All Forum Posts by: Seth Hochberg

Hi Brandon, welcome to Bigger Pockets! General contractors are considered the hardest member of your team to identify (good ones at least) and you will very unlikely have any success finding one via an internet forum. Your agent, and maybe even your property manager, should be able to help you find one. Also, building relationships with other investors, offering them value, can be another route to get a reference to a good general contractor. I have the mentality that I may end up going through a few contractors before I find one that is solid. Best of luck!

As Russell said, it makes more sense to find something that works in DC, or even the surrounding areas, like Montgomery County, Northern VA, etc.

Research shows there is a very strong relationship between how unhappy you are and how long your commute is (with a sweet spot of 20 minutes). Sure you can listen to podcasts and make productive use of that time, but I would advise against it with as much conviction an internet stranger could convey.

Wouldn't you rather lose 7k (or even more) on a deal and get the experience than lose 7k to a crash course and learn what you've already learned? Either the course will reinforce what you know - in which case you just needed a push (which you can get other ways, for free). Or the course will be drastically different than what you already know - wouldn't that just cause more analysis paralysis and hesitation? Seems like a lose-lose.

@Jake Houseknecht 

I don't know if the guys above were saying to avoid Baltimore City - just that it comes with risk. More risk, if you've never stepped foot in Baltimore and don't know the neighborhoods. 
Baltimore County has less crime, substantially lower taxes, and I believe that water billing is not as ridiculous. But the price to rent ratio isn't as favorable, and I heard that you can't rent by room in the county (but you should fact check me on that last one).

Welcome to BiggerPockets, Gulfraz. I am a new investor to the area as well, so take what I say with a grain of salt.

That is a unique restriction on financing, but not an insurmountable one! Brandon Turner's "The Book on Investing with No (or Low) Money Down" might interest you here. It sounds like wholesaling can definitely be a great way to break into real estate as you save up capital. As for funding a flip, you have a few options. You can save enough to fully fund a flip yourself (of course be sure to leave a cushion if you go over budget). In a pinch, are you allowed to use 0% credit cards (that don't charge interest for a year or so)? Another option is to look into partnerships, as you said, to be the boots on the ground guy. Another thought is to look for private lending not from an institution like a credit union but with other humans. If you can build relationships with people who can lend money, you can form whatever kind of deal you like to get around the interest restriction. Joining a REIA (Like Baltimore REIA) would be a good way to build those relationships.

Unfortunately, the latter ideas require something of a paradox: people won't necessarily want to partner/lend with you without much experience, but you need people to partner with in order to get that experience! My vote is to go the wholesaling route, continue to build connections, and continue to save capital. Best of luck!

Agreed with what many others said - all major cities have good and bad neighborhoods. Some more than others. But you simply have to invest in the good or "better" neighborhoods. I see Baltimore, the city I'm investing in, in the top 5, which doesn't surprise me. But I would argue it's a fantastic place to invest in! But if you have this notion that Baltimore (for example) is a crime-ridden city, then no one's forcing you to invest there. But to repeat what others said - I wouldn't make much of this list.

You would think. But I believe there is somewhere in Baltimore law that only the owner of a property can be charged for water. When I lived in Baltimore, the owner would always send me a copy of the water bill that was charged in their name and we'd reimburse them. Good tenants will do that, bad tenants can easily screw you over. Another reason to screen as carefully as possible for quality tenants.

No pictures? Personally, I need pictures to get a ballpark estimate of repairs. If you don't have pictures, you don't know if you need to do 10k of repair, or 100k of repair. If you're convinced it has potential, then you need to go check it out, schedule a tour and take pictures. Tarl Yarber talks all the time about the importance of taking pictures - start with the outside and work your way in. Air on the side of too many pictures. 

Now you should estimate how much you think the repairs will be. I don't profess to be good at this but I am practicing, while using J Scott's "How to Estimate Rehab Costs" as my bible. Then you should have some calculator - make your own excel spreadsheet or use the BiggerPockets calculators. After taking into account the estimated repairs, then you can assess if it's a good deal or not. Eventually, (perhaps after making an offer) you'll want to make sure a contractor (or several) put in a bid for close to (or less than) what you were estimating. 

As for your second question, it looks like you want to have more money without borrowing it. Read Brandon Turner's "The Book on Investing in Real Estate with No (and Low) Money Down". That seems what you are looking for. Partnership is one way to do that, but if you are looking to do the partnership route just to avoid borrowing money, you are trading off one type of risk (private/hard lending interest) for another type of risk (working with a partner). Partnerships are not an easy, streamlined process - they require a different type of work, and I believe you should only pursue it if your partner can provide something you can not (and vice versa).

@Kennesha VanBurch In case you still wanted to know: you can either click on people's profile to message them directly, or you can use the "@" symbol to tag someone (like I've done with you). Sometimes you have to wait a few seconds for the suggestions to populate.

I am currently in the process of forming a partnership almost identical to what you are describing (except I would be the more passive investor in the partnership). What's so great about a successful BRRRR is that if everyone gets their initial money back (what you should be aiming for), then the profits are almost like a bonus. The way I see it, you need to figure out:
1) How to split cash flow
2) How to split equity in the house
3) How to split unexpected (and expected) costs

But I wouldn't get so hung up on the exact percentages. If it's a successful BRRRR then everyone's going to be likely happy. As the sweat equity partner - how are you going to protect your partner's investment? Perhaps promise that your partner gets all of the cash flow until his/her initial investment is returned before you get any cash flow.

You need to think of all the not-so-great scenarios and all the worst case scenarios and all the nightmare scenarios, from your partner's point of view. What happens if the project goes 2k over budget? What if it goes 30k over budget? What happens if you go MIA? What happens if you don't agree on choosing a tenant? What happens if you disagree on anything? Perhaps, consider one person (likely your partner) to always get the final say if you disagree on something. What happens if your partner thinks you're doing a terrible job? What happens if one person wants to sell? What happens if one person wants equity in the house for a HELOC?

This is the process I'm going through myself. Answer all these questions with your partner. It sucks to go 30k over budget, but if you agreed on something beforehand, I'd like to think that's much better than winging it and causing bitterness. Figure out these terms and then of course talk to an attorney to formalize the LLC, joint venture, or whatever legal entity you end up choosing. I'd probably also recommend talking to an experienced CPA (someone who know real estate) to learn about the tax consequences. How are you going to refinance the house is another good question to throw in there.

Hope this helps! Keep in mind, I am not speaking with past experience, but someone currently figuring it out as well. Feel free to DM me to stay in touch with your progress and journey. Cheers!