All Forum Posts by: Account Closed

And make sure when you say we're only $11,000 away from a deal you follow it by "and I can close in 30 days or less".

This will take time to master but if you make this your routine you will not leave looking like a jerk, the people will thank you for coming out and they will give what you said some serious thought because the truth is it makes sense. Over your career you will get many many more offers accepted as well.

Sorry guys,in the above example 65% of 150k-30k is $67,500.

Greg I've also enjoyed reading your journey. All hard work brings a profit and in due time you will reap if you don't give up. Here's a tip about estimating repairs and negotiating with sellers that has helped me in my wholesaling business when meeting with homeowners. If you're meeting with someone they should be motivated. Never go see anyone you haven't qualified over the phone.

1. When you get there remember one thing, in the sellers mind all they know for repair pricing is retail, retail retail. They don't know what a rehabber is going to pay for repairs. So when you formulate your repairs list and you're going down the line you can ask them what they think all this costs? They know if they need a new kitchen, 2 new baths, roof work, plumbing, etc they're looking at a crazy number that in most cases they can't afford. A retail kitchen alone could be over 20k. So you add up everything and tell them a retail price, then come back with the statement "now I can do the work a little cheaper because I have my own team" then they know that from a retail standpoint there house needs $60,000 in work. Doesn't matter if you can do it all for $30,000, they can't. You now shock them into reality. Always estimate repairs higher, remember all they know is retail, so if it would cost them 60k when you're making your offer use 50k. You know in the back of your mind that you could probably get it done as a rehabber for the $30k but you leave yourself room to negotiate.

2. Make sure you mention to the optimistic seller that if they list the house for $150,000 that's not what goes into their pocket. No one in this market pays your asking price, they also are entitled to a sellers concession and you'll pay 6% to a realtor. Add to that they're going to hold the property for another 3-6 months best case scenario, in NJ our taxes aren't cheap, that could be another 3-4,000, plus utilities, ins, etc. so if the buyer of their home asks for a 10% discount, 3% sellers concession and they have to pay a realtor, what % of their asking price do they really end up with 81%. If you deduct their holding costs for the property even if there's no mortgage (probably common with probate) they're probably going to net 79% of their asking price, WOW. So much for that $150,000. Now for the big tip...

3. Also emphasize that in this market, houses are not selling unless they're perfect. Wives want new kitchens and bathrooms, there is so much inventory, the houses sitting on the market for over 150 days are 1. Overpriced or 2. Not updated. Now they know if they don't bring that house to that condition it's not going to sell, when they think about it, it's $75,000 that they don't have. And the best part is if beautiful houses in the neighborhood are selling for $150k then that's your ARV, that's for a perfect house. If theyre really motivated then theyre not delusional trying to get top of the market, theyre probably trying to get closer to $100,000 if they listed it. So their number they hoped to get is $100,000, your ARV is $150,000. Here's how we bring this home, let them know they're only going to net $79,000 off that $100,000 sale. Your offer is based off of 65% of $150,000-$30,000 in repairs or $67,800. Write those 2 numbers next to each other then you say we're only $11,000 away from a deal. This is when you begin to look very good.

So to summarize, it's important that you do all these things and work them into every meeting with the seller. If you're just making offers at 60% of fair market value you might come off as a jerk, but if you do this,i guarantee you when you leave that house, if you don't buy it they will know they're going to have a heck of a time trying to sell it on their own and that's what you want. You want them saying to each other, "do we really want to go through all this for a few bucks more" that my friend is how you justify your offer. God bless you on your journey.

So I had the interview with the first canidate today. He's the gentleman I spoke about in the last post. 37 years in the business and is now doing project management work for another local investor. This is only on a few projects as the investor is focused more on the lending side and is only doing a few rehabs per year. Anyway I see him as knowledgable about pretty much every subject. He's done everything from new construction to modular homes. He's 60 and at this time I see him as wanting to transition into a more systemized business vs doing a bunch of different things going wherever the money may be at the time.

We went over the different roles and what we would expect out of each other. He's not going to be an employee (at least not initially) he's acting as a consultant who will be responsible for preparing scope of work, getting bids, managing the project. I will be hiring the subs and paying them from the company. He said that I need to have a license that I can get for $95 and liability insurance to do this. Of course I'm going to get more info on this. I guess we're going more towards the way Will has his business set up. We'll work together on a deal by deal basis to start and will pay either 5 or 6% of the gross profit. I did not want it based off of the amount of the work because then what incentive is there to keep the price as low as possible. In this case his profit is attached to the company's therefore he'll do everything in his power to make sure we're not being overcharged. He's going to get all the bids so we hire the subs directly and he knows material and labor prices. He's also a very good negotiator when it comes to working with these sub contractor. He does however believe in quality work. Looking at his portfolio and his years in the business I can see he takes pride in what he does. Honestly from what I see, he has very few faults. I think he's not that good when it comes to marketing himself but running with someone like me we would be focused on a huge volume business where he knows there's a lot of money to be made and his talent can be utilized.

Now this is not to say that I've made my decision, I'm just letting everyone know about the first interview. I plan on meeting with a few more people over the next couple weeks as I continue to learn more about this process. Definitely exciting to say the least.

The reason I asked him what to look for vs telling him all the traits i think the person should have was because I wanted to see what he felt are important traits taken from his own business. He also said something that a lot of you guys hit on which was the ability to manage people. He said that besides the experience and knowledge that's probably the most important thing.

We also discussed starting on a deal by deal basis which is what I'm really looking for. You want to date someone for a while before you marry them. When we transition to a full time PM, I understand that we're making a long term decision. That's why our first 6 months is going to be so important but eventually we'll have a dependable person who is an important spoke in the wheel of our business. Can't wait!

I'm really excited about this project manager coming into the business. I've put together an ad for craigslist and I also reached out to a friend from my investment club. He's been a general contractor in his own construction company for the last 37 years. I called to get some advice, told him what I was looking for as far as workload and responsibilities. I know he's done it all and I was really looking for some advice on what to look for. He said I should look for someone who knows a little about every aspect. Then he said maybe someone who is a little hands on themselves and can do some of the work themselves. I told him that I really wanted someone skilled in every aspect but not so much hands on themselves. Reason being, one or two projects would be ok but my vision is a company that has 5+ projects going on simultaneously. I need someone to manage that, not be working in it. So then he said, what about me? So I'm assuming from his interest and looking at his experience and age (60 but looks 50 and is in great shape) he's looking for a way to generate profits while not having to be so hands on. We're meeting tomorrow. I'm still running the ad on craigslist tonight and will be looking to meet more people's over the next 2 weeks but this is definitely a good canidate. I know he has the skills necessary. I'll keep you guys posted. God bless.

Awesome advice Adam, I just got some big help from Karen as well in regards to ad wording. I'm going to run the ad tomorrow evening or Monday morning after I get all my ducks in line. Im not in a position where I have to rush and hire someone, so God willing, after thorough interviewing and screening I can find the right person. I will definitely update this post as these events occur including the results of the interviews. Thanks everyone and if you guys have any other input going forward its appreciated. I hope those reading this post get as much out of it as I am.

Maybe I can just do what Karen M. suggested and run a craigslist ad for the person I'm looking for. After a few interviews, maybe I'll have a better view on what the market is looking for.

So much great information, thanks to all who've shared so far. So I see that the challenge will be finding someone who can start on a part time basis. The reason I was looking to start out part time is because of the actual volume that we'll be doing in the first 4-5 months. At 2 wholesale deals per month and 1 rehab, I don't think that will be enough action to constitute a full time person. Mind you I've never hired anyone before. Basically I'm looking for someone who understands where we're going and can roll with us.

Let's say for instance I do bring a person on full time, how do we start the payment process? I was looking for someone part time who would be available for a few hours out of the day for certain tasks. I need a repair estimate, they meet me at the property and prepare it, we buy it they prepare the scope of work, meet w/ contractors, get bids, manage the contractors, etc. Getting started they wouldn't be managing more than 2 properties at a time until about the 4th month. At that point we'll be rolling and they'll be busier, but how do we get things started? I have cash reserves but I don't know about paying a salary at this point, should I consider a small salary in the beginning or will people work on a per job basis if I contract them as a PM?

The goal is to have a person that handles the construction side of our business. I'll focus on marketing, talking to sellers, meeting with sellers, negotiating, paperwork and raising money. If I have someone to handle that part of the business I can work twice as hard on producing more deals and raising money.

Will Barnard, @j Scott (can't tag you)You guys are the only ones I know of that have worked with project managers. If anyone else has I would appreciate your input. Thanks.