All Forum Posts by: Matthew Becker

 I agree with Dmitriy. Are you refinancing or flipping land, or do you have cash coming in that you know about?  I see no reason not to if you know the money is coming in.  But I would hate to have you take a hit for dirt.  

Hi Hassan 

I have been doing this for 35 years. I am a general contractor but no longer work on other people's projects. I have also never worked in construction. I buy, add value, and build from the ground up.

You are retired, and based on your picture, you are not old. You already understand investing, and clearly, you have been pretty successful in life.  So you are probably pretty smart.  I would get in there and learn as much as I can if you are physically capable and want to do more stuff like this in the future.  It is fun if you have the time on your hands.  If you move walls and remodel kitchens and baths, hire subs and do it yourself.   If you are popping a top, I would not do it on my first one.  You need a designer who understands maximizing income on properties, or you need to understand it and be able to sketch it out.  I have a designer who only does rental properties.  It is entirely different than a residential house.  Turning a dining room into a bedroom can be as cheap as $2K, add $600 in rent, and create a value of $75K. 

   On paper, a GC costs 10% to 20%, but it could be a lot more.  A GC makes money based on what you spend.  It does not benefit them in any way to save costs; it costs them money and time.  Most successful GCs I know repeatedly hire the same subs.  They have great relationships with them, but they don't beat them up at all on prices.  They already know they are getting the job, so they don't sharpen their pencil much.  They use more expensive subs because they don't have to manage the project.  So it could cost you 50% more.  

None of this is difficult.  Building is slowing down, and finding qualified people in TX should not be too hard.  Everyone who does this preaches gets a team with a great contractor, agent and PM.  I have done the opposite.  Just grind it out, and you will learn.  If you get enough properties and plan on doing this, build a team of construction workers.  You only need two guys to do a lot of stuff.  They will have friends who can come in and help as side jobs.  Especially in the Hispanic community, they will call their cousin if you need a drywaller.  Pay everyone more than what they make now at their construction job, be kind, and give them bonuses based on completion, and they will never leave.   I partner with my employees, letting them live in and own part of the investments.  We all grow wealth together, and you can change people's lives generationally if you get them into home ownership.  

Sorry this is so long.  I hope I encouraged you.  

There is a lot of different software that you can use to get this information without driving around.  You can just draw lines on a map, and it can spit out every property with whatever parameters you put in.  I have a buddy who does this for a living on raw land, and he pays for the software and gives us all the data for free.  So you can choose from more than one unit.  It can get you the owner's phone number and address.  Then, you send them a letter and do a follow-up call.  You can also do direct text.  He uses Mojo and can call several people at once, and if they pick up, he talks to them, or it leaves an automatic VM.  It is quite effective.  He is only 22 and does it once a week.  Generally, he lands a lead worth going after every month.  Direct marketing really works. 

From Land Guy " Landvision to make lists, but it's expensive (3800 per year, but you get unlimited data). There are other cheaper alternatives - for example, with datatree you can get down to 10 cents a record."

I have a question.  Why under $300K and where are you looking to buy. 

Matt

 Great rate.  You will have to wait a bit to get some equity out.  You could see if a local credit union or community bank will give you $20K.  

Then rent it. Buy another house and do the same thing. Get the LOC if they will give you one before you move. It takes time, but equity grows, and you pay stuff down. You will be wealthy if you can keep moving and renting. Slow and steady.

We buy a lot of single-family properties in high-density zones with either a large lot or multiple lots.  We remodel the single family and then build onto it or a small complex.  Right now, I am doing a lot of Coop Living/Mico Hotels.  Sam, my 22-year-old apprentice, is an amazing young man.  He hunts deals down, and he is good at it.  I am lucky to have a fully integrated construction company where we do everything in-house and don't need subs.  Sam spent the first 6 months doing demos covered in old dust, working 60 plus hours a week to learn, and cold-called in his free time.  He lands a deal every few months.  I put the money down, and he is learning to run the projects.   If people want to learn, they have to get dirty.   

You are doing great, man.  

Can you cash flow your property now if you move out? 

I would do a direct mailer in my area and try to pick up another owner occupied.  

Hard money is very dangerous.  You don't need to do that.  You make great money.  You will be able to repeat what you have already done. 

You are in Texas, and it will continue to grow, so you are in a great spot. 

Listen to all the Bigger Pockets material; it contains so much excellent information. I wish I had had these resources when I started.  

Keep it small, and keep it all.  Go slow.  

I am 53.  I have been mentoring people who work for me for decades.  You should not pay for a mentoring program.  Go work for someone good at what they do.  They should teach you that it is to your mutual benefit.   We need younger people to take the torch.  If you are worth a crap someone will pay you to be mentored by them.  I think most mentoring programs are useless.  If you want to be a plumber, go work for a plumber.  It's the same with investing.   You will make more money bring 20 deals to someone who knows what they are doing and can fund the deal then you will if you do one deal that you loose your *** on.   I had a 20-year-old real estate agent come to me 2 years ago.  He asked if he could work for me for free.  I paid him.  He is 22 now.  Own 1/2 of 2M in cash flow rentals and oversee two new builds and two rehabs.  He will own 1/2 of 4M by the end of 2025, and by the time he is 28, he will own 1/2 of 10M.   If he does nothing else by the time he is 50, he will have 10M in paid off real estate, and that is if things don't go well.   I hope to hand the kid my company in 10 years.  Even with inflation, earning 80K monthly should be okay for retirement.  Anyone can do this stuff.  Just work hard, be patient and have a good accountant.  

I just did a Zoom call with an accountant, a lawyer, and someone who helps set up funds.  I currently have a small fund that is completed.  I was talking to them about launching another larger fund.  Because of the dollar's strength, I suggest we target some foreign investors.   This was something I thought of because of Eric's post.  My accountant, who is a real estate tax adviser, told me not to do that.  Instead, he said to borrow the money from a person from Canada and pay them a dividend on the borrowed money.  He said there are no taxes in the US on the interest they receive as foreign agent.  It eliminates extra paperwork for foreign investors and is better for them.  They can't take advantage of all our tax benefits.  I am just about to start researching this.   I will post something on Bigger Pockets with more detail once I learn a little bit.  But I wanted to put it down in this thread as well.   Maybe someone knows all about this.  But it sounds like a good opportunity for someone like Eric and many other Canadians.  But perhaps this is not accurate.  No idea yet.  

There is always a solution but I have some questions. 

You own 50/50 with your mom?

What do you owe?  What is it worth?

Where did you get the loan from?  Community Bank or Big Bank? 

How big is the guest house?  How much rent will it collect?

I might have more questions but if you can answer this maybe I can help.

 It has nothing to do with what people are willing to pay.  Generally PMC's charge between 7% and 10%.   An owner being cheap does not have anything to do with the fees you charge.  I ran a giant PMC in Boulder CO when I was young.  We charged 10% plus 25% leasing fee which was above market.  Owners paid it because I treated the property like it was my own.   Now I have one just for my own properties.  My PM makes $90K a year plus bonuses.  I just built him a custom home for his family and financed it for him so he could own his own home.   But if I tried to scale the issue would be retaining the person under him.  As you probably know it takes a year for someone to be usefull and more for them to be good at what they do.  It is a hard job I did it for 15 years until I made enough money to just invest.  I have always invested in places that are expensive to live.  In Detroit they give houses away for $1 because it is a crap hole.  Where I live they cost $500K for a starter home which is not expensive but it is a lot for a person who make $50K.   In order for people to own a house and have a family they need to make six figures.  So retention is difficult.  The fees you collect just can't make enough money to pay several people over $100K .   A self managed PMC can do it because they don't have all the owners to deal with so it is more efficient and you can pay people more.   That is my take on things.  I have nothing good to say about Detroit either but who does except agents or PM telling people it is a good place to invest.  There is no reason to hire a PM for 2 properties unless you are a high level earner and it is a waste of your time.  New people should learn to fix stuff, do leasing themselves and grind it out so they understand the business.