I'm ready to invest! (again)

13 Replies

This may be a long read for some but just wanted to put my story out there just to start something… what I’m not sure yet but let’s see what happens.

In mid-2000s, during the subprime market, I began flipping homes in the Los Angeles with $0 money down. My first property was a learning experience, I lost like $5000, but I kept at it and eventually started getting better. I successfully flipped over 15 homes and decided this was enough to start putting the money I made towards fully paid off rental properties and live the dream of passive income for the rest of my life! This is where I made a major mistake.

In 2009 I started off with a duplex in an “affordable” housing area of Columbus Ohio. Purchased a rental for $32,000 and each side was bringing in about $400 month. This was great. Unfortunately, I told my grand plans to an investor, who was also a property manager out there, of my long-term plans. He knew of my past deals and the amount of money I made from my flips and immediately saw dollar signs. I still took it slow. I sat on the duplex for 6 months and it was doing great. I then purchased a 2nd duplex for about $42,000 which was bringing in about $350 per unit. Life was good. I couldn’t get these kinds of returns in Los Angeles. Then he told me about this 14-unit building in the same affordable housing area that was boarded up and the owner was desperate to sell. This is probably where most of you are beginning to cringe. Well I did it. I was able to get the building owner financed and used every penny of what I made from flipping to get that apartment building rent ready. Fast forward a year later about 3/4th the build was rent ready. The rosy goggles I wore finally cracked. My units were revolving doors for tenants, the property manager was making a killing with tenant replacements and turning over the units. Well I had to fire that property manager and really no one else wanted to manage that area of Columbus Ohio. I was desperate and scared. I listed the property for sale multiple times and then started to reach out to other landlords in the area that might be interested in buying my units. In 2016 I finally got lucky and a local investor agreed to purchase it if I carried the note. The investor eventually got the property ship shape and was able to sell it to an out of country investor. I was able to pay off some of the debt I accumulated. I ended up in the red and have been working my butt off trading time for money to make sure all my debts have been paid off.

I’ve learned A LOT. Today I’m debt free from that experience, I never quit my day job and even grew ranks in corporate America. One thing still bothers me. I’m still not fulfilled. I think we deserve more than trading our time for money. I want to get back into real estate but my wife no longer wants me to invest farther than driving distance.

Today with a ridiculous commute, family & more responsibilities at work (I’m an IT Manager) I no longer have the time to start over with doing flips so I’m taking a different approach. Enter wholesale!

This is where I start a new chapter in my life. I plan on being a semi-virtual wholesaler. I have long time trusted friends in Jacksonville Florida so let’s try that area first. Been reading up on wholeselling and putting together my process. I’m going to leverage my IT experience in assembling teams, creating processes, documentations and using technology to be successful. Maybe just maybe my wife will let me keep 1 or 20. 😊

I’m an introvert by default so putting this together was a bit difficult. I also know how important it is sometimes to put yourself out there so that maybe I can connect with others and make bigger things happen or at least inspire someone to get back on that horse or else you’ll always feel like something is missing inside.

@Jason Medina oh great another out of towner coming to my city lol. Glad to see your getting back in the saddle. I'm just getting started myself. If your going to be wholesaling may I can pick up a property or two. Who do you know out here in Jax.

@Jason Medina

Welcome to BP!  I have to question your approach.  If you have a track record of being good at flips, why not go back to doing flips?  Instead, you are wholesaling in an area you don't know, leaning on others, and trying to get wholesale deals 1500 miles away.  Being an IT manager does not mean you cannot do something you are good at.  Why not use your IT skills and networking to build a team that does flips instead?  You have as little time wholesaling in Jacksonville as you do in LA. 

Do you think it is possible that you saw a strategy that should have worked, but didn't, in Columbus?   Is what is bugging you more the mistakes you admit in Columbus, and you feel a need to recoup those mistakes.  Believe me, I get it.  But take time for joy...you paid off your debt.  What an accomplishment.  

There are still other options you can pursue more in your immediate area and do well.  You've shown you are good at paying debt.  Why not consider becoming a private lender?  I know LA is pricey.  I get it.  But you may have more opportunities locally, because you know your own market.   

@Bryce Spraggins haha.  Just a personal friend who had a few rental properties in LA but has since sold everything and moved to Jax.  Can definitely add you to my list of contacts when I start getting properties under contract.  

@David Moore  

Thx but I've been here lurking on BP since 2009.  

I've given this some thought and the reason why I've elected to do something remote is because the plan is to keep some as rentals at a later point.  I can wholesale in LA but I won't be able to keep some of my leads as easily.   I have time to make phone calls & crunch numbers in my office but I can't leave work and visit a property to make sure my contractors are there mid-day like the old days.  

Columbus days are over and behind me.  I don't plan on doing anything by fly over Columbus.  I don't think of it as recouping but more starting over. 

@Jason Medina very good story. I'm from Miami and am just now getting involved with the wholesaling side of things. Any advice for a newbie?!

@Kamal Cuffe thx.  I'm going to be figuring it out as I go along. :)

I'll definitely share my stories with BP.  I know about fix and flips and have wholeselled (wholesold? lol) one deal but that was like 6 or 7 years ago.  I did it the hardway... i bought a property and closed it again the next day with a buyer.  

Originally posted by @Jason Medina :

This may be a long read for some but just wanted to put my story out there just to start something… what I’m not sure yet but let’s see what happens.

In mid-2000s, during the subprime market, I began flipping homes in the Los Angeles with $0 money down. My first property was a learning experience, I lost like $5000, but I kept at it and eventually started getting better. I successfully flipped over 15 homes and decided this was enough to start putting the money I made towards fully paid off rental properties and live the dream of passive income for the rest of my life! This is where I made a major mistake.

In 2009 I started off with a duplex in an “affordable” housing area of Columbus Ohio. Purchased a rental for $32,000 and each side was bringing in about $400 month. This was great. Unfortunately, I told my grand plans to an investor, who was also a property manager out there, of my long-term plans. He knew of my past deals and the amount of money I made from my flips and immediately saw dollar signs. I still took it slow. I sat on the duplex for 6 months and it was doing great. I then purchased a 2nd duplex for about $42,000 which was bringing in about $350 per unit. Life was good. I couldn’t get these kinds of returns in Los Angeles. Then he told me about this 14-unit building in the same affordable housing area that was boarded up and the owner was desperate to sell. This is probably where most of you are beginning to cringe. Well I did it. I was able to get the building owner financed and used every penny of what I made from flipping to get that apartment building rent ready. Fast forward a year later about 3/4th the build was rent ready. The rosy goggles I wore finally cracked. My units were revolving doors for tenants, the property manager was making a killing with tenant replacements and turning over the units. Well I had to fire that property manager and really no one else wanted to manage that area of Columbus Ohio. I was desperate and scared. I listed the property for sale multiple times and then started to reach out to other landlords in the area that might be interested in buying my units. In 2016 I finally got lucky and a local investor agreed to purchase it if I carried the note. The investor eventually got the property ship shape and was able to sell it to an out of country investor. I was able to pay off some of the debt I accumulated. I ended up in the red and have been working my butt off trading time for money to make sure all my debts have been paid off.

I’ve learned A LOT. Today I’m debt free from that experience, I never quit my day job and even grew ranks in corporate America. One thing still bothers me. I’m still not fulfilled. I think we deserve more than trading our time for money. I want to get back into real estate but my wife no longer wants me to invest farther than driving distance.

Today with a ridiculous commute, family & more responsibilities at work (I’m an IT Manager) I no longer have the time to start over with doing flips so I’m taking a different approach. Enter wholesale!

This is where I start a new chapter in my life. I plan on being a semi-virtual wholesaler. I have long time trusted friends in Jacksonville Florida so let’s try that area first. Been reading up on wholeselling and putting together my process. I’m going to leverage my IT experience in assembling teams, creating processes, documentations and using technology to be successful. Maybe just maybe my wife will let me keep 1 or 20. 😊

I’m an introvert by default so putting this together was a bit difficult. I also know how important it is sometimes to put yourself out there so that maybe I can connect with others and make bigger things happen or at least inspire someone to get back on that horse or else you’ll always feel like something is missing inside.

 So sorry to hear about your experience in Cbus. I can't believe the experience that you had. glad you got through. hopefully the haven't turned off your interested in columbus. i'm looking at a 8 unit just like that and maybe i shouldn't after i see this lol. 

@Jason Medina Awesome Jason.. I also agree with you that wholesaling still fits with your flipping experience .. you just used to do the work and now you need to find the buyers. I also appreciate your documented process approach.. no doubt you will be successful with that approach. Good luck 👍

@Robert Ellis  Thanks Robert.  I'm sure you heard already that C/D class homes are more challenging to manage.  You're actually located in Cbus so it may be a bit easier BUT the type of tenants they attract still tends to be the same.  Watch out for bait and switch tenants meaning a well qualified sweet grandma applies and moves in, a few weeks later their troubled grandkids show up with about 10 of their friends.  

@Cody Z. Thank you I appreciate it.  Posting this will keep me accountable and so I'm hoping to making some progress soon.  Working on a few things so stay tuned!

Originally posted by @Jason Medina :

@Robert Ellis Thanks Robert.  I'm sure you heard already that C/D class homes are more challenging to manage.  You're actually located in Cbus so it may be a bit easier BUT the type of tenants they attract still tends to be the same.  Watch out for bait and switch tenants meaning a well qualified sweet grandma applies and moves in, a few weeks later their troubled grandkids show up with about 10 of their friends.  

@Cody Z. Thank you I appreciate it.  Posting this will keep me accountable and so I'm hoping to making some progress soon.  Working on a few things so stay tuned!

 If they pay their rent they pay their rent. Evictions are very easy in Ohio and you have a security deposit as well. If you are worried about the tenants you can collect more than one month up front to protect yourself. lots of ways to avoid this. To be honest we work with managers that can manage in any neighborhood and i would feel comfortable buying in any part of franklin county where columbus is. 

@Jason M. I LOVE the story... seriously! You probably don't hear that very often but I feel as though bad real estate deals are like bad lottery tickets, no one ever talks about them but we all KNOW they are out there. I have a few nightmares myself that I often bring up when in conversations with others but that is all part of life. As long as you take it as a lesson and grow from it which it appears you're doing. I'm a local agent and investor here in Jax so if you ever want a second option or set of eyes on anything I'd be happy to help anyway I can. I'd also love to get added to your wholesale list (i'll shoot you a PM).

Also let that local friend know coffee is on me for disclosing that story, it will be his job to pay it forward from there!

Hi Everyone,

Update time. I launched my wholesale site, joined quite a few REI groups and doing a bit of marketing. I have a goal of one property before the end of the year and I have 2 in the pipe!

Here’s the kicker… I WANT TO FLIP THEM! This is where I need your help BP. Can anyone recommend some veteran flippers in Jacksonville that would be interested in partnering? I found the deal, I’ll put all the $ in but I need a partner to be boots on the ground and run me through a few deals until I learn how things are done in Florida. The challenge I’m having is communicating with the contractor on what needs to be done.

Thanks,

Jason

Took me a while but 6 months after my initial post I finally completed my first transaction since my 3 year hiatus. 

I wanted to originally invest in Jacksonville but found an opportunity in Orlando. 

3+2 SFR

Purchased for $75K

Reno $18K

ARV $150K

Rent $1300

I'm currently in process to refi the property and looking to cash out $112K (75% LTV) to use on the next deal.

Things I learned:

1) Hire someone to inspect the property frequently DURING reno.  The property manager contracted out work and some of that work was done incomplete or there was miscommunication.   Some kind of facetime to walk through and using painters tape to have the incomplete area marked for the sub-contractors before they leave.   Property Manager is not a contractor.

2)  Get insurance right away.  I was in a catch 22 where I couldn't get regular insurance until a tenant was in and if too much time passes, from the purchase, the insurance company wont insure you (at least the 3 I tried).  I had to get vacant property insurance first for 3 months min and then get my final regular insurance.  If anyone has a better suggestion I'd like to hear how to approach getting insurance on a property that will be renovated. 

Feels like I shook a lot of rust off.  I'm hoping to get this streamlined and process 3-5 per year.  As for the virtual wholesaler I couldn't quite get that to work.  I spent about $5000 in advertising (not including other expenses) and was only able to close one deal in the past 7 months that made me pretty much break even.  It was a learning experience but I don't think that's for me.  I've been having a bit more luck with wholesellers.  

That's it.  Let me know what you guys think of my first deal.

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