All Forum Posts by: Steve Milford

Biggest thing is that you need to be confident of your team and have it in place before finding the deal. In this case, it is not unheard of to do a quick flip in 3-4 weeks, and then you sell it. Depending on appraiser schedules you may get it closed in 3.5 weeks. So total turn around time from purchase to sale closed, 6.5-8 weeks. Cash is king, so find a way to leverage the most out of it. The hardest work will be finding people to have conversation with regarding potential deals.

I look at real estate investing as a lifelong journey. It is my retirement plan. And I learn what I need to so that I can be better as I work toward the passive income and 10-hour work weeks lol.

If I look in the past, I was interested in real estate as a dreamer. Yes, I made goals but I didn't have everything in place. I read lots of books, then bought my own home, then in selling my own home became disgusted with Realtors I encountered. I became one to help myself first. Then bought my next home as my own Realtor, which also is my first investment property (and I got a really good deal off of the MLS. At the time it was what I could afford.) Since, I have helped friends, family, and referrals buy or sell. I found this site through my own research.

In the now, I primarily refer to 1 lender but talk to all that I encounter. I only work with lenders that I have direct access too and that answer my calls evenings and weekends. I perform DIY rehabbing when I don't understand what is involved and based on my timeline allowed. Do I want to be a contractor? No, but I want to know if I am being ripped off. 

In 2018, I want to convert my current property into 2 with positive cash flow. That means that I need to get better at sourcing deals/marketing/more in-person conversations. Ironic to me, before 10/2017 I thought I could use my current property as a rental for BRRRR method though because of Fannie Mae rules (feedback from multiple lenders), I am prohibited. It's a mess. That led me to investigate 1031s, and in the fine print it is a mess. That led me to look at how capital gains taxes hits and everyone I talk to says push it off if I can. But the %s are the same, so why put off a problem that's going to come anyways. Initial thought was that if I sell mid-spring I might be rewarded. Now we have the Trump messy tax revision where the 2 years out of 5 residence rule could change to 5 out of 8, which seems to guarantee that I will get hit with huge capital gains tax anyways, so now why wait to sell? But then back to, my house is not ready to sell, lol.

That's a long answer too this question lol. The short answer is look at your long-term goals and learn what you need to for peace of mind and so you can go to the next step. As you learn, you will also become less fearful of hiring a pro or in situations where it makes more sense to pay than to do it yourself. 

On this site, I run into so many people that want to side-step Realtors. It cracks me up because I get property updates every day of activity in my market. I tweak my own search any time I want, not when my Realtor gets to it. I look at it all, yes in the weeds there are some really good deals, but if I was doing it on my own without a Realtor then I would miss them. I visit properties Friday night, or any night for that matter, sometimes as late as 11pm. I look at tax rolls easily. And by watching the pro rehabbers I have learned how they are rehabbing homes for profit (in my market). I have learned how to talk to title cos to get in-depth info for pennies on the dollar. Being a Realtor is also a business for me and helps me on that end with expenses.   I have also learned the land of agency as well. All Realtors are not equal. So being a Realtor is a total win for me. I am not a Realtor to make money, anyone can do that. I am a Realtor to realize profit.

Regarding other pros: In 2016, I hired my first contractor for a bathroom overhaul. In 2017, I hired my first tax pro for consulting only, I pay for print marketing services, and am looking at outsourcing much of my initial lead generation activities.

I have learned a TON from being a Realtor that I wouldn't have learned otherwise because my personal network is not that huge, that's the reality of it. Rather than ask questions and get short answers, the fact that I have a license encourages people to talk more and this helps me too.

I guess, only you can determine what helps you the most.

I haven't look at the duplex or area, but what are the comps of like properties? That can tell you lot. In my market, a comp more than 1/2 mile away and more than 4 months old makes the comp hard to consider.

Of you have to cash out in 9 months then buy a below market property, rehab a little and then sell it in August. Watch what rehabbers are doing in your market to see and evaluate to find one applicable.

Getting my license has been 100% worth it. I have been involved in more areas than otherwise because that is what clients want. Having easy access to homes also helped me buy my first investment property too. I always advocate that people get their license and work it for a couple of years. If you want to give it up later, at least your eyes would be open. 

@Gerald, my recommendation is to watch the market every day. You will see what rehabbers are doing and what they are fixing and how.

Where to start? Easiest to start where you live. Then you get to look at your mistakes everyday. You will learn really fast.

In my journey, I like to know why the numbers are what they are, and remember that the tips and tricks are not hard and fast. They are guidelines. In my market, the 2% rule rarely applies. You need to run different scenarios to see what you are comfortable with.

So for landlording, what I did was went and found other local landlords and asked them.

Regarding rehab, I am also a slow DIYer cause I have time, want to see what is involved and I buy using banks. I try my hand in repairs to evaluate if it is worth my time and money doing it myself, what it really costs, and what is the headache. If it is too much? I hire it out i.e. On my current project this is the first time I have done a major exterior replacement, it is easy but the prep work takes the most time (just like in painting). In the future, if I didn't have the time, I would probably just hire a couple of laborers to tear it off. Water heater, easy. Minor electrical, easy. I have found that it is the tini-tiny details that end up costing and are often not taken into consideration initially. Tile work is not just tile work, it is backer, leveling, different grout for different uses, tile saw and tools, sealer, and time to dry at east stage. For the most part I have found that the cost of labor is about double (or more) of materials.

Now when I look at a home, I look at cabinets, exterior, laminate, tile work, and more and then estimate what it will cost to repair and then I plan it on a Gantt chart and estimate costs with a 10% overage + labor. I have a couple of finish carpenters/handymen that I can call to finish or fix if needed as well that just charge me time; materials is my responsibility. Then does it fit in my timeline and budget? Back to that time and money piece. If I wanted it done fast, i would have to hire it out.

And as a result of evaluating many and working a few of them, I can eyeball a project and figure it out a lot faster. Or I might determine that I really need to do a scope analysis on it. In performing analysis, I also created my own evaluation tools along the way. Just like I would suspect that you do in your job now.

And then what is your time worth? To me, rehabbing is a passionate hobby that happens to make money. If I didn't rehab, I might be spending money on cars or golf, etc. Everyone has their own opinion, you just need to learn to be confident of your own. And when I lose money? I learn the fastest lol. And am I really saving money with DIY? No, since it takes me longer I have loan and utility carrying costs. See, there is no best way, but I am comfortable with the process I have established. In the end, if my ROI is at least 15% then it is a win for me.

if you are comfortable with house-hacking, go for FHA or conv mortgage on a duplex. Find out what lenders require. Work the numbers against what you read here. There is no "safe" answer, and most learn best by just doing it.

You also might be putting the cart before the horse here because it sounds like you need a brokerage first to be affiliated with. In OR and WA, they require 2 years of full-time supervision by a principal broker. If Texas requires similar, then your 1st course of action is to start interviewing brokerages to find out what they require of you to be affiliated with them. And then you will have to find an arrangement that works for you. Things to consider are annual co-commissions (essentially franchise fees), annual co-commission caps, desk fees, transaction fees, advertising fees, systems/platform fees, training programs, the schedule required, and then access to principal brokers and or mentors. There are also fees for MLS membership and maybe Realtor association fees (depending on area).

Also why did you become licensed?

In my journey, I become a Realtor to learn how to find deals and put together transactions for the betterment of my family and as my retirement plan. I don't ever plan to stop working at something I enjoy...it is not who I am. My father dabbles in real estate and my grandfather had a nice retirement because of real estate, so to me this is a viable avenue, yet I needed to learn it. Easier income like rental income would be nice too. And lost on many is that the process to find leads and do marketing as an investor or Realtor is basically the same.

So, I wanted a flexible schedule (because I have a job), this was huge and I didn't want my real estate activities to become all consuming of my time away from my family. Too many Realtors I talk to are doing their business morning, noon, and night 7 days a week. What did I find? I found a brokerage that let's me work from home 100%, doesn't have any hourly requirements (some weeks I work 0 hours and some I work 25 hours in it), has $0 desk fees, $0 transaction fees, $0 advertising fees, 7 day a week access to my principal to answer questions, super low annual franchise fee, and 100% control on my business, yet what did I give up? There is no training program and no built-in software systems. I talk to Realtors at other brokerages all the time and ask about their training. Most is sales job 101 stuff. When I see a class I want to take, I pay the fee and I watch lots of sales training videos on YouTube. Regarding marketing and advertising, I pay for my own as well. Regarding software systems, I have picked up what makes my life easier and pay for that as well.

I also found that a W-2 position/salary is more readily accepted by lenders AND satisfies my risk tolerance against starving while learning/starting (part of many commission-based sales jobs) AND is still a major source of my income. Statistically most Realtors and small business owners fail within 2 years. For me this business still is feast or famine though a bigger litmus test is that it doesn't bring more commission income than my salary position. When it does for 2 years then I will be comfortable to quit my day job. 

I hope that helps.

@Rochelle Duong

Perceptually by the general public, being a Realtor gives me more credibility than just being a real estate investor, IMO. I also have a license to protect, which adds to that credibility.

If you decide to become a Realtor, you need to find a brokerage that works for you. Be straight up with them when interviewing them. If your goal is to help friends and family as you become skilled in investing, tell them that. I had many conversations with different brokerages until I found the best one for me, which ironically was within the first bunch that I interviewed.

I belong to a brokerage that allows me to do business my way within the law and it is a brokerage w/o a lot of formal training. Instead it is the School of Hard Knocks. For that responsibility I also have to make my own phone ring, and but the reward is a better compensation plan, IMO. 

How each person works to generate deals is different and different brokerage require different things. How do I generate deals? 2 ways: 1) I start real estate conversations whenever I can and I learn about people, I get to know them, and I celebrate the wins in their life. Yes, it is both work and fun getting to know people. I send a lot of birthday, seasonal, and congrats cards. I get 90% most of my business this way. i.e. I ran into an old friend recently that stated that she wanted to start looking for a house. I have sent her birthday and Christmas cards regularly for approximately 5 years. 2) I perform cold-prospecting activities AKA I do a bit of direct mail/cold-calling/farming whatever you want to call it. The other 10% comes this way. I enjoy method #1 versus #2 more.