All Forum Posts by: Robert Williams

Hi Weis,

I think your friend's offer is quite generous if he's a seasoned investor and knows what he's doing.  He's offering you 50% of the profits plus substantial mentoring all in exchange for providing some working capital to get the deal done.  

I've had cash investors that I've partnered with in my deals and the most I've offered them is single digit returns.  Getting the money to do deals is important, but it's just a very small part of any real estate development deal.  Identifying and closing the deal, planning and managing the renovation work, and then successfully selling the finished product are where are all the heavy lifting of a real estate flip take place.

I'm definitely not trying to minimize the dollars that you're putting into the deal.  As you said, it's basically your life's savings so you should really consider how much you trust your friend and carefully examine his track record.  I'm just offering my two cents that the proposed profit split is more than fair in my opinion.   

-Rob

Hi Weis,

I completely disagree with the notion that Washington DC is not a good area for the buy-and-hold strategy.  I would actually argue the complete opposite.  Washington DC has one of the strongest rental markets in the country.  And while it's true that property acquisition costs are high, the significant rents make finding a successful buy-and-hold property relatively easy.

I personally own a number of positive cash flow rental properties in DC and I've helped several friends find good rental properties to buy over the years.

-Rob 

The best way to learn the different DC neighborhoods is to pick one and then go to as many open houses as you can in that neighborhood on a Sunday.  There's no substitute for physically driving/walking a neighborhood and personally seeing it's housing inventory when it comes to really learning a place. 

Repeat this process for the neighborhoods in DC you want to get more familiar with on subsequent weekends and you'll be off to a great start.  This is how we get new real estate agents who join our brokerage to learn DC neighborhoods and it's worked out pretty well.   

That's a really comprehensive list of questions.  My only suggestion is that you really focus on "Referrals" part.  The quantity and quality of referrals you receive from your brokerage are going to make or break you as a new agent.  Along those lines I would ask for the track records of other new agents that have joined the company recently.  How many deals did they close in their first six months?  How many did they close in their first year with the brokerage?  Make sure they don't just give you the numbers for the most successful new agent, but all of them so you can get a feel for their track record.

I'll echo what another poster said, please do NOT use Zillow to establish the value of a property.  Do what real estate agents do to establish a property's value and check to see what similar properties have sold for recently within a few blocks of the home.

How close are the newer "luxury" homes to the property you're considering?  Are they a few blocks away?  I don't know exactly where your property is located, but new construction tends to happen in new developments so all the surrounding houses have the same nice appeal.  You may not realize the same sales price if you do a "luxury" build for the home your considering if it's surrounded by other older, less appealing homes.  

The numbers sound promising, but make sure you have a solid process to establish the numbers.  When setting the value for a home based on comparables, they need to be close.  

Double closing would be very expensive in jurisdictions with high transfer/recordation taxes and fees.  For properties in Washington DC, the transfer/recordation tax is between 1.1-1.45% of the sales price.  If you double close, you're paying that amount twice.  

My biggest fear is losing money on a bad investment.  

My next biggest fear is having to evict a tenant.  My rentals are in Washington DC which has some of the most tenant-friendly/tenant-biased laws and protections in the country.  

You started your post by going into detail about how your father reneged on his promise to pay your downpayment when the time came.  Do you have any concern or worry that the same thing may happen with this latest property your purchasing?  If so, it may be wise to find a way to get the funds under your control before you make and offer and potentially get under contract on the property (unless you're able to proceed with the sale without his money).

Great post...I knew the 90-day hold period was coming back, but I'd never learned the backstory as to why it was put on hold.  

Do FannieMae- and FreddieMac-backed loans have similar restrictions?  

FHA-backed loans have become a lot less popular on our area because of the mortgage insurance premiums that are now charged for the life of the loan if you're putting down 10% or less.

I think $10,000 of passive income per month is a very ambitious goal, but I applaud you for it.  My wife is always telling me that I don't think "big" enough so good on you for doing so.

The challenge, of course, is in how to get there.  Real estate investing is not a fast way to easy money and anyone who tells you otherwise is lying.  It takes hard work, long hours, perseverance, tons of learning (with many mistakes along the way) and lots of entrepreneurial spirit.  

For starters, write down the steps you need to take to purchase your first buy-and-hold property and then take it from there...