All Forum Posts by: John Hamilton

@Marquest PageAwesome work!

Glad I can help.

As others have mentioned, mortgage and insurance policies are not transferable.

When you're dealing with AS-IS, I would recommend you getting pictures with dates to record the condition and items in the house to be included in the sale. That's your protection in case they decide to take the HVAC unit on their way to the closing. There is a clause that you can add that states something to that affect.

Much success

Hi @Fred Mittel

If you do have deals, I would like to look at your list.

Looking to buy fix and flips in the St. Augustine and Jacksonville areas.

SFH, under $100K for purchase and rehab (medium to very little), no war zone neighborhoods, ARV of 65% or better.

MF is also a consideration. 4 units or less. If you have any deals and numbers, let me look at those, too.

John

@Terrence RiversCongrats on wanting to join the ranks of REI. Here are some of my thoughts and suggestions, if I was in your situation.

$100K is not a lot, but maybe enough for your plan. The price and rehab costs don't leave much room for mistakes. If you don't have reserves or anything above the $100K, I would leverage a property immediately to help cover or reinvest. Or rethink your strategy.

MF is tricky and has its own inherent potential for problems. For example, instead of 1 or 2 renters, now you're dealing with 4-8. Each with their own hardships and story. You might get great tenants. You never know. A good PM will take care of that for you.

Repairs (now and in the future) are going to be your highest costs. Understand the condition of your big ticket items (HVAC, furnace, air conditioners, sump pumps, plumbing, electrical, foundation, roof, etc). You'd better confirm the total of $5K rehab costs. Paint and wood flooring can be done for $5K. Is that all it needs? What about 1 year from now when you have to pay $12,000 for a new roof for both properties? Leveraging then when you're desperate is not as good as leveraging beforehand to do preventative maintenance/replacement, when it's cheaper and you have time to deal with it. What about damage from your tenants?

Do you have relationships with companies that service these ticket items? If not, and you don't know how to repair it, you better get started. How about GCs for those nasty, unknown structural problems? How about a handyman for painting, drywall, tile, cement, fences, little plumbing and electrical? What about lawn care/landscaping?

Are these places fully occupied? What s the net cash flow you are looking for? Are the rents leased or month-to-month? Are the rents comparable or can you increase? Is the neighborhood in war area or decent neighborhood, street or area? Lots of places you don't want to invest here in Jacksonville, if you are the faint of heart. However, if you have no problem with these areas, good on you and more power to you.

@Marquest PageCongrats on getting your first contract! You need to provide all the numbers you have now to even think of knowing if this is a good deal or not! You have no time for questions, you need answers. Let us know everything about the deal to know what your options are.

Now comes the hard work. The goal should be to have everyone walk away with a win. That "win" depends on YOU!

Know your numbers! You should have done more research and learning to know if this was a good deal or not BEORE you put that house under contract. Now that you have, it's not worth crying over spilt milk. Get those rehab estimates, get the comps, get the title report. These will help you evaluate ARV, condition and clearance of the property. These are what investors will be looking for to determine if it's a deal they want to pursue (close on) or not. If you found a "deal", you will have no problem finding a buyer.

You may have sunk the ship before it left port! Determined on all those variables I just mentioned, you may have priced yourself out of the wholesale market. Don't start panicking! This might be a good market for those rehabbers that can do the work themselves and sell confidently at FMV or higher. Depends on the location and neighborhood. Look for JV (Joint Ventures) with rehabbers. For true JV, you need to bring something to the table. You have half the equation, the contract. The second half would be the funding.

Look for funding! If you have priced yourself out of the wholesale market (anything above 70% ARV- your cut, rehab, asking price, etc), in order to preserve your reputation and close this deal, you have to get creative. Talk to HML (Hard Money Lenders) to see if you qualify for an investor loan. Talk to Transaction lenders to double close, if you find a buyer. Talk to JV partners to close the deal (they can get funding and do the rehab-you get little equity but can realize $1,000+ for your effort). Then, close with the seller and buyer at the same time and you get your cut out of the buyer.

Don't play around! I'd say continue with your getting homes under contract, but next time, have some real numbers and folks in place post contract-signing to quickly move those deals. Some learning (big time) may be what you need to solidify your RE investing approach. This is wholesale, baby!

Don't think you will do this with no money, no time, no credit, successfully. It does take time, effort, understanding of the whole RE process, knowing rehab costs, calling and talking to sellers and buyers, etc. It's not a lazy man's cup of tea. However, as your business grows, you can employ some great time-savers to leave you more time to sort through actual deals than dealing with mass-mailing replies all day.

Reality Check! Remember that you are putting someone's real property on the line with  you taking control of this property. Now perform based on what you "promised" them. 

You're going to get slammed by the wholesale haters on this site. Don't let it get to you. DO the work, learn from the best, put forth a stellar performance and close this deal (even if you walk away with nothing) and make yourself, and all of us (all investors), look good. 

@Ana G. Great job and congrats on all your deals!

I'm inspired by your posts to pursue this type of investing.

I was going to start doing fix and flips, but if I incorporate a system to handle the bulk of the work for finding wholesale leads, I can do both.

Maybe make enough money from to things to a new level of investing. Who knows?

When I'm ready to pull the trigger, I will post my progress as well. Please keep sending yours.

In my estimation, $250K is not enough to perform in the MF arena. You can add that money to an investing group, but your return can vary. The same with any control. You will be last in a line of major principals. 

If you've never done one solo, have a team and a mentor next to you to guide and help you manage it. Bigger risks. Dealing with duplexes, trips, or quads might be something to do now to build up capital and knowledge of dealing with MFs. 

You have your goal. Now go about obtaining that goal. If you don't have the means to realize that goal now, what can you do now to get to that next level. It may take you several levels to get to your specific goal. If it's totally unrealistic, then you will NEVER realize your goal. Trump didn't start by just saying he wanted a big project with high quality, with little risks, little investment. He started somewhere.

Follow the advise and counsel from the wise. Run your numbers on actual and calculate realistic numbers. For example, 50% of rent should be a reserve for repairs. The other half paying for the loan and management of the property, and your net profit. I'm just throwing stuff out there to get you to think about what is needed.

You can probably get $1.25M worth of SFH (6-10?) with higher rent potential per door. After a few years, keep your leveraging to a minimum, unless using that to make repairs or upgrades for higher rent potential. Or us it to buy more properties.

@Joe Melvin This is how I would handle it.

A preliminary screening process is what you need to quickly determine an immediate offer or MAO, based on what you currently know. Sure, that number can be negotiated based on further investigation into the property (contingencies). That's ok. If they are willing to accept those contingencies and offer in a contract, get that seller to sign that contract by that first call or meeting. Don't wait. If they aren't ready to sign, move onto the next deal.

It is a numbers game. Don't waste time on unmotivated sellers. You can tell right away with one call. Don't use email or text. Meeting is ok, but should be at the house and ready to negotiate a deal. Time is too valuable to go see a place without making an offer. Seeing a place does reduce the risks, but you still need to make an offer, based on this new information in a contract.

To start the call lead the conversation, but have them indulge information. What would they pay for their neighbors' house, or the best house on the block, for example? What repairs are needed? How old is the house and what type of repairs have been done? What is the neighborhood like? What are the schools and shopping like? How is the job market? Renters vs. Owners. Some, if not most, sellers will know some of this information, but not all. Most of it you will have to use other resources to find out. Due diligence can be performed in all cases (pre offer to post inspection). You should know this info BEFORE you speak to or meet the owner.

Of course, there are those deals that just don't work or they won't accept your number. Move on to the next deal and waste no more time.

@Jacob KnowlesMuch success in whatever you REI strategy or market. I'm not an investor in this niche, but have researched its consideration early on in my career. This is all my opinion based on that research in several states. Lots of great comments already from folks in the business.

Owning the land (with the mobile) is key to better cashflow, resell and other benefits, if you wish to rent or flip. Too many things can go wrong in a park. Sometimes, there are advantages, but less value and more rules.

Mobiles, like autos, depreciate. Not appreciate, unlike other property types. Some tax rules and requirements may apply differently.

Your profit margin is still slim in flipping, unless you have a pipeline and know how to repair mobiles quickly and inexpensive, or know someone who does. Less expense up-front (purchase and repair), even with minimal rent areas, can lead to a decent cashflow. Not great, but decent. For parks, meet with all owners/park managers in your target area. The more parks you work in, the more product you can deal with. You might find some hot deals and some you barely make it.

Markets in retirement states (Fl, AZ, CA) can be a great place for longer term strategy. Availability of assets are easy to find and very little money to own, compared to other properties. Though, resell market is tough, for those same reasons.

@Heather Angelo Much success to you in both REI and career (yes, same career path).