All Forum Posts by: Peter Mckernan

Never base any rehab or flip off numbers from someone else or an example of something someone gave you. You need to have boots on the ground numbers to run on that project, or you can have similar projects you have been doing for awhile in the area and then match them but this takes some time for experience. 

For typical wholesalers that are smaller outfits they are wholesaling to 2-3 investors and if they have some overspill they will call some other people. If there is a bigger outfit then they may have a bigger buyers list and then premium buyers list of buyers that are the top 3-5 buyers and maybe a couple more good buyers to send really good deals. 

I think for you, you should really be calling the wholesalers that you know that are good wholesalers in your community once a week. Most the time I hear from someone that wants to get off market deals is once then they never call again to check. You need to be calling, emailing and texting them to get a deal along with staying top of mind. 

I would take a look at buildium, it is a great resource for smaller outfits looking to grow! 

The brother-in-law for 18 years could be a blessing and a curse depending on how it shakes out. I would really stop all what you are doing until you get something in writing. This could turn south pretty quick.I would call him and see what he is good with on all the terms, net proceeds, equity and all. You can do 50/50, or you can do 60/40, or anything in between. But both parties since you are knee deep in it need to work to figure out what they think are fair terms then get it in writing. 

I have done 80/20 and I got paid as an agent on the front and back end. I have done 50/50 brought the deal and managed it, and the other partner just brought all the capital. So really depends on what you want to put on paper for you and the partner. 

Yes correct sorry misspoke, the missed rent was recovered by the insurance company. It was a SFR with ADU on it and the people living in the ADU were the same family as the SFR so they just moved in there due to the room and gave them the stay for free. Thanks for checking me on that Owen!

I would get rid of the tenant, cut him the check and deal with the insurance issue with him out of there. The insurance company will pay to cover hotel stays, lost rent if rental, and all that for typically 6-8 months. I had a leak in one of my rentals (tenant was easier to work with btw), and insurance cut is a check for the missed rent for 6 months till the tenant could get back into the back unit. 

In the future as I was reading this I was thinking the renters insurance but you brought it up. I always have it in my lease and make sure they get it. If for some reason it lapses and you are not aware of it then something like this happens you can still hold them to the binding contract so that you do not have to cover the issues/expense of items like that as you mentioned above. 

You should be raising rents each year on the tenants and if you get a little turn over that is okay. You need to keep up with inflation, raising taxes, higher labor and material costs on repairs, higher insurance, and also you need to be profitable. The big owners that have 5,000, 10,000 and 20,000 units are raising rents, model what they are doing in their business to what you should be doing. 

I would also say knowing the market is critical and knowing the comps for what you want to do with the sale too. As your number two on the list hit the nail on the head, do not overspend for the neighborhood either. You can spend a lot of money on each and every thing, but knowing what needs to be spent and going over that dollar amount is very risky. 

All of those suggestions what I have seen are great examples of growing the business. You are in a large market and can really grow and expand, outside of what you are doing now I would really put money into marketing. APM is a good source for leads, mailers (direct mail), google ads, and hiring someone to cold call (lower turn on this one). I would really look to online lead sources and mailing, those are really going to move the needle. 

I agree with Matthew on numbers looking a little tight. For the first time you doing this type of big maneuver I would suggest something with bigger spreads so that if something goes wrong you can get out and still make some money. There was a real estate agent on the east coast that was a solid agent, and started getting into doing some condo conversions a little bit and then raised a fund. The couple he did went south quickly and he ended up losing all the money and foreclosing on the place (investors lost all their money too). Not saying this is going to happen to you, but what I would recommend, a deal with bigger margins and bringing in someone that has done a few in this market and over the years (good and bad markets) and has been successful.