All Forum Posts by: Michael Mazzella

Aloha @Darrell Shepherd 

Mahalo for your comments, Darrell.

You know, I used to scratch my head and ask that same question. Why isn't everybody doing this? Everyone should be quitting their jobs, right? I mean, stand up, pee on your bosses' desk, walk out, and go flip a house! In this Honolulu market, we make an entire year's salary in a single house flip!

Well, I have some theories...

First of all, there's that huge attraction - simply put, being a real estate investor is sexy. Maybe the next best thing to being a rock star. Everyone wants to be one.

But once the marathon begins, reality sets in, and people start dropping like flies. Why? Let us count the ways! 
The bar is too high. People are intimidated. People are untrained. People are trained, but its the wrong training. People don't know how to think like entrepreneurs. People are afraid to take risks. People don't have the will to get up off the canvas once they've been knocked down. People make emotion-based decisions rather than numbers-based decisions. This next one is quite common, and culls the population down significantly... people think they need lots of money to get started. Another one I see a lot of, is people seeking advice on real estate investing from the wrong people, such as financial planners, real estate agents, lawyers, family members, or unsuccessful investors. I'm sure we could all name many more reasons why people fail in our business.

Many of these 'speed bumps' that knock would-be investors out of the box are common to all markets, all areas, and perhaps even to all business startups. Some of these are exacerbated here in Hawaii because of the high price points and high cost of living. 

As my thinking has evolved over time, and 163 deals, I've come to believe that its not for everybody, and that's a good thing. The culling process, and survival of the fittest in business, is necessary and natural.

I don't give much thought to it anymore.

I do throw a life-line out once in awhile, and help someone to get started, and up to altitude. I get a lot of enjoyment from that, although when the deal-flow is rocking, there's not enough time in the day it seems. I don't do it as much as I'd like to. 

I ramble. 

Again Darrell, I appreciate your thought-provoking question. 

~Michael

Aloha @Andy Gross 

Remember that all the big Bull Frogs in your pond were once little tadpoles at some point. I think its harder for a beginner now than it was when I started doing this 13 years ago. The good news is that today you have more opportunities to learn and succeed (such as Bigger Pockets) where you can also network and connect with real players in your local market. 

Now as for your comment...
"for us newer players, this island is priced out of our range. I would love to find a silent money partner, but as of now, I have no real track record to show."

Yeah, so what are you going to do about it, Andy?

My suggestion would be:
1. Find out where that thinking originates. If it's coming from a coach, fire him! If its coming from friends, get new friends! If its coming from any other Red Light Thinker/Dream Stealer, well... I think you know what to do.

2. Reconnect with your 'why's' and be honest with yourself about whether you really want this or not. Are you willing to go 'all in?' It's not easy, but its totally worth it. If it was easy, every single 'wanna-be' out there would actually become a multi-millionaire RE investor. We could then do away with Darwin's theory of 'survival of the fittest' as it applies to business. 

3. Read the post by @Account Closed made earlier in this thread. 

I think that life is short, Andy. Its the only life you'll ever have, and the meter is running. In fact, its on 'Fast Forward.' One of the few certainties we all have is that we're not here for very long. Given that, what's the down side of failure? We have little to lose. I'd encourage you to go to YouTube and watch Steve Job's commencement address at Stanford. Let yourself be inspired!   http://youtu.be/UF8uR6Z6KLc

....then go out and make a dent in the universe, my friend!

~Michael

PS- glad to hear of your plans to invest on the mainland. You can use Hawaii to generate some big cash to invest over there. 

Aloha @Account Closed who are looking to get past the 'bar to entry' in a market like this.

I do partner with novices on occasion, and while I wouldn't necessarily 'feed deals' to a beginner, I would certainly let them jump in the back, fasten their seat belts, and hang on for the ride. They get to take good notes as I take down the deal, and in most cases get to do some of the hands-on fun stuff. Its a good way for them to build their own credibility, momentum, and get a learning experience unavailable at any price. Its good for the experienced investor too, because as you stated, the Jr partner is usually bringing something of value to the deal.

Its a smart move, Joe, and I'm glad to see it's paying dividends for you. All the best to you in your empire-building adventures!

~Michael

Aloha @Jay Hinrichs 

Yeah, the area of which you speak is a playground for billionaires. This varies greatly, but I generally have $2m to $3m of working capital, so I don't want to tie it all up in a single deal. Does that make sense? When I get a lender with deeper pockets, that could open up some of those high-end neighborhoods and beach front opportunities. That said, I would certainly pick off one of those older ranch-style homes in a neighborhood like that. Then I would restore it rather than knock it down to build a mansion.       

By the way, the flip I described earlier is not in a Kahala-type area. Its in a high demand middle-class neighborhood. A teardown I bought for $340k. I'm all in at $520k, and in escrow and exiting at $850k.

I agree completely about controlling the remodel costs. You can really under-rehab stuff here and still be blown away with full-price offers in many neighborhoods. We don't have to squeeze every nickel out of deal in a market like this. The demand for property here is global. 

Aloha @Andrey Y. 

Investing in Hawaii has changed my life and afforded my family a very nice living.

But if I wanted to be frustrated, and wanted to waste my time, here's the recipe...

1. Seeking a healthy cash-on-cash return in a high price point market such as Oahu
2. Using a realtor to find good investor deals. Taking investing advice from a realtor. 
3. Being solely a back yard investor, when the local market does not support your goals
4. Forgetting that, at the end of the day, its all about the numbers. 

I say this in a friendly way, Andrey - maybe its good that you've hit this wall. Those are not investor deals you are describing, and you're looking in the wrong place. As your rethink your strategy, and change up your game plan, let me offer a couple of suggestions...

1. Understand your market, and let the market determine your best exit strategy. Are you seeking wealth creation, passive income, or both? Oahu is good for wealth creation, as its not uncommon for us to make $100,000 on a single house flip. I just accepted an offer and put one of my flips into escrow with a $200k profit. No kidding, that's one house, in a high-demand neighborhood. ;-) Honolulu is not, however, a good market for cash flowing properties. If you want to do passive well, you need to seek a market that supports that. I'm a "both" guy - I like to create wealth from flips, then reinvest my profits into cash-flowing properties. For this, I use 2 very different markets - I have a sizable portfolio of cash-flowing properties on the US mainland, and I flip houses in Hawaii for wealth creation.

2. Understand your 'kill zone' as an investor, and work within that zone. Its where we have the upper hand and are most effective. Its not participating in bidding wars with retail buyers. Its not using a realtor as your main source of deals. And its certainly not paying full retail price for anything. Get your 'okole (Definition: Hawaiian word for the gluteus maximus region) out there and find motivated sellers before a realtor finds them. Buy directly from the owners. That's where most of the deals are. Use the market to your advantage. Ours is a good market for wealth creation, but if you're trying to do passive income here, you're paddling upstream, bruddah. 

Don't worry, Be happy. This **** works! 

If you want more advice, you can buy me a coffee. ;-)
~Michael

Aloha Ciara, welcome aboard, and congrats on your first investor deal!

I've been flipping houses in Honolulu for 13 years. I think you'll love it, and I'm sure you've already discovered that there's a huge difference between being a realtor and being an investor. Realtors are a dime a dozen in Hawaii, and in my opinion its a tough way to make a living. Conversely, if you flip 2 houses a year here, you'll make at least $150k pre tax.

My initial advice would be to steer clear of the red-light thinkers. There are many here in Hawaii who would tell you that its too difficult to invest here. If you ignore that crowd, you can do well here. I've got 7 deals going on Oahu at the moment, and I'm pretty picky - I choose a deal like I choose a wife, so I walk away from most deals that cross my desk.

I haven't done anything on Maui yet, but you've got high price points driven by high demand, somewhat similar to Oahu.

All the best to you, enjoy the ride, and feel free to connect with me.

~Michael

@Ciara Quam 

Aloha fron Hawaii Kai, Matt! and welcome to BP. 

I've done a bunch of wholesaling, house flips, development and lending over the past 13 years here. Feel free to connect with me. 

We also have a MasterMind/REIA group here, for those who have completed at least one deal. Our next meeting is Tuesday, Jan 13th.

Seize the day!
~Michael

Aloha Anna!

I'm a full-time investor here in Honolulu. I've bought 41 houses on the US mainland so far this year. Feel free to connect with me and I'll be happy to talk you through the process.

Welcome to BP!

~Michael

Aloha Lorinda! Welcome to BP.

Very interesting thread!

The B Plan. (Just in case)

1. If needed, create your initial wealth by flipping. On Oahu we typically make $70,000 to $150,000 per flip.

2. Get the cash flow. Invest for max cash-on-cash return. That's definitely NOT in Hawaii. 

3. Get your ocean front (or ocean view) dream house or condo as a distressed property, or buy from a distressed seller. You may accomplish this during #1 above.

Very do-able, and will leave you with a lot more money in the bank to enjoy your Hawaii dream lifestyle.

That's just an unemotional perspective from a local Hawaii investor, who is already doing same. I mention this only because its hard to invest well when you are fixed on a particular property, and the seller is holding out for the higher prices. (which he'll very likely get because inventory on this island is so low.)

Returning to your A Plan for a moment, have you considered the Big Island? I'm beginning development there now, on both Kona and Hilo sides. Views are just as magnificent, and prices are much better. 

All the best with achieving your A Plan, Lorinda!

~Michael

Aloha @Christina Pribilla, 

You are correct, REI MasterMind (Honolulu) caters to experienced investors. However there are spinoff groups that allow beginners, including a women's group. Some of the investors, myself included, are happy to meet with beginners to answer questions and help steer them in the right direction. 

Feel free to contact me at [email protected]

Seize the day!
~Michael