WHAT"S THE RIGHT PRICE?

[Gary Harris]

I'm seeking advice from the membership of BP!  With all of the money companies are charging for education and mentorship (up to 50k) I want to hear your opinions as to what you think is fair.  I know it would depend on what's provided....so let's say the following...

1.) Mentor comes and works in your local market for 3 full days every 6 months.

2.) Mentor is accessible via email, phone/Skype for a year with scheduled 1 hour session every month that he/she isn't in my local market.

3.) So what do you think a fair price to pay is?  Yes, the mentor has verifiable experience.

[J Scott]

Originally posted by @Gary Harris:

As to how would I go about learning the markets....research listed properties and those sold, population growth or decline, job increases or decreases and types of jobs, capital improvements by city/town, how are the schools, what's the typical sales price , what does the typical sales price house look like, what are typical rehab costs for that area, and the specifics from good neighborhoods and bad, etc etc.

Do the items listed above change, of course but they don't tend to change overnight and the mentee would be shown how to get all of this information. 

These are all things that are easy to find by doing a little Internet research but, in my opinion, are ultimately not that important.  Population, employment and education trends are much more important when buying long-term holds than when buying flip properties; when you buy flips, the only important pieces of information are:

1.  Where is the demand (types of buyers, types of properties, etc)?

2.  Can you acquire properties for the right price that meet that demand?

#1 is easy to find if you have access to the MLS and know how to do some basic data-mining.

#2 is much harder, in my opinion.  This requires you to know things like:

-  What types of upgrades are important in the area?

-  What are buyer expectations for upgrades?

-  How much does labor cost?

-  How much do materials cost?

-  What are the typical types of concessions are buyers asking for?

-  What are the rehab nuances in that area?

-  Etc...

Those aren't things that can be looked up on the Internet, and often require several projects before you truly get a sense of what works and what doesn't work.

For example, it took several projects in Milwaukee before I truly understood how buyers viewed foundation issues (much of the city is built on expansive soils), how contractors approached foundation issues, and how much it cost to fix the various different types of foundation issues all my houses there had.

In Maryland, it took several projects to before I truly understood lead paint issues (Baltimore has wrestled with lead paint more than most cities), how and when it needed to be remediated, and the most cost-efficient ways to remediate.

In Atlanta, it took several projects to learn how to negotiate the various permitting and inspection authorities.  The first project we did was in permitting for over 6 months; since then, we've been able to get that down to 2-3 months for large projects.  If you've never done a big rehab in City of Atlanta, you'll spend months learning the processes.

I could go on, but my point is, every area has their own nuances and successful investors in these areas already know those nuances.  My first few projects in Milwaukee and Baltimore were tough because I bought properties that other investors weren't interested in -- I couldn't figure out why the other investors weren't interested, until I learned more about the specific rehab issues in those areas.

If you want to help someone in a particular area, my recommendation is to do a few flips in that area yourself first, so that you understand the nuances, costs and pitfalls associated with rehabbing in that particular area.  Otherwise, you're putting your students' money at risk because you didn't do proper due diligence.

Just my $.02...