All Forum Posts by: Theo Hicks

@Joe Fairless I am actually signed up to attend the meeting this Thursday. Have been looking forward to it al month! Will see you there!

Hello BiggerPockets Community,

I have been using BiggerPockets for a few months now, reading blog posts, posting in the forums a few times a week, and listening to Podcasts on a daily basis, but haven't officially introduced myself in the "New Member Introductions," so hear goes nothing!

My name is Theo Hicks and currently own one property (a duplex purchased back in February) and am in the contract phase of a second duplex, with a 4 family in the pipeline.

Without getting into the specifics, my goal is to be the interviewee on the 250th BiggerPockets podcast! :) 

Like many others, I think it depends on what type of job/work culture you have. For me, I had a typical corporate job when I first started out and now I have moved to a more flexible sales role where I am in the car driving to customers for the majority of my day.

At my corporate job, I found that as long as I meet deadlines and got my work finished, no one seems to mind that I was reading real estate articles, making phone calls, etc. My manager was in the middle of doing renovations on his home, so since I was a complete novice at the time (and probably still am), I asked him LOTS of questions regarding rehabs and the house buy process in general. Being my first property, I fibbed and said it was a personal residence :) 

As for my new job, it is a smaller sales company who expect a lot out of there employee's. During my orientation, the owner was going over 401k options and I let it slip that I would be passing in order to invest in real estate. His response was "oh I don't know about that Theo. Investing in real estate will be hard work. Fixing toilets and dealing with tenants will take time away from you working this job." I politely explained that other salesmen spend their free time golfing, fishing, spending time with kids/family, while I spend mine investing in real estate. It seems like the explanation worked and I will never bring it up again to the owner or anyone else I work with.

I would recommend always keeping your personal life out of work as much as possible, the less they know, the better. Because if your work starts to suffer, even a little bit, they can blame your "personal life" as being the reason. There will come a time when I can walk away to invest full-time, but in the mean time, I need the salary to fund my deals. No amount of deals (also opportunities and knowledge) I come across because of discussing with co-workers will be worth it if I get fired and cannot fund the deals in the first place!

Hi Tom,

I searched for good online real estate courses for Ohio but was unable to find any. I ended up enrolling at the certification program at a local community college! 15 weeks of courses Monday-Wednesday nights, from 6-8.

I figured it would be better to sign up for an in-person class to minimize my chance of procrastinating or just looking up answers for tests :) 

Hello Alex,

I bought my first property using a FHA loan on a $170k duplex (~$5000 down) plus an additional $20,000 for renovations. I had a college fund that I didn't use, so my parents "gifted" me the money! Looking back, I wish I would have gotten a 203K loan because I would have saved almost 20k in cash upfront, but I didn't know anything at all about real estate when I decided to buy a property.

Search "House Hacking" on BP. Great way to get into real estate with limited funds. Good luck

As a fellow newbie who just did his first deal in February, my biggest piece of advice is always remember "why" you are getting into real estate investing. I had a lot of things go wrong during my first deal, but instead of letting those failures defeat me, I persevered by focusing on my "why." My "why" is always evolving, but it looks like you've already got yours! (Spending more time with your son). So whenever you are feeling down or you make a mistake, think about "why" you are doing this. What's worse, dealing with a clogged toilet, showing a unit to a prospective tenant, firing a shady contractor or being stuck in a 9-5 not being able to spend time with your family? If you can leverage the power of your why, your purpose and focus that energy into real estate investing, you will achieve amazing success!

Good Luck

Update:

As of July 1st, both tenants have moved in relatively smooth. Unit 1, which is a 1 bed/1 bath w/ an office rented out for $1200 per month starting June 1. Unit 2, which is a 2 bed/1 bath rented out for $1400, with a two-year lease. Lessons learned so far:

1) Utilities:

Initially, utilities were not included, and I was going to bill each unit at the end of the month. When making this aware to potential tenants during showings, the reactions were mostly negative. At this point, I was marketing unit 1 for $1100 and unit 2 for $1450. I decided to include utilties and mark-up the prices to $1200 and $1600 to gauge the reactions. I got a bite during the first showing for unit 1, renting it out for $1200 a month. Unit 2 took a little bit longer to rent out.

2) Rent Prices

I was having a lot of difficulty renting out my second unit for $1600. I would say that the market rent for 2 bedrooms in my area are around $1000, but I figured "it only takes one," so I started out insanely high. After a few showings, I realized $1600 wasn't going to happen, so I dropped it to $1450. I instantly received 10+ emails asking to see the property. Two tenants told me that their max budget was $1300 a month (which I would have taken) but I countered by stating I could do $1400 a month for a two year lease and they agreed.

3) Tenant Requests

With the utilities not being split, the only thermostat was on the 1st floor (unit 1). I made this clear to the potential tenants during showings of unit 2. Then the tenants finally moved in, they asked where their thermostat was. When I responded, they asked for an AC unit to be placed in there unit so they could control the temperatures. $300 dollars later, and about 15 minutes of my time, and my tenants had a working AC unit. Other requests were replacing the ceiling fans (I didn't even think to test them, so they were either very loose or very noisey), repairing a door that was "hard to lock," and repairing a poorly wired electrical circuit. All of these requests were fulfilled within a day or two after initial contact.

Lessons Learned: 

-I learned that it makes sense to adapt based off of responses you get during showings instead of being very strict in you requirements. If I would have stayed the course, I would still be looking for tenants

-Be sure to test all components of the house, including door locks, ceiling fans, and everything inbetween

-Procrastination on tenant requests or ignoring the maintenance due to a few hundred bucks gets you the short term satisfaction of not having to get off the couch, but could potentially result in the tenants being a little bit more picky or deciding not to renew with you. I have discovered the importance of having a solid, positive tenant-landlord relationships.

I am sure all of these lessons are fairly obvious to experienced investors, but as a complete novice, they were little things that I didn't even think of!

Currently, my partner and I are in the contract phase of another duplex, and will be acquiring a 4plex from the same seller once we close on this duplex! Exciting times!

I currently have a real estate portfolio of 1 two bed/1 bed duplex, and as of July 1st, I have both units occupied! From purchase date (end of Feb 2015) to now, I have enough funny, odd, embarrassing stories to rights a book trilogy to rival Twilight. With being a novice in the real estate game and already having so many stories, I can assume that the intermediate to advanced investors can trump any embarrassing mishap of mine. So I decided to post one of my favorites for all the people out there looking to get into the game, but are afraid to make mistakes. The only mistake you can make is convincing yourself that the fear of failing is great enough to not take any actions whatsoever.

Niagra Falls: Basement Edition

In the midst of a dreary, cold Cincinnati winter, I had a few work colleagues over for our weekly Pwn Sesh (video games played Mario Party style). The topic of investing came up and two of the Pwn members mentioned that they both had acquired investment properties that cash-flowed a few hundred bucks a month. What really caught my interest was the fact that they did so little as a landlord that they forgot they even owned properties! I was convinced, so I reached out to a realtor, took a look at a newly listed duplex, made an offer, and went under contract that same week. 30 days later, I was a home owner. 

At that point, I did what any 23 year old would do, I went to my new property, took a few selfies, and posted to social media about the beginning of my empire. I celebrated throughout the weekend, while my property sat idle through negative degree temperatures. That Monday, in a hungover state, I decided to take the day off to recover, because the property wasn't going anywhere, right? After a hearty breakfast and a Monster, I thought to myself, would Donald Trump take a day off or would he get straight to work? Around noon, I figured I would go to the property to put together a renovation plan.

With a grin on my face, I unlock the door, and upon entering, I hear a very subtle buzzing noise coming from the direction of the basement. As I walk begin walking down the stairs, the buzzing noise turns into a noise I can only compare to that of a Niagara Falls. As I reach the last step, I can now see the source of this noise, which indeed, turned out to be a miniature Falls. The drywall ceiling to the basement bathroom is floating in a few inches of water, and the ceiling is replaced by a monsoon level downpour. 

I calmly (or probably frantically) trace the waterline, turn the water off, and assess the damage. 

Long story short, I had forgotten to turn the utilities on for a few days, so the property temperature dropped significantly due to the weather, the waterlines froze, and when I finally had the utilities turned on, the damage was already done.

Mother Nature: 1, Theo: 0

After a few consults from Serve Pro and local contractors, I ended up spending a few hundred dollars to fix the broken lines and replace the drywall.

As I stated earlier, this is one of many mistakes I have made, but I faced all these mistakes head on, learned my lesson, and am now in the process of acquiring my second (and possibly third) investment property!

Any one else care to share a story that stands out from the rest, specifically regarding your first acquisition?

@Joey Palmer

@Jim Viens @Micah Copeland

Appreciate the quick responses. I agree about the chances of getting an overwhelming response is low, but I know reputation is very important in this business, so it would be embarrassing if I am not able to keep to my word! I am a firm believer in the the saying "Positive attitude = Positive Results."

1000 letters a week? That is intense! For the experience, I decided to obtain all the owner information manually. Embarrassingly, it took me a whole weekend to pull data for the 650 properties manually before realizing I could export 75% of what I needed with a click of the mouse. Will make for a funny story some day!

We have recently compiled a list of 650+ direct mailing candidates for 2 or more unit properties in our target area. We are in the process of dropping off letters to the owner occupied properties and writing up the letters to mail out for the others.

Before we sent out a single letter, my partner was discussing his real estate passion with a work colleague (who we happened to be sending a letter out to) and he said he was in the processes of looking to unload his real estate portfolio (didn't have the will or the time to attend to the properties himself). So technically, we are currently 1/1!

My question is, if we happen to get an overwhelming response from motivated sellers:

1) How do we go about purchasing as many properties as possible?

2) How do we prioritize which properties to pursue aggressively?

My thoughts:

1) Attempt to purchase the turnkey properties using seller financing or lease-to-owner, or possibly a low money down Hard Loan. If we use the hard money loan, use the cashflow from the property, other properties we own, and our W2 earnings to refi into a conventional loan after the Hard loan expires

2) Compile a list of all the leads into an excel document, and determine 1) amount of cash down required 2) ROI and then start at the top of the list and work out ways down

We are currently focusing on consistent cashflow, so we would like to avoid wholesaling at all costs.

Any one out there that has used direct mailing and has received an overwhelming response care to shed light on how they went about acquiring the properties???