That didn’t go as planned!
Contractor · Orlando, FL · Member since 2018 · 64 posts · 45 votes
You hit the nail on the head. Find the property, manage the rehab, deal with any and all headaches that will definitely arise. Be on site, make sure it goes smoothly, sign for everything. You will earn your 50%, and sometimes you should earn more depending on the project.
Time is the most valuable thing to most people who have money. Your value is giving them a return on their money without taking up their time.
Risk is obvious. If I was trying to avoid risk I would sit at home and never do anything.
Some people say the market isn’t going to experience the same bust that it did in prior years. Others say next year it is coming. Isn’t that all speculative? I heat A LOT of varying opinions.
Why do you believe we are heading for another recession?
What are you doing with your real estate investments to prepare for the recession you anticipate?
The fact that you even have to ask why I believe we are headed for a recession speaks volumes. You don't pay attention to the obvious market trends or economic fundamentals, didn't realize you need a down payment to buy a house, sorry, but I need to move on here, you just don't get it.
@Branden Sewell I’m a newbie to this just like you. I’m eager to get started as well but I also want to do whatever I can to make sure my first deal is as good as possible. That might mean waiting 6 months or more. While I wait I’m going to dive into this site and read every book I can. We have the benefit of learning from so many people on this site that have already been through the ups and downs we will face eventually. If we listen and learn from them hopefully we can avoid some of the pitfalls they ran into. Good luck to you.
@Branden Sewell I have not read all replies, so some of this may have been said. You can get into deals with no money of your own, but it takes effort. Find partners that have money. They can be active partners or passive money partners. Either way, get them to put their money up for return on the RE leveraged. I have done a ton of RE deals with out my own money!
Seller financing is also another great way to get in with less money. This will require some money up front, but not much. Also, buying land can be a way to get in with little money.
I wrote an article on this topic. Most ideas require some money, but not the 20-25% down that a bank will require
@Branden Sewell You need to have the full picture. Commercially, if you do a rehab yourself (you're listed as a contractor) you could potentially get 100% financing if you add enough sweat-equity to have 20% of the value in the deal added. This is rather difficult to find though as you have to add square footage typically. Residential, you could do an FHA on a multi-family or single family, but you'd have to have between 3-5% down, but that may be your cheapest route. The other problem is your credit, and the deal. You typically have to have two of the three. If you have money and a deal you can usually get someone to lend to you. If you have no money but a good deal with a good credit score, then you may be able to find someone.
How the heck am I supposed to get started with no capital. People make it sound like people just hand over money to help with funding a deal but I’m just not finding that to be true.
Anyone have some real advice on this? Or am I just not looking in the right place for funding?
Help me get creative!
I see there are 5 pages so this might have been adresssd.
There are syndicators who put together deals with little or none of their own money for income properties. But it sounds like you’re just looking to buy a traditional 1-4 family house.
So yeah. You’ll need to deal with normal residential underwriting. And have a down payment.
Commercial is different. I can get a $20m building financed easier than I can a $100k single family home
How would a 50/50 split work? What value would I bring to the table with no capital in the game? Do I propose that I do all the work/management of the job?
I’m just a newbie so I’m trying to understand my value other than just being super eager and determined to make money and be financially free.
Is my value my time, my business I own? I’m not sure. I guess figuring that out is key.
I think I need to understand my value and what I bring to the table. But to know that I need to know what is valueable to other investors besides money.
Any insight?
>Is my value my time, my business I own? I’m not sure. I guess figuring that out is key.
It is my belief that finding deals is my biggest bottleneck. This implies that a newbie's biggest contribution is finding a deal. Newbie's labor often ends up being more hassle than it is worth. I cannot make profit by having an apprentice that is just "super eager and determined to make money and be financially free". I can make money if someone finds me a property that meets my buying criteria. If a newbie finds such a property, I would let them partake in the decision making discussions and help with labor if they so desire.
I have had one "apprentice" be a successful RE investor. He was the best handyman (by far) that I ever had. Worked hard, pride of work (sent me photos of his tasks not to inform me of the progress but because he was proud of the job), great attention to detail, could research what he did not know (smart). He would see our purchase through value add. His attention to detail allowed him to know what provided good return and not so good return. He now has 8 units. His house is much bigger than mine (but worth a little less). He has done well.
My points are: 1) finding a good deal will provide your best in 2) there are different methods of learning the skills needed to be a successful RE investor some of which may not be glamorous.
Good luck.
I can’t agree with this more. Want to help/partner, find me a deal.
I closed on a smallish deal last week. $900k. Paid the kid that brought it to me $27k. He wants to help with the upgrades just to learn but his value was bringing me the deal.
Do NOT listent to anybody telling you how and why you can't do anything. Somebody here actually said it was a bad idea because you "might have to sell in a year or two"? Well, that's a hell of an assumption. We all "might" have to sell in a year or two I guess, health pending.
It takes some people decades to learn, and some never learn, to ask themselves a simple question when setting a goal in life; "HOW can I achieve that goal?" Never say I "can't".
How the heck am I supposed to get started with no capital. People make it sound like people just hand over money to help with funding a deal but I’m just not finding that to be true.
Anyone have some real advice on this? Or am I just not looking in the right place for funding?
Help me get creative!
Is this a serious post? If you have NEVER done a deal before, why would anyone in their right mind just GIVE you money?
Unless it's private funding (typically friends and/or family), there isn't a lender out there that is going to just give you money with no track history.
Go to a tertiary market, find some less expensive point of entry properties, and start there. Go to some networking events, tell them what you've done, how you're planning on moving forward, what your goals are...
No one, I repeat, NO ONE...is just going to hand over money to some guy just because he claims to be a real estate investor.
I've been networking for over a year now and have only now just found a potential partner and a private lender...I've also gotten my own finances in order so I can use my own capital. Most importantly, I have a deal under my belt and people know how well it's doing despite a couple of initial setbacks.
Sorry if I came out as harsh, but I can't believe people actually think lending institutions will just hand over money with no skin in the game.
Go watch the documentary / movie "The Big Short"...
@Branden Sewell everything has been well covered here but just to recap you have a lot of options:
I am thinking long term. I would love to start with a duplex. Live in one side with my wife and rent the other. But I just don’t have the kind of capital needed for a down payment on a duplex.
Not too sure what my options are. I would rather do that than buy a single family home.
I have my own business but only have one year under our belt. So we are basically working with my wife's income. We got pre approved based off her income for a conventional or FHA type loan, but to get a duplex at the price we are pre approved for it just wouldn't make sense. Unless we found some kind of miracle deal at $200K.
Any advice given our situation?
I would disagree that it doesn't make sense to do this. I bought my first house as a Duplex and lived in one side and rented out the other. It's a great learning experience if you're just starting out and we actually did really well on net when we sold it and moved back to the Midwest. Financially it worked out pretty good for us, as our gain more than exceeded our costs.
I would recommend you run a Net Present Value calculation on it, using some basic assumptions and see how the numbers look then. If it adds value long term than it's not necessarily a bad idea when you have no other good immediate options.
I greatly appreciate your response. I clearly don’t know a whole lot but that is why I am here. I am here to learn and grow. I know I am going to be wrong about things. I came here for help and I found that and I also found a lot of condescending remarks. Anyway, thanks again for your feedback. It is greatly appreciated and right along the lines of what I expected from this forum posts.
Perfect! Everyone has to start somewhere. Ignore the naysayers. Don't get me wrong, do not blindly jump into something with no research, but ignore the people on here being condescending. It's ridiculous that anyone would bother jumping in to a forum to drop a useless comment like that. Ignore those people. Their comments serve only to boost their feelings of self importance.
If you need any help feel free to ask. Also you asked a bunch of questions about how you could add value. Being a contractor is a big help. A lot of people with money want to get involved in real estate investing but have no clue how to estimate rehab costs and have 0 contacts in the various trades needed to do a rehab. Owning a painting business I assume you at least know a few good painters and probably have a good idea of who does quality dry wall work in the area. Try to leverage all your contacts in the industry to build a solid team of subs. This could be a huge value add for you to bring to a money partner who just wants to passively invest.
My name is Stassa. I am wanting to flip houses in Atlanta and surrounding areas. I have never flipped homes before, but it is something I have thought about for some time. I would some advice on getting started. I would like to know how I can get started from the beginning with this process. Thank you
I don't want to bring scepticism to this thread but I've never understood why an investor in his right mind would do this; this could eventually make sense if the active partner is extremely experienced and reputable with a long proven track record of successful deals but why would you put your hard earned money at risk partnering with a newbie for only 50% of earnings?
I would never partner with anyone who hasn't skin in the game; way too risky
@Branden Sewell If you need a recommendation for a loan officer, shoot me a PM. I have gone thru a couple bad ones in my time and now work with some great ones. Seriously I had clients cancel a deal because of the loan officer I was using when I first started my career.
Do you have connections with hard money lenders?
keep researching saving money and running numbers in your market, no deal is better than a bad deal and it sounds like you are pretty inexperienced and need to do some more research before getting serious (no offense)