All Forum Posts by: Erik Hitzelberger

@Eric Gar - First, whatever you do, I hope it is based on defined (and preferably documented) criteria such as credit score, income, pet policy, past evictions, and references and not on age or familial status. You accidentally included this info in your question which wrongly (I'm confident) gives the impression that these items may factor into your decision.

Assuming everything else is equal, (no criminal records, past evictions, and they applied at roughly the same time), I'd choose the second applicant based on income.

I agree with all of the above responses. You should pay the GC and the GC should pay the subs. Prior to handing them a check, the GC should get a lien release from each of the subs though.

Congratulations on the ruling Vince and thanks for the update.

Wow! That's a phenomenal deal. Nice job on the rehab and congratulations. Like @Jonathan Harris, I'm curious about the arcade game. Does it work?

I too have followed this with great interest. My first observation is that the level of professionalism in this discussion is generally very high. This is a divisive topic on BP yet, for the most part, both sides were discussed with little rhetoric and without demeaning others. Civility. Online. How novel?!

Like @Ned Carey I have spent a significant amount of money on seminars, courses and mentors. I consider every single penny well-spent. My biggest regret is that I didn't seek out education sooner. The costs I incurred trying to do it on my own exceeded what I paid to others. When I say this, I include time, missed opportunities and other opportunity costs in that calculation.

In 2009, my house-flipping business hit the wall. My lending sources dried up and I was stuck. After some research, I found a coach/guru to teach be lease-options, subject-to, etc. (Ironically, he was a BP contributor at the time). His system was kind of generic, but it was enough to get me going and he was there when I had questions. I locked up my first deal in about a month and have done dozens since.

Could I have found all of the same info on BP? Probably. But the notion that doing so is FREE is absurd. Time is valuable. I had a family and was working a FT job. Those few hours I had to spend each week were precious and I wanted to spend them DOING not LEARNING.

Real estate investing is hard. Anyone who says differently is either lying or hasn't done a deal. Having someone to teach you, answer questions, or provide info that saves you from making mistakes is not foolish, in fact, it is a good business decision. You can certainly do it on you own, but I'm not convinced it is "cheaper."

The caveat is that you need to be in business. If you don't take action, then the time you spent on BP and the money you paid for the seminars is absolutely wasted.

@Amy Meza -- Your goal of getting passive income via turn-key rentals is a good one. There are MANY areas of the country to invest in and even more turnkey property management companies. I'd do a little research here to figure out what questions to ask when interviewing these companies and then start calling around. You will find a wide-disparity in the level of services, type of homes, etc. The PM should be able to give you a good idea of their vacancy rates, repair costs, management fees, etc. Figure out where you are comfortable.

As to the numbers, you have enough to get $500,000 worth of homes assuming you leverage the money and put 20% down. If this is 5-6 houses, and you get $100 per month per door, it will take ~3 years to have enough for the next house without any additional capital. This will put you short of you goal. At $200 per month per door, you can add 1 property each 10-15 months and be at $30K in 7 years.

A full-fledged business plan may not be necessary, but writing and honestly assessing your goals is something you should certainly do. I also prefer to break down goals into achievable tasks. For instance, if your goal is to make $100k flipping houses this year, figure out 1) how many houses that is, 2) how much money you are going to need to fund that many rehabs, 3) how many offers you need to make to get that number of properties under contract, 4) how much time all of this is going to take, 5)....

If you go far enough, 1 of 2 things will happen. You will either have a detailed and actionable plan to achieve your goal or you will find one or more issues (lack of time, lack of money, lack of contractors, etc) that will cause you problems. In the latter case, either find a way to address the problem or modify the goal.

@Ronald Friesen -- You've mentioned several options (SFR, MF, Flipping, etc.). I strongly suggest you pick the one you think will best help you meet your goals and focus on it. If you want to buy & hold, stop reading about flipping and limit your research to learning about the costs associated with rental properties, responsibilities of landlords, and, most importantly, about your market. Use rentometer.com, Craigslist, or similar sites to determine rental rates in your area. You can then decide whether that rate minus debt service, taxes, insurance, repairs, vacancy, property maintenance, etc will leave you with your desired profit. If so, drive the neighborhood(s). Spend time getting to know where the schools, parks, restaurants, etc are. Find places people want to live and have your agent concentrate the search in that area.

Knowledge is the key to overcoming fear. If you focus, you can learn as much as you need to know in a very short time.

Good Luck!

@Matt Rodak - Welcome! To answer your question related to challenges getting started flipping homes, the biggest one is having the confidence to pull the trigger. Many people suffer from Analysis Paralysis as they aren't comfortable with the numbers. To this end, there are 4 things you need to understand..

1) You need an agent you can trust to run comps and determine the ARV (After-Repair Value). This is the price you are going to sell for.

2) You need to be able to estimate repairs or have a contractor who will do it for you.

3) Closing and carrying costs can be significant. These include, but are not necessarily limited to Origination Fees, Bank Fees, Attorney Fees, Title Insurance, Recording Fees, Hazard Insurance, Property Taxes, Transfer Taxes, Commissions, Home Warranties and Utilities. Your agent should be able to tell you what is customary in your area.

4) ARV - Rehab Costs - Close/Carry Costs - Your Profit = Your MAO (Maximum Allowable Offer). This number is what it is regardless of the list price or what anyone else thinks. Stick to it....unless of course the list price is lower :).

Good Luck!

Welcome @Esther Thomas ! Sounds like you are off to a good start. Most 'newbies' are a long way from owning their first rental property. My best recommendation is to 1) decide what your goals are, 2) figure out what form of investing best supports those goals and 3) learn as much as possible about that type of investing while actively ignoring everything else. It is very easy to get caught up jumping from topic to topic here on BP and learning a little about everything. The much better strategy is to learn a lot about 1 thing and then expand.

Good luck!