All Forum Posts by: Scott E.

Very interesting. I don't think I've ever heard of anybody start a venture like this but I like the idea. I have been to a few of these parks before (as a customer).

Are you looking at allowing these 'tenants' to park their food trucks on your lot full time?

The biggest hurdle that comes to my mind is getting the city on board. Not sure what permitting looks like for something like this. But it's a unique use for the property and I could see there being a lot of red tape getting it approved.

I get renderings done on my projects and agree that they are great for pre-marketing the home. They are also great for contractors to visualize the finished product.

Rendering detail is getting better and better too. The guy I work with now does them so well that at first glance, you can't even tell that it's rendering. Impressive stuff.

If you bought for $150k then you refinance down the road at say a 5.5% rate, your cash flow would be about $112 per month in the beginning and bump to $278 after the refi.

$112 per month is a pretty awful return on ~$35k cash invested. But after the refi the return is great.

You ran your numbers well, you're accounting for everything.

The biggest issue here is that to me the deal only makes sense if rates come back down to the mid 5% range in the next couple of years and you refinance. Nobody has a crystal ball. Nobody knows if that will happen.

I'm building 2 houses right now (as the developer, not the contractor). And I've got guys at my job sites about half the time.

Sometimes they work for 7 days straight. Sometimes there is nobody there for 4 days in a row.

As Bruce and James explained, it's just so dependent on the many moving parts of a flip or a build. For example on one of my jobs I'm waiting on fire sprinklers to go in. There are only like 3 subs in town who can do sprinklers. And until I get those sprinklers in, we can't order the inspection. Which is putting many other tasks on hold.

Also need to remember you're not the GC's only client. They hopefully are spreading their guys around 5-10 other jobs. If your job is their only job, that would be a bit scary lol.

Best practice for determining rehab costs: Meet with an experienced general contractor at the property. Walk them through your plan in detail. Have them give you an estimate to execute your plan, with allowances for finishes. And then add ~20% to their number.

Best practice for determining ARV: Look at similar homes that have sold recently in the immediate area. Pay attention to bedroom count, bathroom count, square footage, lot size, etc. Then also look at homes that are currently for sale in the area. Same idea, make sure you're looking at homes similar to what your remodeled home will look like. Comparing the sold homes to the for sale homes will give you an indication of where the market is headed (down, up, or sideways)

Congrats on a solid deal. To add ~$140k in value in 3 years at this point is a job well done.

Don't take this the wrong way though but I have to call it out based on the title of this thread and your first sentence. What you're describing is following the herd. And there's nothing wrong with that. 

This is probably the most common, tried in true strategy in real estate. Buy a property in a good location, add value through renovations, and either rent it or sell it when you're done.

 Yes we do!

I only recommend getting your real estate license if you plan on becoming a realtor.

If you are planning on becoming a developer, house flipper, wholesaler, or buy and hold investor, it doesn't make much sense to get your license (in my opinion).

Oddly enough, many realtors end up becoming real estate investors. That's another story. What I'm saying is that generally speaking, I don't think investors should become realtors.

Closing costs are $20k on a $175k deal?? That doesn't add up. Should be no more than $5k.

Not sure where the other Scott is going with his posts. But don't worry, most of us are here to help and point you in the right direction.

1. I definitely recommend getting started close to home. So if you're living in Chicago, you should be trying to your first couple of deals around Chicago. Within a 30 minute drive ideally. Whether you are wholesaling, flipping, or becoming a landlord, it's just infinitely better to invest close to home in the beginning.

2. Wholesaling is much easier said than done. It is a great tool to build capital for your first multi family home purchase. But it's a LOT of work.

3. Because of #2, if it's true that you're only allowed to do 1 deal per year in Chicago as an unlicensed person, I would not pursue wholesaling. You're going to put a lot of work into networking with buyers, underwriting deals, getting to know the right neighborhoods, sending direct mailers, doing door knocking, etc etc. To do all that work for only 1 deal per year would not be worth it (Although I don't know the laws in Chicago. Consult with a local expert to get more direction on this one).

4. Attending meetups is a great way to learn and network. Keep that up.

5. You're going to have a very hard time convincing anybody to do a joint venture with you at this stage. Just due to your age and experience. Don't take offense to that. It's just unfortunately how it goes. Once you have a few deals under your belt this will become much easier.

You've come to the right place. Your mind is in the right place. Keep spending time here on the forums, listening to the podcasts, reading books, etc.