All Forum Posts by: Andy Sabisch

Everyone and their brother is hawking courses and partnerships on Facebook, TikTok and the web . . . all promising to have a secret no one else knows about and for a mere $XXXXXX (fill in the amount), you can become a member of their inner circle and reap the rewards of their knowledge.  There is no quick shortcut to success in any aspect of real estate (unless you consider selling these courses and "knowledge" as real estate).   A BP membership and utilizing the resources that they have available from tools to books, videos, workshops and the forums as well as the members themselves will get you further ahead than a franchise will . . . . what you will pay to get into it would cover your first flip and in many cases more.  And by the way, I am speaking not only from talking to other investors but having been one that got pulled into one of those programs that did nothing for me other than cost a chunk of cash that could have been put to better use . . . . and after getting with BP and using the tools they provide, can say the value lies right here

Quote from @Richard F.:

Aloha,

It would really depend on whether I was operating a Business, or a Charity. As a Business, I would follow the terms of the rental agreement and local law.

Understand . . . . the lease specifies the 3rd and the 15th and the tenant pushes the 15th before legal action is started.  We are having a meeting with them this week and seek to understand what their intentions are and if this will be a regular occurrence.  They have 6 months left on the lease so I guess we simply take the late fee each month and do not renew.  Posted this because other than the isolated "bad luck" other tenants may have had (and then they called in advance to let us know), have not run into this. 

Quick question . . . our leases state that the rent is late if not paid by the 3rd of the month and at 15 days, we will initiate eviction proceedings.  We have one tenant that screened well (talked to the previous landlord and no issues were communicated) who has been in the unit for 5 months now.  The first three were paid promptly and then December rolled around.  No payment by the 3rd, no communication and then we were notified that the tenant had deposited a portion of the rent in our bank account.  We sent another invoice with the late fee and received a text - not a call - saying that their mother had been ill.  We tried calling and no answer.  The rent was finally paid on the 15th.  

Fast forward to January and the issues start all over.  Nothing paid until a portion was deposited on the 6th, no communication, not taking calls and again, paid the rent with late fee on the 15th.

How would you deal with the tenant on the rent payment situation?

Thanks

It sounds like you are buying long distance which always has its pitfalls.  As Jeffery stated, have you taken the monthly costs associated with a townhouse into consideration and understand that these fees may and usually do go up each year (and sometimes a good deal if common amenities need to be addressed)?

There are good deals for Buy & Hold anywhere if and only if you buy right and you know the market.  Clearly Trenton has good and bad areas but the proximity to NYC will always support the rental market.  What took you to Trenton?  Do you know the area or have you taken the word of an agent or the seller as to the area, the rental forecast, etc.?

No on has a crystal ball and can tell you that property X will be a good rental over the long term.  Some areas (like our current home base) have the bad areas expanding into what even a few years ago were prime areas.  On the other hand, when we lived in Detroit, good areas were taking over bad areas and money was being made to those that bought into the move.

Make sure you have done your homework and have an accurate picture of the rental costs and projected trajectory of the building as well as the area.  Feel free to post what you find for more feedback but again, any area can be a great area to invest in if the numbers make sense.

As William said, you need to assess YOUR situation as they are all different.  We have one property that is on a creek and is an AE zone property . . . but the property has 3 acres and the house is much higher.  The seller we bought it from had been in the house for her entire life (rare huh?) and only had water at the basement once in that time (82 years).  We went with flood insurance because of the AE rating for the lender but were able to survey it and have that adjusted.  Others are in the middle of AE zones and have gotten water in recent years so those need the flood insurance.  ALso having quotes and information available for possible buyers is a great approach and one that will show them that the insurance is not daunting - and the range of quotes you will get are HUGE.  My wife's brother got a quote of $12,000 / year and walked away from a house they liked as a result and then found out that Neptune woudl have insured it for $1800 / year.  Shop around and at least provide that to buyers.

How lucky do you feel?  Not trying to be funny but I had a friend that was in the same situation and around the same time last year . . . opted to forego the flood insurance and the flip ran a bit over and the flooding took place . . . and home owners covered none of it - cost him $25,000 to repair what was damaged.  Flood insurance is not cheap but shop around (we have a few properties in Zone AE and use Neptune as they gave us the best rates) and see what you can get . . . you never know if that 3 months will stretch out especially with the goofy interest rates of late.

We had a similar situation where we did not want to pull the old tile out and addressed it by making a new transition strip from wood and cut a piece out to cover the transition.  Stained it and put 2 coats of poly on

it . . . worked great 

Quote from @Eliott Elias:

None, you need a good deal. 

Remember the post started with what was needed for your first deal.  If you have no experience, finding a source of funding that will cover 100% of the purchase and reno costs is like finding a unicorn . . not going to happen and I would question anyone that says you can buy the property with nothing out of pocket (please feel free prove me wrong).

There are good deals out there and there are even some listed on MLS if you can look past cosmetics and the numbers work . . . we have gotten several that were on the market and in some cases for a while.  Some were more than a cosmetic repair but the cash at closing justified the effort.

I have talked to a number of people over the past few years that got pulled into the coaching programs that provided theory that is available for free or very little especially here that never got a deal, never got the assistance they were promised and now had a financial hole they were digging out of after buying the course.

Finding the RIGHT deal is key but setting up possible financing before finding the deal is critical.  When we started, we were offered a pair of duplexes with established tenants that was cash flowing at close to 22% when the owner needed money for medical costs for a family member.  Super deal . . . and then we started to get the financing and found out that putting the cart before the horse was not the way to go.  Two days later we had what we needed and the owner let us know that she had sold it to someone that had the funds . . . lesson learned.

The more deals you do the easier the financing becomes but even now we d not get 100% financing for purchase and reno (again, if someone has a secret to do that as the "coaches" claim, please let me know)

Excellent post and great advice to those that are looking at getting into the flipping process.  You will find 100 things that do not go according to plan and you need to be able to absorb them into the deal and make it work.  Learning permits and contractors are a lesson unto themselves.  We have done well but nothing like the TV shows portray or the scammers that market the get rich quick programs . . . . just send them $10,000 to $30,000 (and they get rich).  Paying that to learn what you can get here for a fraction of the cost is a losing proposition and the money you save can go into your first flip.  There are more and more people selling programs and putting slick videos and websites up to show you how much you can make with no money out of pocket . . . . sorry, it simply does not work that way.

Quote from @Grey Goodman:

@Andy Sabisch thank you for your input here! My specialty is estimation of ARV and rehab costs, however, I am having trouble figuring out the "profit" that typical flippers are baking into their buy formula in Florida. This is needed to be able to accurately figure out my buy price where I can make sure that I am buying these properties below where typical flippers will pay.

If you are looking to wholesale, why not reach out to some of those wholesaling in your general area . . . look at the property and see what they are making per flip.  Many will talk to you about their success and if they are not selling then their numbers are out of whack.  Join a local REIG will put you in touch with flippers to see what they are looking for to buy price-wise.

If you are flipping, then it sounds like you have the estimating covered . . . just have that contingency factored in to both the repairs and ARV.