All Forum Posts by: Ebony S.

Hi Brieana,

The best place I recommend starting is here:

https://www.biggerpockets.com/rei/

Good luck and welcome!

Thanks so much for sharing Sam!

Hi there Bryan,

The formula that I like the best is as follows:

ARV

- 20% Profit

-10% Miscellaneous (closing cost, holding expenses, utilities, Reno cushion)

- Reno cost

= The maximum offer price

Now, if the property I'm buying has a very high ARV, I usually lower my 20% profit a little to maybe 10/15% because even at that price a lower percentage of a higher number can still be higher than 20% of a house with a lower ARV; so it could still be worth it for me. You know what I mean?

And of course, being as humanly accurate and completely honest/conservative in your ARV and Reno estimate is what will help you have a success on your hands or a flop. You really have to get those "right"

Good luck to you!

Warmly,

~ Ebony

There are formal offers and informal offers. An email or phone call is different than signing a binding contract; but an offer is still an offer.

Brandon is the type of investor I'd bet actually has that type of capital to make good on the 5 offers, if that happened. Also, based on his experience he probably knows that the chances of having 5 offers accepted can be low depending on how much you're offering versus how much the Seller is asking. When making an offer, that offer can be void if the Seller asks for a higher amount, different terms or anything else different than the initial offer.

Making an offer and signing a contact on an offer are very different. For example, I might make 5 offers the same week and have only 1 or if I'm super-lucky 3 accepted. Realistically, none of my offers might be accepted if I'm only making 5. Anyways - Out of those 3 let's say, I may pick the best accepted offer I received and actually sign a contract on that 1. Or If I have money like that, I could follow through and sign contracts for as many as I want. It's all good.

Hi Tucker, thanks for your question.

First Things First: Step out of the box in terms of critical thinking and problem-solving.

Most of your tenants come in by word of mouth; that’s working. If you want it to *really* work and rent out your 9 empties, power-charge what’s working.

Specifically, ask yourself what action you can take to get more word of mouth referrals from your current tenants. Ask them what would make them happier as tenants. What would motivate them to recommend your rental to others? Take action on this survey/focus group. Be honest with yourself; you might get feedback you don't like, but that information may be exactly what you need to make positive changes. You may find that your money is better spent improving tenant amenities or creating a referral bonus instead of low ROI advertising. Don't compete with your competitors, dominate.

You spoke about your company being a house-hold name. Leverage that. Incorporate it into your branding. Do you have a website for your property? How are you incorporating the fact that your company is 60 years old, a trusted house hold name, and gets most business by word of mouth into your website and marketing strategy? Maybe your competitors are doing a better job at communicating what makes them different and better.

You said you’re working with partners – have them do a mental exercise where they put themselves in the position of a prospective tenant and another exercise as a current tenant. What about your company and its offerings could attract and detract from prospective tenants? As a current tenant, what about the company is making you stay and what about it could cause you to not refer a friend? Record this information and analyze it. Take action on it.

Also, although I encourage you to think critically and strategically about renting out your empties, I also don't want to fully discourage you from using traditional newspaper and online marketing. Throwing an ad into a local paper is meaningless if the actual ad you created is weak and lazy. Leverage your partners, what makes your company different, and feedback from your survey/focus group to create a dynamite ad that makes a difference. In other words, the Newspaper itself might have given you a higher ROI if the actual ad you used was developed well and strategically.

Good luck to you Tucker!

Warmly,

~ Ebony

You're welcome Michael!

Yes, using your equity is one way that I’ve heard has helped many people. Many experts recommend that strategy. Some banks may not want you to use the equity in your homes for investment properties or if they let you they will greatly scrutinize the deal and ask for evidence that you know what you’re doing to ensure it will make money.

Banks and even Hard Money will want you to have some skin in the game. If that skin is your own money or money you collected from friends, family, or credit cards, it doesn’t matter. You’ll still need to put something down for the most part. It may be best to do more saving or collecting from friends and family first while simultaneously educating yourself, and by the time you’ve saved up some of your own skin and have educated yourself even more; you’ll *really* be ready for the next step.

You may also consider using your great credit to pull out cash from them and then taking that money to a Hard Money lender as your down payment. A bank won’t probably consider you using your Credit Card cash as a good thing while a Hard Money lender could care less where you got your down payment from. For Hard Money they lend you money based on the deal, not your credit or money in the bank.

I don’t recommend combining a bank with Hard Money because I haven’t done that before. One or the other should be able to fulfill your needs without overcomplicating things.

As for seeking out Wholesalers, my favorite place is myhousedeals.com. Pay for premium membership; its worth it. You'll also find deals in craigslist ads using keywords like "investor special" or "flip", but myhousedeals.com is my favorite. When you find wholesalers, be sure to ask them to add you to their "list" then you'll get emails of their deals as they come up. As you get on a few wholesaler lists; the deals will start coming to you. Easy.

Good luck and stay encouraged!

Michael,

Thanks for your question – Flipping a house is a big job and not all contractors can handle a flip on their own. Ensure that your contractor friend has the network (such as subcontractors) to take on a house flip full-time.

Some contractors will work on your flip half the week and then on another project at the same time which can cause issues and push your time line back, with means money. Be sure your contractor can dedicate themselves to your flip full -ime and has the manpower and expertise to do it. If your friend doesn’t – then find other contractors who you can use along with your friend to fill in the gaps. You need to know the capability of your friend up front or it could mean trouble. Also, get a quote from your friend and from at least 2 other contractors. This way you don’t over pay/underpay your friend etc. It also helps you understand the general costs of things, your friend is your friend but you still need to do your own due diligence. Even friends and family can get too greedy. Protect yourself and be honest with yourself.

Your interior design friend will be helpful as you choose paint colors and things, but you may want to avoid potentially costly structural moves of things for your first flip or two until you become more confident and knowledgeable. So you can bump out a kitchen a bit or knock a part of a kitchen wall down, but keep the plumbing and things pretty much in the same spot at first. Having an Interior Designer on your team can be helpful, but they can also get overzealous. Balance is key.

You don’t need to learn real estate law to flip houses. Use your attorney network to find a RE lawyer who can review your contracts for your before signing. Since you have a good credit score, you can go to a bank. If you go to a bank you’ll need perhaps 20-35% down. Many investors don’t have good credit so they start with Hard Money or friends/family -  not banks. Since you have the bank option you can look into that, but also don’t discount hard money either. I actually prefer them to banks; good credit or not. They move faster, require less paperwork, and etc.

Even if you don’t use all your cash for the deal, you’ll still need access to cash for emergencies or if things come up. Keep in mind there are loans for the purchase and often separate loans for remodeling/renovation.

My hard money lender loaned me 100% of my Reno needs. So again, some hard money banks can provide better deals for you because they focus on lending to investors not just anyone trying to buy houses.

I like to find my deals first and then work backwards to know how much money I'll need. If you don't find your deal, how much will you know to ask your bank or hard money lender for? How much will you know you need to ask from friends or family? I suggest finding your deal first. But once you do, deals can go fast so being able to move quickly with your money matters too. There's no best way; you have to have money ready and always scouting deals. Speaking of deals, you mentioned about a Realtor. Realtors are all about the MLS. I never buy investments off of the MLS so I don't use a Realtor to find deals. MLS is retail; I like buying my deals Wholesale.

I do use a Realtor (Redfin) to help me sell my flips, but certainly not to find them. If I'm unsure about comparables I may hire a Realtor just to run comparables for me; but usually I can handle that on my own (its just sometimes useful if the deal is big and I need an extra opinion before offering a price to the seller)

Good luck to you!

Harry,

Most people have more of an adversion or fear of not gettting along with their house mates and not having "clean" common areas. Not wanting to "share common areas" is often cited as an excuse but not usually the actual true reason. 

When renting by room, having long term leases is actually harmful and not your goal. Based on your question I get the sense you're implying that long term leases are preferable. That maybe the case with renting by the whole house, but absolutely not when you're renting by room (which is a very common mistake by newbies who rent by room).

Since I said all that, I'll explain a bit. When you rent by room; tenants ability to get along well/live well with heir housemates matters. As I said above it's one of a house-sharers worst fears. When you offer 12 month or less leases you can get rid of people who don't fit well or who cause "trouble" more readily. This is important because one bad egg can scare the rest of your good tenants who live in the house away and reduce your ability to get referrals. Start with 3-6 month leases with a month to month afterwards. 

Don't do more than 12 months when renting by room. Only sign for 12 after they've been there for 6 months already and you have a sense for how well they get along with others. 

Make sure your tenants know and feel comfortable that they can text or call you with any questions or concerns. I've created that type of comfort with my tenants and if I have someone who's disruptive or an issue, I will hear about it from all or most of them. You want this. Better to know and do something about it than be ignorant and wonder why you can't keep your tenants. Proper screening will almost always help you avoid a bad egg in the first place but bad eggs do occasionally slip through. 

My target audience appreciates flexible leases. Those who ask for 12 or more months educate them and sell them on how a shorter term lease works in their benefit. Again, they can stay for years on a month to month. Having everyone on a month to month or less than 6 month lease helps keep everyone respectful of each other because they know if they're not I have the power to cut them off when the time comes. If they want to stay, they have to behave and get along with the others. People always want to stay in my rooms; I have a waiting list. Having a rooming house where everyone is respectful and the place is remodeled, affordable,  and clean is priceless. 

As per your question about AirB: I strategically have half my rooms AirB and the other half non Airb. This is important. You always want to be able to have a flat month instead of a negative month. My non AirB folks pay a little less per month but give my property stability financially and socially. AirB guests pay more and when certain parts of the year come up - for example the month of December... AirB dries up fast as people stop traveling as much and go home for the holidays. I was rebooked and full the next month though. Because I diversified my rooming house, I will always have super profitable months or an occasional flat month where I can pay my expenses and not lose money. 

Plus, having half the house non AirB helps create consistency in the house with the houses "culture" and norms so when my more transient AirB guests come into the fold they are socialized quickly and welcomed. 

There's always the consistent folks to show the new guests "the ropes" or whatever of how the house "runs" (i.e how trash and recycles are handled, mail, how to work the Roku, how they interact with each other and use common areas etc)

Yes, the tenant referral bonus is one of my secrets to filling my rooms. Don't mistake though, it's only half about the money. 

I'll explain: When you tell your tenants that you want referrals from them, it's a people issue. You're saying without saying it that you like them, trust them and want more people like them. This makes them feel good and wanted. They will like the idea of getting to possibly choose a house mate or help a friend they know rent a room with a landlord that's "good". If you're not a "good" landlord no amount of money you offer them will get them to refer others to you. That said - by giving them money for a good referral you're showing your appreciation in a way that matters to them. 

Talk to your tenants and learn from them other ways that would make them feel appreciated. For some, it's not all about the money (but for my demographic it mostly is.) 

Here's an example - One of my long term tenant appreciates being able to pay his rent sporadically throughout the month in 3 chunks for example. His previous landlord would have never let that slide. For me, I'm fine with giving him this flexibility. This is how I show my appreciation to him. If I have a new AirB guest arriving, this tenant will open the door for him, show him their room, give them a hour tour and take them under his wing - so I don't have to go the the house to let them in and explain everything myself. I can stay home and be with my family instead. This tenant who I'm flexible with will take care of small issues when I'm not around and help keep everything all-good, for example. He's the first to tell me if I have a bad egg in my nest. He takes out the trash for the whole house and gives my AirB guests tips on how to get around the city. 

I've experimented with different ways to offer a referral bonus and if you're interested you should too. Always experiment and see what works best for the demographic you serve. What works best for me and my audience is $500. $200 if they stay for at least 90 days and another $300 after 6 months.  The bonus is enough to get your tenants always looking out for more potential tenants to send your way. It's also less than a months rent for me so I'm happy to pay my tenant the referral bonus so I don't lose a whole month or few of rent looking myself or waiting. 

My wait list is a combination of being a "good " landlord is (which I could go into more detail about what that means in a future post), advertising directly to my target market, and referrals from tenants or others who know what I do. Don't rely on just one stream to get your tenants (like only post of Craigslist or only AirB for example). Multiple steams including simply being a "good" landlord will always be working for you all at the same time in your favor. This makes landlording-life and tenant screaning easier. 

Remember, SFH room renting is different from other type of renting if you really want to be successful at it. Treating it the same way will be to your financial and emotional detriment. However the basic fundamentals of being a "good" landlord is what crosses over and is important no matter if you are room renting, multi-fam or commercial landlording.

Good luck Harry! 

Bradley,

Kudos to you for asking for resources where you can educate yourself.

Once you've read what others have recommended and you're ready and willing to do those things to be successful that you won't learn in books, shift your resource focus from books to YouTube. 

You will find some real talk and real life knowledge by subscribing to the following experts: Charles Blair, Commercial Property Advisors, Grant Cardone, and JayMrRealEstate. 

Have a notebook dedicated to your real estate learning and have it with you as you listen so you won't forget the priceless things you will learn. 

Good luck to you and a warm welcome into Real Estate

-Ebony 

l agree with Russel 100%

Especial with regards to Takoma park and the rent control. I rent single family homes by room in addition to flipping houses. Renting by room can make the same or more than multi fam properties and in this area, it's much easier to do so. Just watch for the specific counties policies in Airb renting versus regular/long term renting and be sure you get your rental license/certificate. With single family homes some neighborhoods have retired bored people who like to harass and complain about rooming houses in their neighborhood. 

As long as you're following the law and have your paperwork people can say what they want but you still be just fine and make lots of money. Screen your tenant well. I pay my current and past tenants a referral bonus and it helps me get great tenants and reduce the costs associated with finding great tenants on my own. 

Good luck!