Rehab Newbies looking for a partner

49 Replies

great location by the hospital! Any do's and don'ts on this issue? We are new to this ...and want to make sure that we do almost everything right before we jump in! 

From what I've been seeing, it is very competitive. There are several wholesalers that are quite quick to jump on any "deals". That being said, have your proof of funds (hard money or otherwise)  available when you make an offer - there are still some opportunities, but you have be able to be able to respond quickly once you have identified one. I could share my recent research in Milwaukee with you and your Husband. The Lake Geneva City Government is tough to deal with. My Family used to have a Bed and Breakfast there. They have banned Airbnb etc. If you've  ever driven through Springfield Wisconsin and saw the 1870's brick Church , I converted that into a house for my Sister - it was featured in the Milwaukee Journal. 

@Katy Jansen that area is not on my radar, but never say never, However I think if I did some research AIRBB would be a good idea as it is a super hot in the summer for bachelor/   bachelorette parties.  Have you flipped iN WI? 

@Jamie Moyer this is where we are not sure what to do yet- money. Using hard money or tapping into our retirement. I have some private lenders who would be willing lend. Any suggestions? and yes please do send them! 


Originally posted by @Katy Jansen :

@Ana Klein hey there! I read your thread. R u interested in Lake Geneva at all? I’ve done flips just not in Lake Geneva. Are you looking in Milwaukee?

 Yes Katy.... looking in Milwaukee. 

Hi Ana,

I just read through your thread. You're getting some pretty good advice. I know I'm tainted on the topic, but Hard Money can be a great tool if you learn how to use it properly. It can get you into a deal for no money out of pocket (if the deal is good enough). My caution though is that you do need to be careful who you work with. Not all lenders are created equal (I've even seen some pretty shady private individuals who lend). The most important thing to consider is what's best for your business and not everyone else's. If HM is good for the project, it's good. If it doesn't it's not. HM when done right is typically cheaper than a partner. My business partner & I also flip homes in addition to lending. We see things from all sides. Everyone involved needs to make money. If not, there's no point in them playing the game with you. It's a tricky balance sometimes.

If you do decide to go down the HM path, make sure you find a lender who is interested in your success, is willing to work with you if things go astray and doesn't judge you based on your credit score. A good lender should be more interested in the property and your ability to succeed above all else. If not, don't do business with them. Only work with people who truly want to see you succeed.

Also, if you're not already in one, find a good REIA to attend meetings at. You need to network with other investors. It will help you find good contractors and leads of properties from wholesalers.

Let me know if you ever need any help. I'm up in Green Bay.

@Jeff Cichocki sounds like HM lending is the way we should go. We have money in our 401k as I mentioned but I would like to not touch that ( tax consequences) instead of trying to save it until we don't need cash and do the self-directed IRA option. I guess now we just need to find HM lenders and also properties and analyze properties!

I will keep you in mind!  

@Ana Klein happy to help if I can. If you have any questions about investing, let me know. I'm not just a lender.

In the meantime, checkout WiscoREIA.com to if there's a location nearby. Great group of guys running this one.

Good luck!

Hi Anna,

To answer your questions:

What does a good property look like?

Where to find them?

Funding?

1. Let's start with Funding first because that's prep you should do before finding a property. Although some lenders will say, come back when you have a deal in hand so it can be kind of catch 22. But you can line up some lenders even before you have a deal. Hard money is great to start with because you can line it up pretty quick.

The best thing to do is to ask local investors/flippers, who they've used consistently with good luck and why they like them. You can meet a lot of investors in your area by clicking on the search icon at the top right of BP and select Members from the drop-down, then filter by member type and location. Also by going to local auctions and REIA meetings where investors hang out in person.

You can also find a list of lenders right here on BP. Once you have a list of potential lenders, you want to interview them. I have a Hard Money Profile we created when we did this so you know all of the questions to ask them and why. Happy to share.

Once you narrow them down to your favorites, now you can go to each of them when you have a deal to see who gives you the best terms. Keep in mind when using hard money, you may get beat out on some deals by other investors who are offering cash, especially in highly competitive markets or with REO's (bank-owned properties who will only consider cash offers).

But there is a way to offer cash for REO's even when using hard money. And this will work particularly well for you since you can show proof of funds with your 401k money. You just go to your hard money lender of choice first, before you make your offer (deal in hand) and get everything ready to go, making sure your loan officer knows you will be making an all cash offer and that they need to be ready to fund immediately. Then make the offer as all cash. Then if they accept your offer, you get your hard money funding into the bank's escrow account immediately. Then by the time they figure out you switched to hard money, they don't care because they have their cash.

2. Next, where to find good deals.

* Create a Huge Birddog Team: Train everyone you know and meet how to spot a distressed or vacant property (ask me if you needs tips). Tell them all you'll give them $100 is you buy a property they tell you about. Tell them to tell their friends too. Delivery workers, property workers, postal workers, etc., are great for this because they are driving neighborhoods everyday anyway. Also drive around yourself looking for distressed, vacant, for sale and for rent.

* Put out ads, signs and mailers to pre-foreclosures (get Notice of Default list at county, A.K.A. Lis Pendens or Sheriff's Sale, Tax Sale, etc.).

* Call, text or email for-sale-by-owners and rental properties on Craigslist and Zillow.

* Get a realtor to put you on daily auto-emails of properties with motivated sellers keywords and/or Price/sq ft at 70% or less than area avg price/sq ft.

* REO lists (BP has one).

    3. Narrow down these many potential deals with a quick elimination process.

    * Find the ARV online by averaging all of the instant home value estimators like Zillow (confirm this later with realtor comps).

    * Estimate mortgage balance with either county records (deeds) or by asking a motivated seller (usually they will tell you if they are highly motivated). This tells you how much bargaining room they have.

    * Figure $20/sq ft for typical cosmetic rehab (confirm later with homeadvisor.com estimates).

    * Now use the 70% rule: If the asking price or balance owed plus the renovation costs is 70% or less than the ARV, add this deals to your favorites list.

    * Narrow your favorites with further due diligence: Get comps from a realtor, interview the seller to find motivations and needs, go see the property, get repair estimates from homeadvisor.com., look up liens, title issues, code violations, zoning issues, etc. at the county.

    * Continue to narrow your favorites by the info you find. The best ones will reveal themselves with this process.

    * Choose your most favorite.

    * Get an inspection done to reveal all repairs.

    * Present your deal and all of your fabulous homework to the lender.

    * Make your offer.

    * Offer Accepted.

    * Fund escrow before closing.

    @Ana Klein  I would recommend working with an investor-friendly agent to identify a property that would be good for you two. I would then fund it using a 30-year fixed-rate mortgage. If you guys are willing, move into it and do a house hack.

    Originally posted by @Rick Barbato :

    @Ana Klein

    Understandable, from our experience find a place that has a renewing abundance of people. For example, there is a huge hospital 5 min from our duplex’s. We always have residence looking to rent. They make great money, spend all day studying, and there is always more next year! Similarly, there is an army base about 30 min away. So look for areas that attract people. Colleges can be good too.

    I’m no expert by any means but we’ve had a lot of success looking for properties with these features.

    Another small tip. We remodeled our kitchen last year... well the contractor quit shortly after our job to become a realtor. Now he finds us foreclosures before they hit the market and is able to give us a quick construction estimate for us to decide if it’s a worth the investment. If you can find someone like that, hold on to them! Haha

    Best of luck! And keep us in mind with any questions or ideas... I’m always down to brainstorm or give a second opinion. Even if we don’t do business directly, we can help educate each other.

    Forclosures used to be bread an butter for many flippers and investors - we used to have a distressed sales rate (forclosures + short sales) of close to 50% of all sales a few years back - today it's less then 4%. The few REOs I see these days are usually overpriced and absolutley not worth it. 

    If someone promises you to find forclosures before they hit the market, he is either talking about solicitating home owners that have gotten behind on their payments (which comes with a whole list of human and legal issues) or he is making stuff up (or does not understand what he is talking about), because banks will not sell single forclosures any other way than listing it through on MLS through an REO discount broker.

    @Lori Greene thank you so much for the detailed explanation- you did not have to do that I appreciate it very much. It sounds like we need to get investors lined up before anything. Once we have the money we can present deals when they come up. In the meantime, we have been analyzing things that come up to make sure we use the 70% rule. 

    @Kenya Smith you have deals in WI? or Detroit?

    Originally posted by @Ana Klein :

    @Aaron K. we have about 60k in 401k money we can use, which we plan to use since our ROI on that is so low its pathetic. what do you think? it is scary regardless My husband is very very handy but we have no idea where to even start looking ( app or website) that can give us homes that are worth it

    I'm connected to some education that sounds like it could be useful to you. 

    In regard to your 401k, the Self Directed Retirement Accounts (SDRA) class would be helpful. You can even learn how to get "checkbook access" to your retirement account money. The instructor is Mat Sorensen (The "S" in "KKOS Lawyers").

    For finding deals, there's a a class titled, "Finding The Deal of the Decade Every Week". The instructor owns about 1/3rd of the rental properties in Danville, IL.

    Just wanted to pass that along.

    Originally posted by @Ana Klein :

    My husband and I are looking to do our first Rehab and flip in WI. I am a CPA and he is a very handy ( has done work for others and also updated our old home where we turned a 65k net profit, which we invested into a new house) For the last 6 months we have been reading and listening to podcasts to learn more about this but we recognize that we need help from an expert:

    1. What does a good property look like? Where can we find it

    2. Funding?

    Thank you all! 

     What does a good property look like you ask? That depends a lot on who you ask however, if there is profit in it, then it looks good. 

    Where are they? Uhm...take a look around, you will probably see houses in every direction you look. Maybe your best next deal is next door.

    Funding. Every time I think of that word I think of it as Fun Ding. Sort of like how much fun it is to get a loan, so much fun a bell rings - lol. The not-so fun part is the cost of the loan.

    I'll have the Fun Ding with a side of Rehab please...

    Your title says you are looking for a partner, the thread mentions zip about a partner - I think a partner is a great idea. Maybe put up some $ to help someone else and learn by watching what they do. Who knows, maybe you'll skip the bs and jump right to the top and be a lender - lol.

    Welcome and good luck.

    Since you and your husband flipped your own home more or less, it sounds like you have some experience. For finding deals, I would connect with as many people as possible who are marketing for their own deals and as many investor agents and short sale specialists as possible--most of these people would be doing real estate full time as marketing for discounted properties in a competitive market requires a significant amount of energy, stamina and time. If you do decide to get your license, Premier Point offers the course at a discount and is an investor friendly brokerage with very low office fees.  There is a lot of money for deals in Milwaukee....if you need hard money recommendations, I can send you several too but there's also private money lenders as well.  

    @Joseph Phillip I have a realtor friend who sends me houses but they are still on the MLS. I started to let everyone I know our plan so if they see something we are willing to give them a referral fee if we close on the house. you?

    @Ana Klein There is a local real estate group that is South- East Wisconsin. It is Milwaukee Real Estate Association, or Milwaukeereia.com They are having a speaker on Oct 8 discussing the use of your IRA for real estate funding. The first meeting is free. Check it out.

    Mike