All Forum Posts by: Richard Redding

I don't know your market so feel free to ignore me... but I will say it's not going to be fun managing a property that is a few hours away.

Would you be willing to buy a duplex or other multi-family unit and live in it? If so, with an FHA loan you only need 3.5% down . So instead of 25K down on a 100k property, you could put down half of that ,$12.5k, and get a $350k property with your tenants paying most of the mortgage.

Instead of having your friend as a partner, make him a tenant or a roommate.

As Scrooge McDuck on 'Ducktales' always says, "work smarter, not harder'.  

Agreed, thumbs down.

I'm guessing you're slow to rent due to price. I drop my asking price $50-$100 every 2 weeks. Do the math.... Let's say you're asking $1200/month. You need to look at it as you're losing $300 every week that it's not rented, so just drop the price $100 and get 'er done.

Another tip with tenants you're on the fence about is to ask for a double deposit and/or a co-signer and then gauge their reaction. If that amount of money is difficult to come up with, that probably means they're living paycheck to paycheck... a guarantee there will be some late checks in your future.

Have a realtor list it in the MLS. It'll cost u but you get a better quality of tenants, more tenants to choose from, and it'll be occupied much quicker.

Have the power on and the AC cool and leave the lights on. The property shows much better.

And I apologize if you already know these things, not trying to be preachy. Just unaware of your experience level.

Good luck!

1) I do my flips under my LLC. My rental homes I don't, but I keep an umbrella policy. Figure out where you want to focus. I don't know that I'd jump into both right away.

3) let your boss know what you're doing. Sounds like he did you a solid by getting you a job in the 1st place. Treat other  people how you'd like to be treated.

4) focus on finding out what he needs to see on approving you for a loan and what he thinks other lenders would also want to see.

5) I'm in Austin, I don't follow the 70% rule simply because it's too hard to find a house under that parameter. I follow the 'can I for sure make 20k if my project takes 3 times longer than estimated (if neighbor calls permit office, this can happen) and costs 30% more'. So far we're averaging 35k net per flip.

Main thing is you need to know an accurate after repair value. Make sure your realtor knows what they are doing. Have the home inspected. You can have contractors bid the repairs prior to you even owning the house. Add 30% to the quote and then account for holding costs: utilities, insurance (quite high on a flip), interest, taxes, etc and round up.

6) do not take out a HELOC. Your paid off, homesteaded house can't be taken from you.... unless you give a bank a lien

7) No, do not touch retirement accounts

-to be honest, with no experience, I don't know you should start into flipping unless you can find a local mentor. I think renting and being a landlord is much safer. I really suggest duplexes.

Keep telling people, the more people you tell the more committed you will become.

But don't listen to the ones who don't take risks....

For example, I wanted to be in an MMA cage fight. Most people you tell that to think that's crazy... until you talk to people that have already had a cage fight. To them it was commonplace, no big deal, and they all had really great, tested advice on how to do it.

So tell everyone, even naysayers, because it's fun to go back to them in a year. After awhile they'll just understand that if you say you're gonna do something, it gets done. That's a good reputation to have in my opinion.

But only listen to the people that have experience.....

Fear is a good thing.... how u react to it is good or bad.....

In my experience, when it comes to rentals and profitability it comes down to attracting good, trainable tenants that believe one should pay their debts. I think you're on the wrong track by focusing on the condition of the property.

So in that sense, I'd say avoid C and D property, even if they appear to have better cash flow, as they will only attract the wrong type of people. The wrong people are late on rent, make unreasonable repair requests, damage the property, and frankly can rationalize any type of behavior they want.

For definition C and D would be in average to poor condition, on busy streets, on 'rental' streets (cars parked in yard, sofas in yard, etc), poor schools, grocery store too far away so primary food source in convenience mart.

I'm in Austin, FYI

I'd say you're determined to see it to thru to the end in the court system. I can respect that.

I'm interested about whether you'll be seeking revenge (the legal type). Earlier someone posted about reporting him to the IRS and the disability people. After you win in court, those sound viable.

One other thought, perhaps you could get him arrested for something else. Or perhaps he could 'win' a trip. But if you got him out of the property for few days, you could change the locks, tow his car, haul away his property, install a new aggressive temporary tenant, etc. Check with your attorney, but seems even in the CA legal system your claim to the place is at least as valid as his. And with the situation reversed, his attorney would need more money for the more complicated situation...money which we believe your occupant does not have.

I'm not an attorney, obviously, but just sayin.....

Keep your day job, and/or find a better one. I hate my day job, but steady employment is one of the most important parts of getting a loan, and it sounds like you'll need loans. My friends sometimes ask how I got the money to buy my properties. I tell them I don't have any money, I'm just very good at getting loans and let tenants pay them off for me.

I'd also suggest starting w/ a duplex that you live in one side of. You cant afford a $150 k house right now, but you can afford a $150k duplex when the tenant is paying 60-70% of the mortgage. Since you'll be living in it, you qualify for FHA meaning you only need 3.5% down.

Second, you do have things you can cut out, I promise. Do you drink, smoke, eat out, buy rims for your car, have cable, pay interest on credit cards, drink soda, play lotto, take toll roads, gym membership, have a car loan, etc?

An agent has access to rental comps and that's the most accurate way. They charge but I think it's worth it. (disclosure:these days that's my wife so I get a discount, but I still think it's worth it)

Mike J actually said the number one secret, drop the price every week or two, don't be stubborn about getting the rent you want.

For example, if you think your property can rent for $1000/mo, that means you lose $250 every week its unrented (plus electricity of course). So what's better, leave it at that price for a month and not get it rented or drop it $25 every week and get it rented quick?

Thank you gentlemen. Much appreciated.

We're about to jump into our first flipping venture. We understand the basics of the 70% rule but have one major question we aren't sure about.

We understand that we take ARV and multiply by 70% and this gives us our project budget. We know that from that 70% we subtract out our rehab and repair costs and this gives us our offer price.

The question is what about the holding costs, commissions, closing costs, etc? Does that come out of our profit margin, or do we include all that in our rehab/repair costs estimation, thus lowering our offer price?

Thanks gang!