All Forum Posts by: Chad Shultz

 Rebecca:  Welcome to BP and to the beginning of what can be an amazing adventure for you.  You are steps from financial freedom, but you need to be wise about it.  I don't know that you need 10, but I can share the first one or two that WILL work for you, if you apply yourself:

The first thing to remember is that most groups and courses, who want to know how thick you wallet is, are not what you are looking for. Your best bet is to find your local REIA, which you can search for on nationalreia.org. These groups are a much better place to start and generally you can join for a yearly fee of less than $200+-. At your REIA, you will get to mingle with locals in your area who are actually doing what you want to do. You can network and find the best avenue to start. They also have trainings and other classes you can take, which are generally included with your membership, or at a very low cost. You don't need to spend endless money on the national courses which never give you a result and never teach you anything you can actually apply.

As a general rule, if you find a class or group promoted in your social feeds, or on TV, etc., you want to stay away from those. Those will usually not get you anywhere, but they will help lower your financial balances. Find someone at your local REIA who you click with and see about partnering with them, following them through a project, or offer to trade your labor/skills for them mentoring you. I have personally done this with other folks and they are successful. The REIA folks are there to help and they want to see others succeed. The national programs just need to hit marketing goals and they don't care what your result is.

I am sure everyone has an opinion about this topic, but I am surprised it is not more "front and center" on BP.  After all, if a fellow investor is willing to take unethical actions in a contract or against a buyer or seller, what makes anyone think this person won't also lack ethical principles when dealing with YOU directly?  Often times we look the other way and let these folks get away with their actions, which only compounds the problems for everyone.

If you search "ethics" on BP, you get about 9527 results on the topic.  Many of the posts seem to be questions about something that already happened, or questions about whether or not some particular action is ethical.  We should not be trying to piece something together after the fact, but rather:  Ethics should be front and center in everyone's mind and training in everyday life.  Everyone deserves to be treated fairly and ethically.  There used to be a time when transactions were all done with a handshake.  Now, you need pages and pages of documents signed and notarized and you still are not sure if you are dealing with an honest person.

There is certainly more than enough money in the investor arena to go around for everyone, but many people choose to conduct unethical business anyway.  Maybe we need a BP board of Unethical behavior where we can post the names of people whom we don't recommend others do business with, based on unethical actions.  It is certainly something to consider, in my opinion.

     "The true measure of a man [person] is how he treats someone who can do him absolutely no good." - Samuel Johnson 

This post is intentionally short.  Hopefully, it will cause you to stop a minute and think about ethics in your dealings with others.  Let's get back to "handshake business" by doing right by everyone you deal with.

One of the issues, which helps to grow the problem is there are too many television programs on investing/flipping, etc.  When these scripted, fake, programs don't tell the true story of how the projects go, everyone and their brother want to jump in and make some of the millions, getting their piece of the glory that is television life.  With all these people jumping in, the problem gets larger by unscrupulous individuals who start selling, and up-selling, so called "Real Estate Training Courses."  Many of these courses get very expensive and lead to nowhere for the average person.  Most of these people fail, lose money, get sour on real estate, etc.  However, their presence in the markets raises the entry point for everyone and the actual investors need to start breaking their "rules" in order to be competitive.  At some point, the scales will tip and then everyone left wants/needs to jump off in order not realize coming loses.

It is a cycle, like most things in life, but one that can be avoided if you stick to what actually works rather than taking unnecessary risk just to force a deal.

Haley,

Glad to see you are moving forward and taking the next step in your investment journey.  Obviously, different people have different reasons for the way they approach their investment strategy:

Personally, I prefer to use personal funds and "pay" myself the interest.  The majority of my projects are rehabs that get sold, (fix and flip).  I find there is more profit to be made and more flexibility if you use your own funds.  I started my "official" journey in 2016 with only $35k of my own money.  Today, I can self-fund more than one project at a time.  When you invest smart and you are not paying out to everyone, you can grow cash quickly.

On the other side of the coin, there is a place for hard money.  I have used it on occasion, but it is rare.  If you want to scale, hard money is helpful.  It might allow you to go from 3-5 properties per year to 12+.  However, keep in mind interest does not pause.  If the market changes or costs go up, etc., your flexibility is limited and interest keeps ticking.  I know many investors who are much busier than me, turning more homes each year, but they never have any money.  I am not interested in making $10k-$15k per property, even if I do that 10 times per year.  I would much rather make $60k-$75k and do three to five.  The risk vs. reward margin is in my favor this way too.

My opinion is to start off with your own funds, if you can.  Learn the ins and outs of the projects and learn how to manage your money and maximize profits.  Once you have done this, it is easier to manage other people's money and keep your profits coming in.  Ultimately, don't be one of those people who jumps into the deep end without knowing how to swim.  You'll thank yourself later.

Hello Steve K.

If you are looking for help in the Orlando area, or farther west than Volusia County, I would tell you to contact @Shawn McCormick for help. If you are looking in east Volusia and/of Flagler, I may be able to help you. I am an active investor who has done about 50 personal project over the last few years and I am very familiar with the market and the investor side of things. As a Realtor, I typically only take on investor customers, because we speak the same language. Reach out and I will be happy to help you. I have lots of references, including a large history presence on FB and I am currently the Vice President of the country's largest non-profit REIA group.

Investment Info:

Other buy & hold investment.

Purchase price: $640,000
Cash invested: $1,200,000

Turned a shuttered and rundown 13-unit waterfront motel into a brand new vacation destination with added lakefront "tiny homes". Property has no "on-site" employees with exception of cleaning staff. Customers book and manage everything online and we use a property manager for Q&A and handsfree management. No on-site office, nearly autonomous functionality. Several large Georgia State tax breaks were also part of the deal. Yearly Gross $500k+ with cash flow of approximately $30k-$35k/mo.

What made you interested in investing in this type of deal?

This was one of only three hotel/motels in the city and the only one with lakefront access, including a dock. Popular year around 4-season activity area on the 2nd largest lake in Georgia. Property was just a good combination of the "right place and right time."

How did you find this deal and how did you negotiate it?

I found this deal by "stumbling" on it during a weekend get-away trip with friends for a celebration on another property. I like to make a celebration part of the end of every successful project and this celebration brought us through this area. The "For Sale" sign and phone number were posted on the front of the building, nowhere else. It was not listed. My business partner spent over six months negotiating with the seller and we ultimately purchased at a 20% reduction from asking price.

How did you finance this deal?

This deal was financed through three funding rounds over the approximate 18-month time frame for the renovation and construction of new tiny homes. Investors, (two of us) ultimately funded about 32% of the project with cash and additional money was raised from members of the local REIA, simply by word of mouth.

How did you add value to the deal?

The deal was valued based on a recent sale of the local Holiday Inn, (only real competition for us) which also needed to undergo renovation. We also did many calculations of income and expense models over time, based on usage.

What was the outcome?

The 13-unit original motel, built in 1958, has been completely renovated to 2023/2024 standards and upgraded with all new electrical, plumbing, and internet structure throughout. The six tiny homes were build from the ground up to our specs. The project was very well received by this small town and it is a fully operational 20-unit, lakefront, property in a wonderfully busy four-season destination.

Lessons learned? Challenges?

No matter how much vetting you do, you will always run into contractor issues. Being remote for us, this was a big hurdle, which we eventually overcame. Traveling back and fourth from Florida was a bit taxing, but ultimately it was worth the investment and work.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No. This deal was completely done off-market.

Investment Info:

Other buy & hold investment.

Purchase price: $640,000
Cash invested: $1,200,000

Turned a shuttered and rundown 13-unit waterfront motel into a brand new vacation destination with added lakefront "tiny homes", for a new total of 20-units with yearly gross over 500,000 and cashflow averaging $40k monthly. Project took approximately 18-20 months due to contractor delays. Exterior areas are still being finished, but property is up and running at 100% with many long weekends at full occupancy. Property has no "on-site" employees with exception of cleaning staff. Customers book and manage everything online and we use a property manager for Q&A and handsfree management. No on-site office, nearly autonomous functionality. Several large Georgia State tax breaks were also part of the deal. Two investors in the deal at approximately 32% of total investment. Remainder was raised through local REIA members and debt will be refinanced out at end of this year.

What made you interested in investing in this type of deal?

This was one of only three hotel/motels in the city and the only one with lakefront access, including a dock. Popular year around 4-season activity area on the 2nd largest lake in Georgia. Property was just a good combination of the "right place and right time."

How did you find this deal and how did you negotiate it?

I found this deal by "stumbling" on it during a weekend get-away trip with friends for a celebration on another property. I like to make a celebration part of the end of every successful project and this celebration brought us through this area. The "For Sale" sign and phone number were posted on the front of the building, nowhere else. It was not listed. My business partner spent over six months negotiating with the seller and we ultimately purchased at a 20% reduction from asking price.

How did you finance this deal?

This deal was financed through three funding rounds over the approximate 18-month time frame for the renovation and construction of new tiny homes. Investors, (two of us) ultimately funded about 32% of the project with cash and additional money was raised from members of the local REIA, simply by word of mouth.

How did you add value to the deal?

The deal was valued based on a recent sale of the local Holiday Inn, (only real competition for us) which also needed to undergo renovation. We also did many calculations of income and expense models over time, based on usage.

What was the outcome?

The 13-unit original motel, built in 1958, has been completely renovated to 2023/2024 standards and upgraded with all new electrical, plumbing, and internet structure throughout. The six tiny homes were build from the ground up to our specs. The project was very well received by this small town and it is a fully operational 20-unit, lakefront, property in a wonderfully busy four-season destination.

Lessons learned? Challenges?

No matter how much vetting you do, you will always run into contractor issues. Being remote for us, this was a big hurdle, which we eventually overcame. Traveling back and fourth from Florida was a bit taxing, but ultimately it was worth the investment and work.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No. This deal was completely done off-market.

Renzo,

Glad to see you here on BP.  I am a very active investor/realtor in the Greater Daytona area.  I ONLY work in real estate with investors, so if you need/want help, let me know.  There are many, many agents out there and 98% of them really have no idea about how investing actually works.  I put my investor customers' needs first, because I don't need to make a real estate paycheck to pay my bills.  With that said, to answer your question:  Cape Coral has been well over done.  For the past two years, or more, it has been about the hottest place in FL to invest.  Now that it is saturated, it is starting to fall off.  Lots of big investors went in, driving prices and now pricing is very high.  Many sellers are having to make huge price cuts to sell flips and/or new construction, so be careful there.

With your buying criteria, Daytona area is still a great market with strong numbers.  You should be able to find a decent property, if you can put in a little sweat equity.  However, finding a turn-key for $200k is not likely possible.  The places you will find for $200k won't make the rent rule, which should be a non-starter for you.  You will need patience and need to keep your eyes open.  I just recently sold a duplex property to an investor for $225k, which was bringing in $2800/mo, so you can find them occasionally.  Sorry, I don't know anything about Tampa or Panama City areas.

Hey Kwame,

Get out there and network in person at a group or meet up. Facebook and all these online or social media based groups can only get you so far. Central Florida Real Estate Investor's Association is the largest non-profit REIA group in the country. Come visit us second Tuesday of the month in Orlando. CFRI.net I guarantee you will find people doing what you want and you can start a journey.

Not to burst any bubbles, but there is no such thing as a “Licensed Wholesale Agent” in the State of Florida.  A person can be a licensed agent, or someone who wholesales, but to say “Licensed Wholesale Agent” is a bit deceptive, especially for new investors.  Everyone should do their homework.

I am a licensed agent in the Ormond/Daytona area, fluent in investor properties and needs.  I also do occasional wholesales too. I have done many fix and flips and I am very fluent in transactions in this area.  I am happy to help if anyone has questions.