All Forum Posts by: Jed Haslam-Walker

@Moritz Bode Hey Moritz, really glad it was helpful.

In terms of the difference between fix and flips and buy and holds - yes there are differences. The main principle for you as an investor with a fix and flip is to maximise your margin - this means you need to execute the whole process as swiftly and efficiently as possible. Your market is buyers not renters - I know they can end up being the same market but what they are looking for is very different. Buyers are far more particular and transaction shy - as a seller and this goes for any seller whether you're a flipper or whether you are selling your own home - if you want to sell your property as quickly as possible you need to pre-empt the buyer objections. Buyers can fall in love with your home but not end up buying it due to their fear of the transaction. A good Realtor will work with you on pre-empting those and will have the buyer ready to offer on your home the first time they view it, or at best the second if there's another party involved. In brief here's the guidelines I would say are paramount:

Class A Properties: these are very fixture and marketing specific and require an advanced skillset and market knowledge so if you are buying a Class A fixer upper it's a different discussion entirely - I am assuming you are not working with that property type.

Class Bs: In fixing a Class C to a B or renovating a Class B you want to work with the aspirations of the buyer - they want the Class B to look as much like a Class A as possible so my earlier point of choosing one Class A feature applies - infinity pool, paved lanai, feature wall, upmarket appliances etc. If you are tight for rehab budget choose one and make it a feature - I would always guide you towards the kitchen and the bathroom to make your feature investment stand out -you want granite in these kitchens and upmarket ovens, wine coolers etc. Update your light fittings, LEDs, hardwood in the main areas and you can use LVT in the bathrooms, utility, hallways etc. but they tend to like carpet in the bedrooms - either good quality carpet or hardwood in the bedrooms if they are upper level bedrooms definitely carpet - that transition to the soft upper is a huge selling point and sets the property apart. It's a European design signature. Definitely neutral paint with co-ordinating mouldings - white or off white, crown moulding really changes a property so go for crown moulding in the great room if you can unless it would clash with the style of the property - for example if you are going for a modern, minimalist aesthetic you don't want moulding to contrast you want the neutral tones to be uniform across the whole space.

Class Cs: the same as above applies but tone down the price tag: choose neutrals, don't waste money on up market appliances just instal new clean lookalikes - buyers in this market want the property turnkey so they don't have to renovate as long as the kitchens and bathrooms are modern and attractive they will be satisfied but you do want to choose your aspirational feature - as many as you can afford within your budget .

If you fix everything that's broken, you paint and replace outdated bathrooms and kitchens and your exterior is attractive and clean you have won half the battle. That makes it very hard for a buyer to find fault particularly if your decor is neutral. Don't leave outdated light fixtures in there - that can be a deal breaker believe me - you want the buyers transition from viewing to offering as smooth as possible. The biggest thing that sellers trip up on is removing objections - if you do all the above and then your buyer stops short of offering because they are nervous of the survey or they are short of capital they will not offer. The BEST approach by far is have the home pre-inspected and with a warranty and have your Realtor have BOTH of those ready and available on your kitchen counter at round -up at the viewing. This is by far THE best tip I can give you. If your Realtor is any good they will have fielded all objections to financing, size, location, proximity, other inventory and they will be ready when they view to pick yours. There are some truly stellar warranty programs that are not expensive and well worth the investment.

The only other thing that you REALLY need to get right when you are flipping is positioning your property price point properly in the market. This is definitely a skill and a lot of Realtors don't get this right but when you do you get an offer on the first viewing and you're out the door within 30.

Hope that helps.

@Moritz Bode Moritz, I would agree with several of the points made here - 

@Account Closed is correct in making the point that each rehab will be market dependent - for example you don't put hardwood floors throughout a $150K rental but you definitely do in a $750K. This will be about tastes and preferences in your market. The easiest way to find out is call your local property rental manager and ask them - in your price range what is popular right now for fixtures and flooring.

@Marie D. is absolutely right about LVT it's very popular and a dream for rentals.

@Kenneth Garrett is right too overall rehabbing bathrooms and kitchens will raise your usage value higher than almost anything else apart from extra square footage or if you have limited space and too few bathrooms putting an extra bath in if you don't have enough room for an extra bedroom is a good choice as long as it doesn't contribute to any functional obsolescence ( that is as long as putting a bathroom in won't make the rest of the rooms too small for them to be usable)

I would not agree with siding unless the exterior really needs a facelift and then I would just repair and paint unless you need to weather protect. In my experience ( and I am in your area) the more updated and current your offering is the more desirable and that will always give you an edge in any market. The key to know where to draw the line is with your upgrades is to know your market. Go and look at the houses that are currently listed in your ARV zone. Study the Realtor listings and note down the advantages of the home that the Realtor or agent is listing - you will see a pattern - Realtors know what sells in that price point and you can glean a lot of helpful information about marketing from being familiar with them.

The other thing that I would say is try to get a feel for the materials used in the higher end homes and include at least one of those if you can - feature walls, subway tile, a granite island top if you don't want to kit out the whole kitchen etc. Just choose one of these features It will raise it from the bog standard and when it's your property against another bog standard every advantage will affect how the renter chooses.

Hope that helps.

Traditionally when hyper supply phases hit occupancy peaks and then starts to decrease while rents are still rising just at a decelerating rate. Then when the occupancy hits average long term levels ie. equilibrium levels rents stop climbing and level out. During this time the Fed Reserve hikes up interest rates, aggregate demand starts to decrease and there is a downward pressure on rents - they may not stop increasing but they will increase below inflation levels which results in lower overall cash flows for financed properties. The three things, increased interest rates, lower occupancy levels and lower profit margins can very quickly cause a negative cash flow in properties even with equity. 

The traditional approaches to the final two phases are either sell at the end of the hyper supply phase if you can judge it correctly -  or if you are going to hold - make sure you refinance in the hyper supply phase and try to lock in a lower rate to see you through the recession phase ( always happens can be several years 4-6 if there isn't a war or a global disaster ) before the market picks up again and use your cash reserves to weather the storm - remembering that property values always increase in real value over the long haul unless you've bought in somewhere like Cairo, IL - the other key strategy if you are going to buy and hold is ensure you have upgraded to protect against lower occupancy levels - if the renters have a choice in a hyper supply market you want yours to be the property to get the lease so give them granite :)

The recovery phase rather than the recession phase is the best time to jump back into the market - be prepared to engage aggressively for financing as lenders will be reticent but if you are prepared to give concessions which you will have to - you'll get moving again and be in the water when the recovery starts to gain ground again and then you're booming :)

@Christie Dunivant Christie the law in Florida states that :

475.25 Discipline.—(1) The commission may deny an application for licensure, registration, or permit, or renewal thereof; may place a licensee, registrant, or permittee on probation; may suspend a license, registration, or permit for a period not exceeding 10 years; may revoke a license, registration, or permit; may impose an administrative fine not to exceed $5,000 for each count or separate offense; and may issue a reprimand, and any or all of the foregoing, if it finds that the licensee, registrant, permittee, or applicant:

(h) Has shared a commission with, or paid a fee or other compensation to, a person not properly licensed as a broker, broker associate, or sales associate under the laws of this state, for the referral of real estate business, clients, prospects, or customers, or for any one or more of the services set forth in s. 475.01(1)(a). For the purposes of this section, it is immaterial that the person to whom such payment or compensation is given made the referral or performed the service from within this state or elsewhere; however, a licensed broker of this state may pay a referral fee or share a real estate brokerage commission with a broker licensed or registered under the laws of a foreign state so long as the foreign broker does not violate any law of this state.any person engaging in Real Estate services for compensation of any type must be licensed unless they hold a specific exemption. 

This is from FS.

The exemptions to licensing mentioned  are several and they do apply to an attorney at law but only if said attorney is conducting real estate services within the scope of her/his client attorney relationship.( 475.011 I had to look this one up!)

The big issue here is that the legality of the receipt of out-of state referral fees is entirely permissable if you are licensed in Florida and your license is active with the DBPR and if the Principal is fully aware of the arrangement to pay you a fee this is the important part. There needs to be full disclosure to the customer/client/principal.

Hope this helps.

@Frank Pena Hi Frank, Welcome :)

Sounds like you're already doing what's helpful - read, learn, ask lots of questions and be patient with yourself and the process - there's a lot to learn and there are always good deals to be had if you are willing to do the footwork to find them especially in Florida. 

Tampa and the outskirts are good areas to start developing expertise in, there are growth areas all the way down to Fort Myers for your area.

I would get clear about your property type/range - if you are focusing on one area only then make sure your area is forecast for some decent growth over the next 10 years if you are aiming to hold it and rent it. Create a radius or a corridor that you become familiar with, or choose 2-3 if you find that your area does not have enough multi-familys.

Become familiar with the market rate for multi-familys in those areas and start to identify the prices in relation to features of the properties - you will soon start to see a pattern emerging. This will give you a feel for market price and then you will recognise a deal much more quickly. 

I would definitely start to build your team, reach out and make connections with your financing people, your contractors if you are not planning to do the work yourself, and especially a good Realtor who can help you understand the market in detail.

Make a plan for taking the steps one by one and it will happen quickly especially if you stay connected to Bigger Pockets. I would clarify your neighbourhoods first and write down why you are choosing those neighbourhoods - good transportation links, high pre child rearing age population, close to hospital etc. Get clear with yourself about your reasons for zero-ing in - this is good discipline when you start to get drawn out of area if you get frustrated that there are no deals around - doing your homework on the area you buy in is crucial - if you stay clear you won't get wrong-footed. Better to change your property type than your area.

Hope that helps!

@AP Horvath Isn't it great that you've had so many responses and ideas ? It's a great community and clearly there are many ways to make money in RE. Strikes me that to summarise you have several options and each strategy has the potential to make profit either short term or long term.

So your approach could be to grow your capital with a portfolio of projects - 1-4s, multi-family, small scale retail/commercial sites (3-5 year leases) and create cash-flow and ideally appreciation over time. In oder to find these you could focus your time identifying 3 key neighbourhoods that are either growing or set to grow over the next 5-10 years and then start to learn each sector of investing wisdom 1-4s, SFRs, etc. so you become an expert and then within a couple of years you'll really know what you're doing and will be able to switch strategy at that point if you need/want to. This way you would spread your risk and diversify whilst you're learning. If you or your agent do your homework you'll be ok to park your capital in some cash flow properties that won't lose value in that time and you can re-sell if you decide once you know more that you want to scale up or change direction or keep/ grow your portfolio.

1. Whilst the returns on a syndication are higher- no question - so is the risk. The risk is in several areas: the syndicate itself and the trustworthiness of the constituent parts - it's hard to feel safe parking all of your capital in a project with people you don't have a relationship with, the structure of the deal logistically and legally- whether you're active or passive like @Michael Ealy pointed out there are still risks: 
   1. Industry Knowledge: You have little knowledge of the industry and so with the best will in the world you'll have to rely on others to guide you unless you wait until you have educated yourself sufficiently to feel good stepping out into such an exposed position right at the beginning
   2. Growth Prediction: With the best market analysis in the world ( believe me I did it for a long time when I was managing a Management Consultant team predicting for M&As with large portfolios) you can still be wrong-footed - a predicted bridge funding falls at the last hurdle, the new Corporate office planned for the huge new park goes under at the year end etc. whilst Real Estate investment always depends on future predictions the quality of the predictions for a large project are crucial and the timing of the project has a large part to play in the returns you can expect- unless you know your way around what truly drives a city /neighbourhood's growth you could be blind - sided by a greedy developer with form but without due and careful diligence.
   3. Construction Error: Once ground has broken the risk increases significantly - you can get into negative equity very quickly - if there's a permit mistake, legal loophole, engineering inaccuracy, fire regs many things can cause the building to be torn down - razing a building to the ground costs a lot of money.
2. These are just some of the issues obviously there are many more and having prior experience and knowledge are very important at this scale.
3. Another point I wanted to mention too is that predicting for appreciation is not the same as predicting for an increase in price so be wary of inflated or misleading price predictions - inflation and it's commensurate effect on value can have a house or apartment complex growing in price but not in value - the value of a property is not the same as it's price -remember that the value of the land is separate from the value of the structure on top of it - structure value ALWAYS depreciates from completion whereas land value normally appreciates so if prices are rising it does not necessarily mean that your structure value is increasing.
4. Hope that helps.

Hey Jack, 

The rules vary from state to state but if your tenant is on the authorised medical provider managed database he is allowed to grow up to 6 plants in his domicile and to have up to 8oz oz cannabis for his own medical use in his possession from his own plants in your state..

Here's a link to the breakdown:

https://www.leafly.com/news/cannabis-101/home-cannabis-cultivation-laws-a-state-by-state-guide#washington

Hey AP, 

Great question. It sounds like you are casting/ curating knowledge to try to focus in on a system/ strategy that you feel comfortable with to be able to apply with a degree of confidence. At the point in your growth as an investor
I'll share with you what I have learned in case its helpful.

It seems like you don't need the cash-flow or at least it's not the determining factor in your investment goals so the first thing would be to decide that - "I am going to focus on appreciation over cash flow if it's a choice" which it may well be if you are focusing on future appreciation.

Predicting which category of real estate, retail, industrial, manufacturing, residential etc. will appreciate is difficult but not impossible and is never guaranteed. Knowledge of property cycles and of neighbourhood/city growth is essential to be able to predict it with the degree of accuracy that you would want if this was your property diversification portion of your portfolio.

Broadly speaking rejuvenation projects, that is developing property that is in severe decline to increase the Usage Value ( an industry standard term to quantify the maximum possible return on your investment that a land parcel could yield in a given market given it's zoning) is normally the most lucrative type of appreciation category. This involves predicting an upturn in a neighbourhood/city using analysis and then getting in on the ground floor - taking a risk and developing a supply vehicle for that anticipated market - a trendy apartment building in an urban renewal zone for example. A less risky option would be coming into an existing renewal zone and paying slightly more elevated rates than at the ground level but with the reassurance of more investors supporting the renewal momentum. 

If you wanted to buy an existing property rather than develop one you would need to enter the market at a phase in the neighbourhood cycle that would be likely to yield a higher enough return after your expenses and within the time frame that you anticipate selling. In order to do this you need to understand the phase that the market is at in the neighbourhood cycle ( as well as the property's stage in it's own life cycle within that neighbourhood. 

Focusing on desired appreciation and time frame first might be helpful -how much ideally do you want to appreciate and when do you want to sell you'll need this to be able to calculate your Net Present Value to make sure that you wouldn't be better off with alternative asset classes etc. - in beginning to narrow it down to an actionable plan - then - once you have an idea you could think about risk you're willing to tolerate and then how involved or not you would want to be in managing the asset/s. Then you would have a much clearer idea of the category/market that would fit your goals - residential, SFR, multi-family, commercial etc.

Hope this helps.