Hello. I'll make this post an introduction, as well as my first question.
I consider myself a beginner, despite being a landlord for close to 15 years now. I purchased a 1 bedroom condo for myself after moving out of my parents house, and then started renting it out when I moved in with my girlfriend (now my wife). Hindsight is always 20/20, and I realized I missed a very large opportunity in 2008 to purchase at least a few condos in that area for under $100,000 that could easily rent for $1,200.
I am trying to learn as much as I can. I've attended a webinar , read "Rich Dad Poor Dad" book and currently reading the "BRRRR" book. Both of those books talk about having a dream team. You need a realtor, a contractor, etc.
Here's my question:
Why would a realtor who finds an amazing deal want to share it with me, instead of buying it for themselves?
Why would a contractor not want to buy that run down house and fix it themselves for the purpose of renting of flipping?
1. Why would an agent want to give you to the good deal? Because you prove to them that you are someone who will close. There are reasons they might not want it, first off maybe they aren't an investor, maybe they don't have the funding, maybe its not the area they want to invest in, maybe its not the return they are looking for, maybe they aren't focused on increasing their rental portfolio right now. Its a combination of: Hey, I don't want this, and you (the investor) have proved to me that you will close, so I will toss you my deals first.
2. MY dad is a contractor for 30 years. He has only flipped one house. My dad never had the money to flip. Maybe a contractor doesn't know how to calculate ARV. Again, tons of reasons why they wouldn't.
Hi Pasha - I totally agree with Antonio's comments. There are a lot of deals out there. Realtors and contractors cannot act on everything, nor do they always have the cash or desire to do so. What you have going for you is determination and a fresh perspective. Do your homework, listen to podcasts and don't be afraid to act when the right opportunity presents itself. Don't beat yourself up about 2008. We all make mistakes. Learn from them and look forward, not back. My best advice would be to be patient! It took me a year to find my latest acquisition. And wouldn't you know it, I found a second one a week later! And thankfully I was able to act on both. All the best...Melissa
@Pasha Gorky Melissa and Antonio gave you great advice. Also, most realtors and contractors aren't investors. They are in it for the paycheck. So they aren't even your competition. It blows my mind how many fix/flippers, realtors, contractors work on amazing deals for others, and miss the boat. Go do you and build your portfolio! PM me with Q's
@Pasha Gorky Good questions, I've definitely been asked that by many clients before we work together. There are reasons for both:
1. Certainly, some deals will be kept, but everyone has limited funding. Also, there is opportunity cost to consider. I, as an agent, make money by getting transactions closed. If I wanted to be a house flipper, I would have to set aside time that would otherwise be used generating business to manage the project. Alternatively, my goal is to partner with someone to buy a large MFH. I'm clear on that goal. Things that don't fit the criteria are not even considered by me. Everyone has a strategy and a good broker will help you execute on that strategy, even if it isn't their strategy.
2. I've talked to a LOT of contractors. Very few also happen to be active flippers. There are definitely some that do, but it comes back to opportunity cost and positioning. For example, if you've purchased a property, that contractor would rather take the job than be upset because the didn't get the property. Even if it was presented to both of you at the same time, maybe you only require a 10% cash on cash return and they need a 13% to consider a project.
Don't get in your own head with imposter syndrome...they want to work with you.
Speaking for myself -- your goals may not be the same as the Realtor's goals. I am not currently purchasing, so even if they matched, you get the deal.
It's not a bad idea to know where your Realtor is in their purchase cycle. I recommend working with an investor agent because of all the knowledge and investors they work with. If you and I are both in the market to purchase a 2/1 bungalow for 350k, then I would tell you. And honestly, even if we both want the "same product," what you find desirable, I might not, and vice versa.
If you're new, you probably see certain things as much riskier than I would. Maybe I'm budgeted for a roof, while you're nervous. Have that conversation.
Also, an early podcast guest explained why he stopped flipping: (paraphrased) "There's too much risk for that amount of profit. I could sell another few houses and make that money with no risk or capital invested."
Contractors aren't mostly flippers. They do contract work to get paid. Most of them aren't investors at all. Plus, if you already own the property, there's no worry.
I appreciate everyone's replies here. It does make sense.
A contractor may not want be a landlord like me, but I, a landlord, don't want to be a contractor.
@Pasha Gorky Like all the contributors have mentioned. Realtor and Contractor is a profession and not investing.
Most Realtors and Contractors are NOT Investors. They don't even understand the 70% rule, 1% rule, CapEx etc.
I will suggest you get past this and JUMP IN.
To put your mind at rest, look for an ON-FIRE Real Estate Agent and the rest will be a breeze.
O - Organize (The Investor-Agent must be well-organized)
N - Network (The Investor-Agent must be well network with other Real Estate professionals like Lenders, Appraisers, Property Managers, Inspectors, Insurance Agent, Contractors, etc)
F - Focus (The Investor-Agent MUST Focus on YOU)
I - Investor/Investment-Savvy (MUST be INVESTMENT SAVVY)
R - Responsive (Must Be responsive and answer your call/text)
E - Experience (Must be an investor or have experience working with investors)