All Forum Posts by: Andy Sabisch

The good thing is that you are in the area and can walk the properties but the bad thing is without experience, teh walk through will simply be a tour and not tell you what you need to know to see if the numbers work.  

There are several REIGs in the Detroit / Flint area (we lived there for several years and did projects in select areas.  I would join a few and see if there is someone that can walk the property and show you how to estimate repairs if you can't get a GC to do it.  All too often here people complain about GCs not being willing to do walk throughs and give estimates but remember, they are in it to make a living and doing estimate after estimate only to find out you missed on the deal and they got no work will come to an end quickly.  You need to be able to walk it through , get a ballpark number and use a GC to lock it down if you think the deal will work .  Asking for freebies on a hope to get the property will not work.  You might try offering to pay a GC for an hour or two of their time and get some things to look for (big ticket items) and the costs to use as a local gauge.  Then if you think it will work and you get a contract, get the GC to look at it within the inspection period you set forth.  

Good luck . . . just watch the areas you are looking as there are some great deals a few blocks from some really bad deals.

Agree with everything posted above and that many first time flippers get burned expecting the process to work like the TV shows and YouTube self-proclaimed gurus make it seem.  The TV shows fail to show the bankroll behind the deal, the number of contractors working when the camera is not rolling and the issues that invariably come up on a flip that were unexpected.  

You really have to have a solid deal with locked-down numbers and trades lined up to go after private lenders.  Are you ready to tell a friend or family member that the deal went south and you are losing money on the deal?  It happens and we have seen flips in the works that had to be unloaded at a loss because the numbers were bad from the start.  Going for a deal from a wholesaler is often a bad idea for a first timer as the ARV is usually over-inflated and the repair estimate is almost always under-estimated.  End result is that even a slight unexpected issue puts the deal underwater and owning the property you either commit more money and deal with a loss or sell what you have and hope to beak even.

Those that want to start by wholesaling really need to understand ARV and renovation costs if they want to impress a potential buyer that they have a real deal and not something no one else wanted to buy.

It is a shame that the "get rick quick" gurus are all over the Internet today and all promise immense wealth with none of your own money or risk in the deal . . . . the one's making the immense wealth are the ones selling the programs . . . . know many investors that wanted to get into the business that took on loans to get these programs only to find that they were even further behind than when they started looking into it.

There is money to be made . . . consider partnering with another investor (where you find the deal) and spend time with other investors with you local REIG.  It is not as easy as the books and videos and TV shows make it out to be.

As Esta said, there is a difference in an addition versus what a home is appraised at.  Adding an addition does not simply equate to what your current house is valued at psf x the new total sq ft.  If you are expecting an addition to bring instant equity, you need to do some checking with local realtors or see what the market is supporting.  Look at houses similar to yours now and then see what houses with the additional sq footage are selling for and see if what you are planning to put into the property makes sense.  Some areas it does and others it does not . . . . in our areas (central Mississippi and NE Pennsylvania) it would not based on what the market supports.  Put on an addition will add value but the question you need to get confirmation on is will it offset the cost of the addition in your area?  If you now have the biggest house in the area, that is never a good place to be in.  If you are going to have the most updated house in the area, also not a place you want to be in to have a wide market looking at the property when it comes time to cash out.  Are you planning on paying cash, financing or getting a HELOC for the project?  See what the cost associated with that does when it comes to the true cost of the project.  But getting input from multiple realtors that know the area to see what the value added will be will make your decision clearer . . .

Hope this helps

Make sure you run numbers both ways.  Not sure what type of deal you got into and what your potential upside is but what can be a great deal can turn negative if you spend money on a GC especially if you do not have a track record to look at on past deals.  If you go with a GC, be sure to interview more than one and try to get a referral from other LOCAL investors that may have used the GC before.  We have used GCs on a few deals but in about half, we found that we had to pay twice for work when the GC found a better gig and moved on in mid stream.  We could have done better to protect ourselves (and have contracts that do that now) but there were some costly lessons that we wished we had avoided.

It depends on the scope of the reno you are tackling.  Paint, flooring and a bath / kitchen refresh you can probably do well with hiring the trades for specific jobs.  If you need to move walls, rewire, change plumbing or re-roof the property, a GC (the right one) can save your sanity even if it costs.  

But either way, make sure you run the numbers to make sure whatever option you go with fits the budget and ensures that the only one not making money on the deal is you.

Good luck!

This is the il' time vs. money conundrum.  Can you find fixtures that can save you money over what your plumber can get them for?  Sure but what if there is a problem with the fixture when he installs it?  You might be able to return it for an exchange but now you are paying him to install it, remove it and then reinstall it a second time.  So did that really save you anything?

We have found that if you are using a trades person that can get the parts needed for the job, unless the price is way out of line, it is easier and less stressful to go with them rather than trying to shave a buck or two your self and then bring the items to have them installed.

If you are doing the installation, then we would see what we can get a discount on but if we are having work done, let them quote you for the entire job (labor and parts) so you an make an informed decision as to use them, someone else or possibly buy parts if you have a standard SOW.

Quote from @Jarrod Settle:

Wow thanks Andy.

I will take that advice. The asking price is huge I better find some help.

Be sure to get a second (and third and fourth) opinion so you know you are on solid ground.  If you are using a HML, they will make sure it is a solid deal since they have skin in the game.  If they say no, understand it is not personal but from a business perspective it does not work.  Ask them why and that will be a lesson in your education folder.

Good luck . . . . and remember, use the tools here and make use of the BP family to help assess the deal
.

One thing you need to careful of is ANALYSIS PARALYSIS.  You do not want to jump into any project especially starting out but wait too long and the deal is gone.  One of early rental projects we analyzed and analyzed the deal a dozen ways, asked for assistance and in the end it was a great deal (20%+ CoC and a nice positive cash flow from day #1).  We called the seller and she said that someone else had come in, looked at it and the rent rolls and made her an offer which she accepted.  

The lesson here was be aware of costs, be ready with financing and get help on your first few to assess the deal but at that point you either need to pull the trigger or walk away.  Hoping the deal stays in your court for an extended period of time is often a pipe dream and your deal will go to the next investor.

We willing to post the deal here after running it through one of the calculators on BP - you can post it directly from there.  Pull the address off you are afraid someone will swoop in and take it but the details will get you information quickly.  See if you can get someone that is in the trades to walk it and gauge repairs.  Make sure you have your financing numbers that you can put in the calculator.  Hate to see you find a killer deal and then wonder where the funds will come from.  

We are all here and willing to help . . . use us as a tool to find that deal. 

There are Facebook groups but some are wholesalers trying to sell properties.  They may find you deals that fit your model and budget but doing rehabs without boots on the ground may be a challenge starting out.

Some options to check out include:

https://www.gareia.com/
https://www.facebook.com/Atlan...
https://www.meetup.com/biggerp...

As far as specific areas, Atlanta is sprawling outwards so in addition to the recommendation above, consider Douglas county to the west as it has easy (if you can consider I-20 easy in Atlanta) access to downtown.

Having lived in Atlanta for more than a decade (out now), a lot of areas that you would not have wanted to go are priced like Alpharetta was then.  Atlanta is still a hot market but the steam is not what it was during COVID thanks in part to the interest rates.  Take a look at Redfin and see what areas are still on the upward trajectory and are still priced where there is / will be meat on the bone.  Look at some of the agents (here as well as those involved in REIGs in Atlanta) that speak investor as they will not be the same as agents that simply open doors and write contracts after you do the legwork.  Be sure to connect with REIGs in the area as there are online groups as well that can help you focus your search areas.  One thing to be careful of is that while there are bargains still out there, there are still areas that you do not want to be investing in so a recon trip to highlight focus areas (good and bad) would be recommended.  Spend some time looking at recently closed sales (Zillow and Realtor will show you when they last sold, when they sold before and how much on each which can quickly show you which were flips) and drive by - see the house and the area.  If you see several flips in the area, you know other investors are also looking there which is a good sign.

Hope this helps

Quote from @Alecia Loveless:

@Josh Danna I just paid $6000 to get 500 sq ft of cloth wiring, but not knob and tube replaced with a dropped ceiling, no attic. Light fixtures, outlets, and switches.

As Alicia just said, the cost you are being quoted seems to be way out of the ballpark even for CA prices.  When it comes to rewiring, it really does not matter if it is knob-&-tube, cloth or modern Romex . . . pulling a new wire from source to supply is the same activity.  You should get a quote to 1) upgrade your service which would include the connection outside the home to the breaker box and a new breaker box and then 2) rewire from the new breaker box to the ends (lights, outlets, switches, etc.  You should be able to get phone quotes for #1 as that is a straight forward activity that electricians do not need to see to price for you.  Then when you have that, find an electrician that wants the rewire job and finding one that can do it may be easier to find at a REIG meeting or even asking one of the more seasoned staff members (i.e., knows what they are doing) at H-D or Lowe's.