All Forum Posts by: Chad Shultz

Quote from @Sam Dunlop:

Hey everyone, I wanted to get the opinion of someone with more experience than I have. I am looking to purchase a fix and flip in Daytona Beach, Fl. The deal makes sense financially however the house is in a flood zone A and flooded during this past hurricane season. This is the first time this area has flooded in years. With hurricane season now over and the house would (hopefully) be sold well before the next one I am curious if anyone has any seen any change/decrease in sales with areas that have flooded recently? Thanks!

Hey Sam: Daytona Beach is a great area, with a few exceptions.  I do many projects in this area and I’d be happy to discuss yours with you.  I bought a Zone A house at auction last year and everyone said I was wrong, or the value was not there.  Home sold in about a month, during hurricane season, above list and $40k more than the “nay sayers” thought it would.  It depends so much on the type of Reno you do.  Reach out via PM and we can exchange info, if you like.  I would be happy to go over pros an cons with you.

Hello @Dillon Lewis,

Welcome to the BP community and congrats on your starting a family. Hopefully you will be able to mingle all of your adventures into one successful journey. Don't listen to the "naysayers" with respect to the market. What you need is focus and discipline. If you follow correct MAO offers rules, which most successful investors use, then there is no "bad" time to be in the market. Right now is an excellent time to buy, because sellers are feeling more pressure and better deals are available for investors who can solve seller's problems. I recommend you stick to that approach and never "yurn" for a property. Most of my best deal projects come along when I am NOT trying to find them. This is especially true nowadays.

Being newer, I think you should be hands-on involved in your first few deals at minimum.  This will give you a better working knowledge of the process, time frames, materials, etc.  It will also help you keep costs down, so you can be more in control of profits, while getting started.  I have never met a contractor that cares about costs, unless those costs directly affect the contractor in a negative way.  For example, you can tell a contractor it costs you $100/day to hold a property, so the job needs done quickly, but it will not resonate with the contractor until the project gets to a point that it starts costing the contractor a daily fee, at which time the work will be done more quickly.  When I hold utilities on a project and the contractor wants the AC on, it is not uncommon to find the AC set to 68 degrees with doors open, or over a long weekend when nobody is there, etc.  When I tell contractors they can do what they like, but they cover the utility bill, I never find it set below 78 degrees.  This is just how contractors, and many other people, work.

I started my first project ever with a partner and only $33k all-in.  We did much of the work and brought in contractor(s) and workers for specialty items, etc.  In the end, we both made a little over $18k each.  Not bad for a $33k investment and some time.  If you can refrain from spending that "work" money and roll it into another project or two, before taking any out, it will be easier to get to the point that you can maintain.  From there, you can ease out of the "hands-on" side as much, and get more into overseeing crews.  You should always be sure to keep them in line and on track.  Make it a point to stop by your projects, unannounced, at least a few times each week.  This will help keep everyone honest and on track.

Finally, I would find out where your local REIA meets and go to occasional meetings. This will help you network with people in your area who are doing what you do. You can network and make connections that will help you avoid the pitfalls of using crappy workers. Many of the networkers will be happy to tell you who to use and who to avoid, etc. This will be one of your biggest money saving parts of your journey.

Best of luck.  If you want to chat further, about anything specific, feel free to reach out.

@Sergio P Ramos:  When I started working on Flips, my first project was with a partner.  We were both "all in" on the project at $33,500 each.  We sold for $114k.  From there, I was able to keep rolling my funds back into projects and keep increasing the margins.  I was fortunate enough to have positioned myself in a way that I did not need to use the flip income for living expenses.  This allowed me to roll 100% back into projects.  With a little patience and determination, and sticking to the correct formulas, I got to where I am today.  Too many people are willing to fudge the numbers to beat someone out.  All that accomplishes is increased risk.  You never need to be desperate for a property.  Now, I am actually able to fund two or three projects at a time, without using OPM.  I don't like paying interest.  I would rather pay myself that interest in the form of profits.  I do prefer to work with partners on projects.  You get ideas from two directions and you spread risk over more than one project, which is safer in the long run.  Two sets of eyes on projects also helps when it comes to keeping track of contractors, etc.

Quote from @Suhaib Rehman:

Good day everyone, 

I am interested in purchasing either a condo or a townhouse for short-term rental. I am also open to a longer rental as long as I could use this place for 1-2 months as a second home (summer or winter break). Budget at or under 400K. HOA and insurance costs as low as possible.
Can you suggest a few good cities in the FL with lower vacancy rates and close to nature/activities?

I am open to both the Gulf side or Atlantic/east side of south Florida.

I plan to travel to FL early next month and want to have some idea of good cities/regions to start with. Your advice will be beneficial.

Regards

Suhaib

Just be careful about where in the Daytona and Ormond market you look.  STRs are not welcome in most areas and not allowed in Volusia County.  There are some areas in Ormond and some in Daytona, but you need to make sure you follow the rules, or they will come after you.  Take the time to check usage/zoning maps.

Quote from @Sergio P Ramos:

How do you fair late in the year rehabbing/ flipping houses? Do homes sit a bit longer than usual? Is there anything that you do different rehabbing/Flipping late in the year?

 Sergio,

In my market, I rehab continuously.  If you were to try to guess the market, you would wind up losing time waiting until you thought it was "right", then you would be rushing to have a project done.  I keep working from project to project and sell them off as I go.  I can tell you this:  If you do a nice job on the rehabbing, you will never be short on customers.  So many people think "flipping/rehabbing" means you run in a house, stomp your feet and then paint anything that does not run away.  This is wrong on so many levels, let alone; unethical.  I deliver a first rate, top of market product and rarely do I see my properties sit longer than a few weeks.  I usually hit top of market pricing and/or set area sales price records with my properties.  If you do this type of work and you buy properties right, you will never be worried about a sale.

Quote from @Rebecca Morris:

I am new, like pre-school new, to real estate investing and am confused about where to even start.  I have looked at several courses and they all want my investment $ to teach me how to invest.  Ummmm.  So for now I am striking out on my own.  Well, alone until I found this site.  But this site is overwhelming with all the info available here and I have to idea where to begin.  Anyone have the first 10 steps to take?  That would be a good beginning.  I am checking out a couple of books to read and I have the time available to study and learn.  And most importantly I have the desire and the why!

 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.