Meet the Investor: Interview with Real Estate Investor and Landlord, Tom Cmunt

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We certainly have not been focusing on our investor interviews lately and we’re making a concerted effort to change that. We’ll start with an interview with one of our active BiggerPockets contributors, Tom Cmunt.

Tom has given much of his time to help fellow BP’ers through our forums and has become a staple in the community. He focuses on extremely affordable properties in Ohio that he rehabs and rents out (typically costing much less than 1/10 the price someone could buy for even the cheapest home in Southern California, for example). We’re excited to have the opportunity to learn more about this relatively new, but successful, investor.

Meet Real Estate Investor Tom Cmunt

How long have you been investing in real estate?
I have been investing for a little over one year.

What attracted you to becoming a real estate investor?
I believe the main attraction was that I had found something that would allow me to use the construction skills that I obtained as a teenager and young adult, to make money, while still having the ability to work for myself.

Are you a full time or part time investor?
I am still working as a part time investor, although at times it feel like a full time job. There are many days that I will spend several hours concentrating on my property investment company verses working at my full time job as a Software Programmer.

How did you get started investing?
I believe my awakening came when I was trying to figure out how to get out of the every day corporate environment. After facing years of layoff’s and watching my coworkers being walked out the door, I knew that I had to figure out a way to support myself, instead of relying on someone else for a paycheck.

Tell Us About Your First Real Estate Deal . . .
My first deal was a HUD home that was listed for $24.9K. My wife and I conducted the first walk through and decided to make an offer. I knew that the home only needed around $5k to $6K to make it rentable. We offered $23K and HUD accepted the offer. We conducted a second walk through before closing and that’s when I noticed a termite problem, which is pretty much unheard of in North East Ohio.

After we started rehab we ran into several problems. When it was time to turn the gas on, they found several leaks in the basement. The plumber took care of that and we called the gas company back out. She did one final inspection only to find a gas leak in the front yard. This cost us an additional $900.00. Everything else went pretty smooth. Our renter was Section 8 which required us to do a little more rehab that I was expecting.

So, after the termite extermination and the gas leak out in the front yard, we completed the rehab for just under $8K and were only one month over our deadline. An appraisal 3 months later brought the house in at $64K. I would have no problem at flipping it quickly for $47K.

Have you ever had a real estate mentor? If so, what did they do for you?
Other then advice on BiggerPockets, none. I find most of the investors in my area are only interested in sucking equity out of a property and not looking toward building future wealth.

What is your focus (area of expertise)?
Currently due to market conditions, I am only buying and holding for rentals. I am looking at doing a flip within the next few months; I have identified several properties for under $20K, that I could flip for $35 to $40K with a minimum investment.

What do you look for in an investment?
The home has to be solid with good mechanics, in a safe neighborhood and under $20K.

How many deals have you done in your career?
I have done 3 deals now. The only thing slowing me down right now is getting funding. I have been working on an pulling cash out of my last property to purchase another for well over 1 month now; the banks have made it very difficult to obtain funding.

Do you have your real estate license?
No

What advice would you give to a beginning investor?
I see many people getting into real estate without having any idea what type of expenses they will incurred. I truly believe that all investors should have a construction or carpentry background. Everything else can be learned on the job, but if you can’t walk into a rehab and know what its going to cost you within a few thousand dollars, you really should not be in the business. I work under extreme budget measures and when I go over my estimated budget, even by a few hundred dollars I beat myself up over it. Sometimes things cannot be avoided such as a gas leak in the front yard, but a termite problem which cost me another $900.00 could have been. It was a stupid mistake, that will not happen in the future.

Now granted, I am working on $20K homes which require a lot of elbow grease and not a lot of major expenses. If you put me in a $150K home and tell me to rehab it, so it will sell for 300K, I would have to take a lot more time to figure out my budget.

What was your toughest deal?
None yet. Once I get funding, I am ready to go.

What would your dream deal be?
The perfect home that only needs a septic upgrade. I would invest $20K in a new septic and flip it for $70K more then I paid for it. It would be a simple fix that would not require much time on my part, and I would make $45K on it.

Finally, Do you have any thoughts about the current state of the real estate marketplace or economy?
Yes. As I mentioned previously, it is extremely difficult for investors to obtain funding right now. I have many deals that fit within my business plan that I simply cannot move on due to a poor FICO rating and a tight credit market.

Not From BiggerPockets: If you want to talk to Tom, you can connect with him on our social network. Additionally, if you’re interested in being interviewed for our Meet The Investor feature, please contact us.

Note: Interview Conducted March 18, 2008

About Author

Joshua Dorkin

Joshua Dorkin (@jrdorkin, Google+) founded BiggerPockets.com when he saw a need for free, trustworthy information about real estate investing online. Over the past 12 years, Josh has grown the site from self-funded hobby to full-time job and passion. Today, BiggerPockets brings together over 600,000 members, housing the world’s largest library of real estate content, iTunes’ #1 real estate podcast, and an array of analysis tools, all geared toward helping users succeed.

3 Comments

  1. Great interview. I am always interested in hearing from people actually doing real estate development and investments. Too many times we hear from “experts” who aren’t actually out there in the trenches risking their own money.

    I have recently started a blog detailing my actual real estate investments, lessons learned and actual profits. Should be interesting reading for serious investors. If you are looking for another person to interview, I would be happy to participate.

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