All Forum Posts by: Robert Williams

Hi Ilyia,

You've gotten a lot of good advice regarding this deal already.  One thing I'd like to add is that you do a thorough inspection of the entire property.  Have a property inspector go through all the systems, see as many of the units as possible, etc.  

The numbers look good assuming you're willing to take on the task of managing a multi-unit building in a low income neighborhood and all of the potential challenges that can accompany a property like that (or are willing to hire a good property manager.)  Just verify the condition of the property.

-Rob  

Hi Adam,

The first step, I think, should be for you to crunch all the numbers of the deal you're considering.  Have you identified a specific property yet?  If so, how much is the asking price for the property?  What are the comps in the area?  How much is the rental income in the area for the type of property you're buying?

If you have a question as to whether or not you'll be stuck with a debt that the rent won't cover, then you need to go back and do your homework.  Before you get into any deal, you should know how much rental income you can reasonably expect based on research.  Sites like Padmapper.com are a great way to see what the rental market is like in a given area.  

A five year hold period is relatively short, but if you do your research and buy a fixer-upper at below market now, you should be well-positioned when it comes time to sell.  

-Rob

I think the cheapest solution would be to go out and hire some day laborers to take care of this demo.  In our area they cost about $12/hour.  I think two guys working for 10 hours each should be able to get the job done, especially since you have a dumpster on site.  

If you want to hire someone else to bring in the labor, expect to pay a premium.  

Hi Leyla, 

In my opinion, you don't want to fix and flip a property that has tenants in it.  First, trying to do renovation work around a tenant is not going to be easy.  What if there's only one bathroom in the house and you want to remodel it?  Is the tenant going to go without a bathroom for a number of days while you're doing the work?  Are you going to put them up in a hotel?  Second, when it comes time to sell the home, what are you going to do with the tenant?  

Instead of thinking about a cash for keys strategy, I recommend making your offer to the seller dependent on the seller getting the tenants out.  Right now the tenants are the seller's problem...have him offer them cash for keys.  

If the numbers work, this could be a potential wholesale opportunity.  Just keep in mind that any investor is going to see the tenants as a negative and that it's going to take them time and money to get the tenants out.  That has to be factored into your sales price.

-Rob

Welcome to BP, Joe.  I think wholesaling is a great way to get started in real estate investing!  It's a good way to put money in your pocket if you can come up with an effective mechanism for finding good deals.  

My suggestion to you is to research all the ways that wholesalers find deals (yellow letters, bandit signs, absentee landlords, probate, etc.), pick one that seems good to you, and then go out there and do it!

Hi Frantzces,

The parts of NW DC where I'm seeing a lot of flips are primarily Petworth and Brightwood, and to an lesser extent, Shaw, Ledroit Park, Columbia Heights, and Bloomingdale.

If your investor is interested in maximizing his profit margin, I would not limit myself to NW DC.  Other hot DC neighborhoods for flips are Eckington, Brookland, Trinidad, Capitol Hill East, Kingman Park, and Langston/Carver.  

There are also some good flip neighborhoods across the Anacostia River, but I am less familiar with those and don't have any personal experience investing there so I won't offer up any recommendations for that part of town.

-Rob

Great transformation!  

As others have said, you should fully screen each individual to make sure they're both fully qualified tenants.  I would also make it a point to explain to them that each of them is "jointly and severably" liable for the rent (at least that's the language I have in my standard lease).  That means if one roommate does not pay their portion of the rent, the other one can be held responsible for it.  You want to make sure that the roommates trust each other enough not to worry about one of them skipping out on the lease.  

Hi Gary,

I have a strong preference for buying rentals that need work to get them ready.  That enables me to buy the property for below market value and to inject some sweat equity into the deal by doing the necessary renovation work.  I'm a firm believer in a buy-and-hold property earning me passive income through cash flow and also through property value appreciation.  

On the other hand, I've worked with investor buyers who prefer turn-key rentals because they don't have the experience or willingness do deal with a bigger renovation.  A turn-key rental also allows them to put the property into service as quickly as possible, thereby maximizing their rental income.  They're sacrificing some long term property value appreciation, but are realizing immediate cash flow without the hassle of going through a renovation.

To me turn-key means anything that's ready to rent as-is or that needs just a little bit of cosmetic work (e.g. painting or new carpet).  

-Rob

Hi Leo...the golden rule in real estate is that everything is negotiable.  Many wholesale "deals" are not really good deals so the only way to make them work is to offer a lower price than the wholesaler is looking for.  Now, just because you make a lower offer doesn't mean it will be accepted, but you'll never know unless you try.