wholesale advice but am interested to learn a little more about that also.
The trick wit live-in flips is to know your market, buy a property that needs much repair that you can fix up and sell at an after repair value that is very profitable. What’s your median house price where you live?
Thanks for the response. I have looked though a few sources for the median housing value in Lexington, KY from Trulia, Zillow and City-Data and it looks like it is at around $177,000. Let me know if you have a better source to find this information.
@Logan Hill As far as live-in flipping is concerned, I would highly recommend you aim to be within 15-25% of your target ARV listing price to your median home price locally. This means that you wouldn't want to go more than about $225k (ideally $200k) if possible on a selling ARV price, or lower than around $160k(theoretically) to hit the best possible profit margin and days on market targets. Our median home price in Wichita is about $125k which is right around or slightly less than what I would expect my ARV to be here on a flip. I would look for distressed properties that you would need to budget around $15k-$25k on on for repairs to sell at the ARV and make a decent profit. My very first property was a live-in flip when the median home price was about $100k maybe(?) here in town. I bought a property in need of repair for $73k, put about $7k into it plus sweat equity over 2 years, and sold it for $108k literally 25 months into owning it. Zero capital gains taxes. Also sold it for sale by owner because of the pricepoint. Zero commissions. There are many ways to do what you're wanting to do, but this model has been profitable for me. Hope this helps.
@Roger Laughary This information is definitely helpful. However when you were looking for your properties what did you find was the most helpful? Did you have a marketing structure that you developed prior to finding this distressed property? Also I do not have a lot of financing so I would more than likely have to purchase through a loan.
Easiest to me is getting properties off the MLS. Even in my over-priced market there are deals. Otherwise I encounter deals in my marketing as a Realtor.
You might want to find out what your investors definition of what is a good deal, and what they want from you. That will help in your search. The role of bird-dog is different for each person and value is different for each investor.
@Logan Hill Welcome to the wild world of real estate investing! You say that you are connected with a polished real estate investor. Is he a wholesaler? If so, then you really don't need to know what a good deal is, you only need to know what to look for when bird dogging/ driving for dollars. Once you give him the address of properties you identified as possible deals, he (or his team) should track down the owner and figure out if it is a deal or not, at that time you could ask if he would share the numbers with you so you can learn the market and be of better use to him. Maybe even ask to go to see the house with him.
As far as finding your live-in flip, I would suggest partnering with a good realtor who works with investors. BUT be qualified to buy and be serious about wanting to buy. A good realtor will not spend their time with someone who isn't serious, if they find you a perfect house and spend time showing it to you and talking/educating you about what it needs, the ARV etc. only for you to walk away, good luck working with them again.
I did a SFR live-in flip. My advice would be to do a MF live-in flip. That way you can work in a unit and live in another and get away from the dust, tools, debris, etc. Don't underestimate how much of an impact living in a construction zone has on you and your family. If you're single then that is less of a concern. Once you renovate all units you can house hack or BRRRR or sell, more options this way too. If I were to do it all over again, that's what I would do with the exit strategy being to cash out refinance and buy another property.
Thanks for the input! As of right now I am working on being a bird-dog for him but essentially it will be more of me aiding him and his company in marketing on social media and other channels to both help his company and help me get a better understanding of generating cash buyers and motivated sellers. Hopefully this will help me get some experience and get my feet wet. Through this I also hope to find properties that I could handle myself.
One thing that is bringing me trouble is that there is some scarcity to MF properties in the Lexington area, to my understanding, and I also don't have a lot of personal capital so I would need to find private lending or other forms of funding for any property that I may find.
I have teamed up with a real estate agent right now who has helped me to get listed on the MLS for multi-family properties that come up but besides that she has not necessarily worked with real estate investors, however she is not opposed to helping me out going forward.
Any advice for new creative ways of marketing that you have found to be of help to you or any advice on moving forward in regards to finding private lending and MF properties amongst scarcity would be appreciated. Thanks in advance.
Drive around, get on craigslist, and find "for rent" ads/signs. Take a pic or write the number & address down, call the number, talk to the owner and see if they are interested in selling. You have already identified a pain point for them, they are lacking a tenant. Maybe they'd consider selling, maybe not. As a mentor of mine told me when dealing with sellers, find the pain, expose the pain, and relieve the pain.
Something else would be to drive around and identify run down MF properties in areas you like. Use an app like dealmachine to find owner contact info and call them to see if they have interest in selling. If you didn't want to spend money on a service like dealmachine you could try to talk to one of the tenants and ask them how happy they are with the property and owner and see if they would give you his/her number. Also county information is free, just takes time to look up.
The only reason I suggested an experienced agent is because they would be able to tell you what is a good price for the property as is, what it needs to be sold and/or rented, what it would rent for when finished, and what it would sell for when finished. But she may know her stuff too, everyone has to start somewhere.
As for the lending, why do you think you need private lending for MF properties?
Great. I will give that a try and hopefully find some properties.
The reason I say that I need private lending or another creative source of funding is that I don't have the money to put down myself and I figured that it would make it that much harder to profit given that I have to take a loan out from a bank. What were you thinking?
@Logan Hill Most private lenders will need a down payment too, and typically have higher rates than you'll get with a mortgage from a bank. If you are a first time home buyer, there are a lot of programs out there to assist with down payment, talk to a bank or broker on that. If you have nothing to put down, you'll most likely have to find an owner that will do some creative financing with you.
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