I am new to biggerpockets and so far I am loving the wealth of information that is on this site. I have attended a few webinars and those are great as well.
Me and my wife want to start flipping homes but I just don't know where we should start first. Is it better to get your private lenders set up first? Or should you find your contractor first?
Does the order really matter as long as you cover all of your basis?
Any help would be much appreciated.
BP is full of useful resources. Welcome to the Bigger Pockets community-be sure to check out all the awesome BP blogs under “Learn.”
@Chris Marvel Welcome to BP! I've found a mix of getting contractor referrals and lender referrals is great as you seek to find the first good deal. Know your market so you will ID a good buy when it comes up. "Build it and he will come." Find that deal and lenders and such tend to appear!
- Start with knowing where to get private money lenders, build a list.
- Second, find a property you can get under contract and meets your criteria (i.e. 70% of ARV minus repair costs for instance).
- Third, create your Deal Analysis Report detailing the cost, repairs, ARV and your down payment.
- Fourth, submit your Deal Analysis Report to various lenders from your list in step one and negotiate a deal with them to close on the property.
- Fifth, after closing, contact some contractors to bid on repairs.
- Sixth, get your RE agent to market the property 2 weeks before work completion.
- Plan for contingencies and holding costs as well as alternate exit strategies.
Hope this helps.
Welcome to BP!
While you will definitely need to line up funding I think the harder part is finding reliable contractors that you are comfortable with.
1. I spent a lot of time putting a crew together before the first project. I actually did a huge remodel / poptop on my primary residence and formed up a lot of my initial crew on that project.
2. I actually found a general in my area that I share subs with. GCs need to keep their crews busy. If they aren't the crews go elsewhere. I help fill in work for his crews and have several projects a year for the guys. I just coordinate my RE purchases so I get the team when I need them. These guys are used to working with each other so they are more efficient, and since I try to have work for them I am at the top of their list when something goes wrong.
3. I am ALWAYS interviewing new subs for spots on new projects. Sometimes a sub will stop working out or not be available, so I always have backups.
On podcasts I have heard ideas like going to Home Depot at 6AM to find out who is there bright and early. I haven't ever done this. Instead I will drop in to RE: open houses in my area. I like to see how things are positioned in my market, and I like to meet agents. I am always looking for investor friendly agents. When I find them I ask who they or their clients have worked with for rehabs and they are usually very willing to share info. Since I know the local subs I can see if our opinions line up then also see if they have recommends for people I don't know. I found a great new plumber this way recently.
RE: the financing, it seems that money is a lot easier to find once you start doing this kind of thing. I have had several people approach me about going in on a project together after seeing my previously completed and rented buy and holds. For your first one, if you have a solid plan and team in place I think it will make getting that initial money a lot easier.
Wow. Thanks everybody. It is honestly surprising to see how helpful people can be especially when it comes to making investments/money. I was always raised talking about such things was "taboo" and it's just a breath of fresh air to see so many people willing to help others. I'm really excited and nervous to do my first deal. I know the payoff will be great for my family and their futures which is why I want to do this, but it's always scary starting new things.
I still have some books from bp that I need to get and I hear another great place to start is local REI groups in my area. I need to find some of those too.
@Chris Marvel , Congratulations on your decision to get started investing! Warning..... You're entering something that can set you on a path to success or it can literally ruin your financial life. I'm not trying to scare you, I'm just warning you that this is NOT an easy business and you have to make very good decisions as you develop your business. If you do it right, you will succeed.....but you have to get it right.
I STRONGLY advise you NOT to begin building your team or start looking for deals until you've given yourself a proper education. There are many smart, honest investors on BP that have been doing this for many years that will tell you that they are still learning.
Your education needs to include (this is not a complete list):
1) Learning the general vocabulary of real estate
2) Learning the different types of real estate investing
3) Learning the rules/laws of real estate
4) "Paper-trading" deals (analyse deals that other people have done to see how it works.... J. Scott is a great source for this. He posts all the details of his projects on his website.)
5) Construction, contractors, real estate agents, buyers, sellers,.....many, many more.
The good news is that you're in the right place to start learning. Get and read all of the books provided here on BP. Listen to all of the podcasts (perfect way to spend your daily commute or travel time). Take your time. A good education for anything worthwhile is going to take a LONG time. Once you thoroughly understand the business, THEN you need to build a good team. Don't fall for the advice that you just need to jump in and learn as you go. I'm sure you've heard the term "sink or swim". That's not a good way to teach someone to swim and it's not a good way to start your business. Start at the shallow end of the pool and work you way into deeper water as you're ready. Good luck!
.... one more book I wanted to mention that's not offered here on BP is the book "The Millionaire Real Estate Investor", by Gary Keller. It's an awesome book that will give you the complete "big-picture" view of how to build a successful real estate investing business.
Join the Largest Real Estate Investing Community
Basic membership is free, forever.