Flipping houses, Creating wealth, partnerships, real estate
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The Story of A 22 yr old and A Real Estate Dream – Part 3 (Creating My Team)
If you didn’t read my first blog post – 10k to 100k In A Year – you should, it will frame the series and where we are.
Having my real estate license was the gateway to developing my team and becoming the investor I am today. When I started, I was a realtor working for investors. Buying properties for other people enabled me to meet people I otherwise would not have and learn about the process. Most investors thought they knew contractors, but most of the time I ended up managing their contractors, an invaluable learning experience nonetheless. Costs estimates were often off, and the timelines were ballpark at best. Budgeting correctly seemed to be another pain point, with some investors overlooking something as considerable as forgetting to budget the 6% in closing costs once they sold the property. To help my clients succeed and aid in my own confidence as an investor, I needed to “have a guy” for everything.
Finding A Bank
As a Realtor, I worked with a number of traditional lenders writing conventional, VA, and FHA loans for clients, so I had a basic understanding of the inner workings of the loan process. What I didn't get is why they wouldn't fund a flip or rental property for me. I always got the same answer, "Fannie Mae and their compliances won't allow us to lend on a flip." Also, I was self-employed, which if you're self-employed you know what I'm talking about (it's near impossible to get a traditional loan). So I made it my mission to find a commercial bank or lender to help me and those around me get deals done. After countless emails and calls, I finally found a local bank and lender that offered exactly what I needed to start my career as a real estate investor. The first meeting I had with this bank, I may not have had a ton of income or assets to show, but it was obvious I had my ducks in a row. I knew the property I was presenting to them for financing was a great deal, but it was my job to convince them. I gave the bank countless pages of comparable properties, explained my plan for the property, ARV (after repair value), and gave them a time frame. I was ready for any question they had for me. After I had presented them all the information they wanted and answered all their questions, I got a simple "We'll take a look at it, but it doesn't seem to be a problem. When are you wanting to close on this property?". Needless to say, I was beyond excited but kept my poker face on so I didn't make them second guess their decision.
Real Estate Attorney
Due to me being a Realtor, my journey of finding a good real estate attorney came pretty easy. I had worked with many different closing attorneys thus far, and each one had their pros and cons. In Louisville, I have yet to meet a closing attorney or title company that has not been amazing to work with. Without giving any recommendations (sorry I’m not allowed to), I chose a closing attorney and title company that aligned with my goals. Not every title company or closing attorney wants to deal with messy titles or to assist you with complicated titles from the commissioner’s sale. Mostly through trial and error, I found the perfect fit for my team.
Contractors
The most arduous task I have run into and still struggle with is finding qualified contractors. It was not only a struggle to find qualified contractors that weren’t crazy expensive, but it was also difficult to find contractors that would show up on time or even come to the appointments that were planned. I leveraged being an agent and asked as many of my fellow agents for referrals, I called property management companies, and I looked on Angie’s List, Yelp, and Thumbtack. I also tried hiring employees to do the work (nightmare). This became an endless battle. I thought to myself “How are these guys I’m reading about flipping 10 houses at a time?”. The light bulb went off in my head. From that point on, anytime I saw a house under construction or being flipped, I would stop and get the contractors card and contact info. I now have a Rolodex of business cards and contractors. In my market, a good contractor doesn’t have time for a fancy website or time to advertise; they get all their work through word of mouth. Their time is spent working, not advertising.
When I bought my first property, I didn’t have the correct team in place. It was still profitable and a great learning experience, but I had to create a better system and team. Through trial and error, I have found my team, and it has been amazing to work with people who understand what I am trying to accomplish.
If you enjoyed this article, make sure to check out the other articles in this series.
Series – The Story of a 22 yr Old and A Real Estate Dream
Part 1 – 10k to 100k In A Year
Part 2 – Hit the Ground Running, Get Mentors, Partners, and Incorporate
Part 3 – Creating My Team
Part 4 – The Title Nightmare: My first property and the title issues I came across
Part 5 – Financing a Flip: The types of financing I have used and how I negotiated the deal
Part 6 – Financing a Rental: My first rental and how I financed the deal
Part 7 – First Successful Deal: My first Exit!
Part 8 – Keeping The Pipeline Full: To make flipping a job, I needed multiple projects.
Part 9 – Managing Multiple deals
Part 10 – Where I Am Now