All Forum Posts by: Steve Short

 HI Tamara, will do.

Thanks

 Thanks Bill, same to you.

Tough market(s) right now, but we're patient and I'm not afraid of foundation repair, etc.

Looked at a few fire damaged units, but those can be super tricky to navigate with the city.

Hey TJ,

We kept it mostly because it was mom's place.  :)

Truth is, we have a low mortgage balance on it currently, and will refi in the next few weeks to get a few more sheckles out of it each month.

But, our long term plan involves having rents payoff mortgage balances on our properties over time, while infusing the current debt with most of our net rental income after expenses, since we don't need it as we are working.

Of course, we will keep a prudent reserve of capital on hand for each property.

Looking 10 years out, the payoff amounts at that time along with infused cash each year from rental income, we could feasibly have a really low, or in some cases no mortgage debt at all on each property.

This is why we go in pretty heavy on down payments, we're not looking to reinvent the wheel or anything.

Ultimately, having around 10 - 12 places cashflow anywhere from 500 - 1500 per month, (10 year plan) is more than enough for us to retire on, plus other things we have currently in place for retirement.

Again, it's our plan and may not be what other want / need for themselves.

Robert:

As for the Colorado market, I have no desire to pay full price for low rents which is the norm in Co. Springs currently.

Flippers are tripping over themselves and inventory has been very tight the last year or so with smaller and smaller margins.

I have no interest in Pueblo either. That's where you can get property pretty cheap, but it does come with other issues to consider.

Our .02

So, we obtained a rental through inheritance, (would rather have Mom), but as she passed we decided to not sell the place and keep it as a rental here in Cali.

The tenant hadn't had a rental increase for quite some time, so we bumped it nominally to just under market valuation(s) for the area. They weren't thrilled with the increase but not too unhappy either as they knew they had a good deal going and we have been good landlords to them.

Now, that door nets around $125 including mgmt fees which we'd like to get rid of, but have to get a new tenant based on current agreements in place.

Once that happens, we'll get an additional $95 per month, but we're patient.

We closed on a fixer in Texas with structural issues others were afraid of and got a good deal that works for us.

Once we're done with repairs I'll post 'em up, but looks like around $500 per month, net, for this door.

We put 30% down, and are cash flowing and doing repairs OOP.

So, why I am posting is this,...

For newer investors, take your time, the market(s) are saturated right now in many areas.

Irrational exuberance seems to be everywhere currently. (We looked extensively in Colorado as well)

Deals are out there, but this one took us almost 6 months to find.

Know your area(s), know your limits.

We'll be trying for 4 this year, but as it is, not sure if the uber hype will last, or for how long.

I appreciate all that I have gained from BP, and helped keep the encouragement going as it has been very tiresome looking at several hundred or even several thousand deals so far this last year.

SO thank you all,

Steve and Peg

Hey Joe, and anyone else who felt offended in anyway

apologies if my post was taken out of context.

I made no assumptions that I am aware of.

In fact, I believe I praised your efforts.

the video was about your current project.

the following posts led in another direction.

I don't have any questions for you, as your process seems tight as a drum to me.

Steve

 HI Joann,

I'd like to see some of these.

I am liquid, (to a point), and have everything needed.

Feel free to PM me.

OK, let's all just slow down a minute.

My post is not intended as a slight to Joe, in fact, I think he's very smart and has a good business plan it appears.

So please, keep the flaming to a minimum.  :)

As a matter of fact, we are currently building a team similar to this. Total in house process.

Not all investors can "in house" the whole process which is a HUGE advantage.

I agree using self directed funds IS a great vehicle, (which I am currently utilizing for our acquisitions) but before folks go running off to convert their life savings, here's a few things that caught my attention about this situation.

My post is really for the newer people to really pause for a moment before going "all in".

Flipping can bury you if you have a "pie in the sky mentality" and your only trade experience is a slew of "Flip this house" re-runs.

He's been doing it for 40 years. He's not new to the game. HUGE.

Yes, if you have 1/2 million or more in cash to put down as an all cash offer, not really hard, especially if you have the team and network behind you.

He also gets to pocket the sellers costs to some extent, otherwise at 5-6% commissions, you can kick off almost $30k in profit in selling costs. (that's almost half the anticipated profit per Joe's numbers)

So, if anyone else had done these numbers, less commissions, sounds like 8% profit.

Cost: 470k - sales price of 540k, (assumed) less 5% commissions = 540k-27k = $513,000.

513k - 470k = 43k.   43k / 513k = 8.38% (gross).

$43,000.00 sounds like a chunk of money, which it is. But against his 470k up front, less holding costs for 6 months? (assumption he gets it rehabbed and sold within 6 months)

Well, then the numbers are just OK.

$43k / 6 months = 7.16k per month profit on 470k or 1.48% per month against your money.

Uh,....I get more than that in my self directed trading account.

So let's be honest for the newer folks, yes, there are some deals out there, even ones that don't know they are deals yet. I was told long ago that deals are made, not found.

Not trying to be super negative here, but the whole story was simply not told  in the video and I hate to see folks get just pummeled by false assumptions and gimmicks.

I have been involved with flipping since way before it was trendy and on TV.

It troubles me that the process is presented like anyone can just buy a hammer and make millions. Nope, not the case.

I can assure you the building codes here in California, (assuming work is done with a permit, which most is not) especially Title 24 and seismic / structural requirements, (currently the toughest in the nation) will make your eyes bug out.

If you are not familiar with them, they can eat your lunch.

I hope new folks really stay motivated if getting involved in flipping homes anywhere really.

But pay attention,....you can get creamed. Have an exit strategy.

Slow and steady wins the race.

I praise Joe for his many years of success and for sharing his story.

But alas, the video is very much like any other flip this house show.

All the numbers are simply not shown, kinda like the unemployment data, but that's a topic for another forum.  :)

BP has many great offerings of which, I am thankful are available.

And in case anyone is wondering: yes, I was born here in So Cal, AND I've been in the trades for over 30 years and have experience with RE deals.

Respect

:)

As an electrical contractor myself, a lot of the posts here have very valid points, so here's mine, some can be used across all trades:

Disclaimer: Our firm is utilized by our state license board as needed, for legal disputes involving claims of electrical installations as industry experts.

Buy cheap : Get Cheap

"Quality is remembered long after price is forgotten"

When plumbers have a bad day your floors are wet, when we have a bad day, people die or places burn down, (old joke)

• Ensure they are licensed and it is in good standing, (tip: newer license numbers are often for newer electricians, tradesmen, not always, but mostly)
• If they have "employees", even 1 guy, ensure they have workers comp, or you might get stuck with hospital bills and potentially a law suit. BIG ONE HERE.

• Our state, (Calif) has the following ruling on deposits, 10% or $1000, whichever is LESS.
• Our state also has a clause for requiring contracts, I believe it to be they must be in writing when over $600, verbal contracts for less must include 3 parties.
• I've seen handwritten quotes I can barely read, make sure you know the extent of the job, and potential unforeseen issues.
• Fires, (electrical) don't just happen, they are created, and often times take awhile to show themselves.
• A good tradesman is worth his weight in Gold, we are all just trying to make a living, if you want cheap, you'll get cheap. Electrical installations are not the place to skimp.
• Get more than 1 price if unsure, don't be in a rush to pay too much, or pay for inferior work that you may have to rip out and do again.

My observations in my local area(s):

There are a lot of "Tradesmen" playing the part of contractors.

They have no formal schooling, much less actual trade type schooling.

Our state requires licenses and certifications, check your local area, become familiar with your rights and you should be fine.

my .02

 Maybe be more specific when you say "invest in new construction".

Are you referring to SFR's, Multi, mixed use, etc.

Or did you mean remodel? some folks actually mix those 2 up.

If you are thinking residential, to purchase, knock down and build new? Might want to be really selective as that can get out of hand very quickly, especially with the newest building codes being implemented across the trades right now. Ca. has gone nuts, but that is good for me as I am in the trades.

I have a lot of experience in Ca, AZ, and NV as I have been licensed in all 3 for many years on small to large projects and high rises.

I can tell you that the big boys here in So. Cal have it pretty much wrapped up if you are thinking anything beyond a small strip mall. Bren family, (Irvine Co), CBRE, among others as well as the medical institutions are aggressively going after land for expansions.

The newest media darling is Anaheim in the Golden Triangle I think they call it.

Google it, you'll see who you're up against.

The Irvine company has even strayed outside OC and bought near Valencia.

We just don't have much land left,......

my .02

 I am in line with this mode of thinking.

Our financial markets, which are tied to everything, have, for the first time in history, been artificially infused with capital for the so called "recovery". It's fake, no other way to say it.

Bernanke's college thesis, which he used in real life was based on the premise of, "If you make the herd believe things are OK, they will act like it's OK".

I am getting back into the game after being pummeled by the last economy, an injury and a very expensive divorce.

I have a full time thing, of which I will be using to "inch" my way back in.

I scrutinize everything a lot more now.

I do agree the banks, (with government arm twisting) have been more prudent in loans making for a more solid RE structure.

The only caveat I see is:

Foreign money is heavily involved in my local market and others, so I am looking elsewhere with a bigger down payment to ensure cash flow right away, (200+ per door, net) and ride any modest value depreciation which I believe IS coming.

I am also fortunate to have a construction background and RE properties are, well, constructed. So I can save a lot there.

It's called the rubber band effect, or if you prefer, DOW theory:

1: Accumulation

2: Realization

3: Distribution - (don't be a huge buyer of anything, stocks, investments, RE, etc. at this stage)

my .02