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Updated over 6 years ago, 05/06/2018
Finding my Rock Star Team..
#5 All Forums Contributor
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#5 All Forums Contributor
- Lender
- Lake Oswego OR Summerlin, NV
Originally posted by @Liz Cole:
Originally posted by @Dean Letfus:
I've seen more people lose money doing what you want to try without any experience than almost any other endeavour.
Why not get a thousand dollars and set fire to it on the back lawn.. If you enjoy that then get long distance rehabbing :-).
On a more serious note you would be better to start with learning the ropes on some easier deals first to reduce your risk of capital loss.
I hope you understand the reason nobody is just answering your question is because our collective experience says it's a really, really, stupid and dangerous idea. The fact you ask the question says you shouldn't be doing it yet.
@Dean Letfus So moving to an area that is basically 3 hours from my current residence and Flipping a house is a stupid and dangerous idea.. And if I don't ask a question Dean, how do I learn? I was looking for tips and things to ask contractors and RE Agents to see if they "fit" with my goal.
Please share what you think I should do instead?
I'm smart, creative and a hard worker. I good with people. They like and trust me. I have some background that is useful. I have time (right now) and a little money. Nothing up to Jay's standards, but a little. And I've wanted to get in the business for years.
I'm attentive..
two things I know you did not ask me but since I am on a roll thought I would chime in.
1. think about being a secured lender for a VERY good rehabber.. give them sweet heart terms in exchange to shadow them and or share some subs etc.. create that relationship with someone your know is already successful but bring them some value IE cheap money.
2. equity partner same theory you do the money part and show up on the job daily :) learn as you go.
3. one easy way to find out who is a good flipper in your area is to invest with a very established local HML he will have all the best flippers pretty much already vetted.
lastly what ever you do.. when you try to hire this GC or who ever is going to be your main point person.. Simply treat them like you would a tenant.. ask for a 1003 so you can run credit and do a criminal background.. You may be shocked at what you find and see.... and if they balk means there something there that they are hiding and its next.
It always amazes me what people will put a tenant through that is just going to live in your rental and pay you 700 a month.. but for someone your going to give 100k or more to in a project you do nothing but go on gut feeling and a few referrals maybe.
- Jay Hinrichs
- Podcast Guest on Show #222
@Matthew Olszak Thank you for your insight. And, you worded your question of what my question was much better than I did. One thing is sure the title of my thread was attention getting!
You and the others have given me lot's to think about and a place to start and that was my goal in asking the question.
Liz Cole You have to make assumptions when responding. It’s just as easy to condescendingly respond to a response 🤣
And, no, not all subs are unreliable. But some are and those 6-hour car drives to check-in will get really old really quick. Or you have to pay someone local to check-in. Or you have to pay a GC to manage the process. So you’re back to risk-adjusting the deal given you’re 3 hours away.
Any deal (out of state where I buy) that I’ve penciled out has costs associated with plane tickets, food, car rental, hotel stays, etc. If I’m dealing with a contractor — even referred — for the first time then I’m checking in on my deal.
The net result is that I (as someone that’s a 5 hour plane ride from where I buy) have disproportionately higher costs that someone doing the deal locally. There’s nothing condescending about that, it’s just a plain ol’ fact.
And I’ll 100% certain that my apartment stabilization costs are higher (and I love my PM) because I’m not investing where I live. I’m not being condescending to myself in that regard, I’m accepting reality 🤷🏻♂️
Originally posted by @Jay Hinrichs:
Originally posted by @Liz Cole:
Originally posted by @Dean Letfus:
I've seen more people lose money doing what you want to try without any experience than almost any other endeavour.
Why not get a thousand dollars and set fire to it on the back lawn.. If you enjoy that then get long distance rehabbing :-).
On a more serious note you would be better to start with learning the ropes on some easier deals first to reduce your risk of capital loss.
I hope you understand the reason nobody is just answering your question is because our collective experience says it's a really, really, stupid and dangerous idea. The fact you ask the question says you shouldn't be doing it yet.
@Dean Letfus So moving to an area that is basically 3 hours from my current residence and Flipping a house is a stupid and dangerous idea.. And if I don't ask a question Dean, how do I learn? I was looking for tips and things to ask contractors and RE Agents to see if they "fit" with my goal.
Please share what you think I should do instead?
I'm smart, creative and a hard worker. I good with people. They like and trust me. I have some background that is useful. I have time (right now) and a little money. Nothing up to Jay's standards, but a little. And I've wanted to get in the business for years.
I'm attentive..
two things I know you did not ask me but since I am on a roll thought I would chime in.
1. think about being a secured lender for a VERY good rehabber.. give them sweet heart terms in exchange to shadow them and or share some subs etc.. create that relationship with someone your know is already successful but bring them some value IE cheap money.
2. equity partner same theory you do the money part and show up on the job daily :) learn as you go.
3. one easy way to find out who is a good flipper in your area is to invest with a very established local HML he will have all the best flippers pretty much already vetted.
lastly what ever you do.. when you try to hire this GC or who ever is going to be your main point person.. Simply treat them like you would a tenant.. ask for a 1003 so you can run credit and do a criminal background.. You may be shocked at what you find and see.... and if they balk means there something there that they are hiding and its next.
It always amazes me what people will put a tenant through that is just going to live in your rental and pay you 700 a month.. but for someone your going to give 100k or more to in a project you do nothing but go on gut feeling and a few referrals maybe.
Awesome advice! Thank you Jay.
I hate to admit this to you, but I don't know any rehabbers locally. I have reached out to RE Agents I know locally but they haven't given me any names. I know a husband/wife team (acquaintance) that wholesales. I would gladly be an equity partner and be on the job and learn, learn, learn. (I just recently have the time that I didn't have before) ..
Contacting HML is a great idea. I have also been trying to find out about Meet up groups and just recently found one in Marysville.
Locally I know good people in the sub-contracting world that I trust (concrete, painting, framers, electricians and plumbers). Just not in the areas I was looking at.
#5 All Forums Contributor
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#5 All Forums Contributor
- Lender
- Lake Oswego OR Summerlin, NV
@Liz Cole off you go took 35 post to get to the finish line but you got there and really don't take anything personal this is just the internet and a bunch of peoples personal opinions take them all with a grain of salt..
but when we have these type of interactions there is something for someone who reads them that this will help or resonate with.. we can't know what it is or who it helped..
You could also just get your GC license as well.. its not that hard ..
In Oregon you have to be a licensed GC or a licensed developer to rehab even one home to sell to the public.. so this state forces you.. I learned that one the hard way cost me 5k LOL..
- Jay Hinrichs
- Podcast Guest on Show #222
@Liz Cole, doing out of city or state rehabbing and flipping when you have no experience at all and have no trusted people on the ground is stupid and risky potentially yes.
Because I don't know your situation I can't tell you what to do. I can only tell you what I did.
I started by finding someone I could trust who was already doing what you want to do and I worked for them by finding them buyers.
Then eventually I flew from New Zealand to Memphis and lived there for a year and set up my own team. Hundreds of homes later I consider myself to be reasonably expert at flipping in Memphis. But I still would have 1 deal in 20 where I get ripped off in a minor fashion. So I found a team by immersing myself in the market and meeting people 12 to 16 hours a day until I found some people I could trust. And I have staff on the ground in Memphis to manage things for me.
My experience in Phoenix, Atlanta and Memphis taught me one hting. Most professionals, from attorneys all the way down to rehabbers and PM's, are fundamentally lazy and dishonest. And when you are not local you are even more likely to get taken advantage of.
So my advice would be to find someone experienced in the city you want to flip in and get under their umbrella for a season. Offer something to them of value in exchange for tapping into their network. That will be the lowest risk way of finding a good team. Of course if your prospective market it white collar mansionville and you have lots of money it might be as simple as going through the phone book. But in most investor style cities that I know of, it's really hard to find good people. There are thousands of stories here on Bp of people getting ripped off by supposed professionals. I've even had to take an attorney to court to force them to complete a deal.
#2 Mobile Home Park Investing Contributor
- San Antonio, TX
Originally posted by @Liz Cole:
And really what I wanted from my original post was interviewing techniques or tips on finding solid people to work with. Even if people are recommended to you, I feel it's important to ask the right questions, getting references, etc. I was too "flip" for my own good.
@Liz Cole If you're interested in reading more, I wrote a book on this exact subject. I too have used referrals but some have turned out not to work with my personality and investment style. Each investor is different and have different personalities. What works for one person may not work for another. And vice versa. Have learned this lesson after over a decade of experience. In the end, I've had to pick and choose contractors to work with: some from referrals and others I've found on my own through my own efforts. Good luck with your search!
Originally posted by @Julie Marquez:
@Liz Cole I bet you can find deals right in your back yard!
Ha! There are. That more expensive market is just a little scarier for a newbie ..
I was pretty focused on Stanwood and Mount Vernon but I didn't have enough on my own to do a deal. I see you stomp around there a bit.. are there any REI meet up/networking groups?
Originally posted by @Jay Hinrichs:
Originally posted by @Matthew Olszak:
I get this question frequently from folks new to the biz - "I want to do buy/hold or flips, how do I build my team, who should I use, where do I find them?" People who are successful in real estate are such because they have built their teams and systems through experience, while minimizing their losses along the way by utilizing their knowledge of the processes. Other than a lucky few, nobody jumps in with all of the people in place. That doesn't happen overnight or on the 1st or 2nd or 3rd job. Not saying this is the case here, but in general folks think all it takes to invest in real estate is money. To invest successfully and actually make a return, it takes a ton of experience and knowledge of the processes. Anything else is on the same level with gambling. Would you open a restaurant without knowing anything about cooking, food costs, table space/counts, or even a decent chef? Or open a steel manufacturing plant if you had enough money?
Its somewhat a trial-and-error thing. You'll have to go through multiple contractors, subs, agents, lenders, etc, until you build that Dream Team and MAXIMIZE your profit on an almost automated basis. The key to not losing all of your money while "weathering the storm" and gaining experience is filtering your team members initially and cutting off the relationship at the right time when its not working. Learn construction law, contracts, lien waivers. Learn how jobs are bid in your area. Learn about insurance and how it affects you in case an electrical contractor cuts through most of a support beam to run their wires. And go into deals calculating your rehab numbers based on market rates, and not based on trying to squish your contractors into where you need them to be.
Then simply jump in. If your area is one where high-end contractors are used, start calling those who have nice offices for bids. If its $90k class C stuff, get on craigslist and be ready for what you get, and be ready to babysit. For most who are successful, their team is made of folks who jive with them and their organization's vibe, which may or may not work for you. Further, sharing a good team is like a salesperson sharing their book of business - it took a lot to build and isn't just something you send out there to anyone.
first time I saw the dawgs system in Chicago land I was like what the heck.. can you imagine someone from CA not knowing about the dangers in many of the areas they want to own rentals.
and when you think about jumping in and just going for it without the right ground partners just look at the pathetic mess than Clayton Morris created for all those poor people.. selling and selling and selling and the ground partner just not at all there to make sure the rehabs worked... lots of those folks are never going to recoup their money.
My best memory of the DAWGS was when I got a call from a small out of state foreclosure buyer after doing a BPO. They paid to install these after the foreclosure. I walk around back, a 5'x5' hole was literally cut into the frame wall likely with a sawzall next to the heavy DAWGS door. Walked in and all of the copper piping, mechanicals, wiring, etc was gone. Everybody sitting outside at other nearby properties "knew nothing". My recommendation to them: Spend 12k to demo the building and basically give away the lot to avoid the 30k lien the city would put on it to tear it down + taxes + fines + building violations which would attach to other properties they own. They were pissed when they received my report, enough to actually call me direct: "I pay $x/mo for this metal board-up system, how is the place gutted!?". I've had conversations with others who've boarded up their properties only to come the next morning and find the wood yanked right off the front. Its not so much "how" you should do flips/rehabs in some neighborhood, but rather should you even do them to begin with or just salvage what's left.
And if you go 5 blocks west - its rose gardens in every front yard with "We Call Police" signs in the windows. Go up north, and they don't even know what you mean by "board-up", like are you talking about the zoning board? Which goes back to what was mentioned about working with contractors familiar with that specific area and asset type. Even here just in Chicago tons of contractors have no clue how to get work done in c/d areas and vice-versa a/b areas, just one or the other. Same with maintenance crews - maintaining a C rental is totally different from an A.
@Matthew Olszak Yeah, I'm not a city-girl. I snooped around a bit looking at people who were going across the country to do a rehab or buy cheap property for rentals, I can't imagine, nor do I want to. I'm pretty much a small town girl and like it that way. 75K-100k population at most. lol MAYBE the burbs around a metro.. I don't feel like hiring a security guard to make the house is still there the next day! (I would if had too, I suppose).
Originally posted by @Liz Cole:
@Andrew Johnson I used that Rock Star term light-heartedly.
At this point, how does anyone do a flip if all the subs are lazy and unreliable?
This is the very key point of the previous comments - it is why you have to be there constantly, check up on the subs, make sure they show, sometimes you have to ride them, sometimes even ramrod them.
I know you understand that, Liz, and intend to be on site - and it sounds like you have the wits to pull it off.
Interestingly, some of the advice here I have personally never seen in a book or listened to in a podcast.
Some GCs and subs are not bad; however, they are driven by self-motivation and could knock you out of the rehab game, quick. I am having to implement new rules and payment methods for our projects.
All in all, really good dialogue here I'd say.
@Liz Cole consider becoming an associate member at your local NAHB chapter and try to find the builders who are actively doing spec and custom.
BP is heavily biased toward the investor population. But in many markets the most successful developers/flippers are also the better builders. We have a lot more capital access then people generally would think and we already have all the equipment and people to execute. The reason you don't see a lot of builders on BP asking about how to raise money is because most of us have access to traditional commercial lending at 4.5% plus a point or two. So if we want to do a deal we maybe call a couple buddies to get the equity together and then get rolling with our local bank.
With the exception of @Jay Hinrichs, here in Charleston my most frequent competitors for a deal are usually the same guys and gals I'm competing with for clients and jobs.
The other advantage to getting in with some good builders is they have the ability to make deal success something of a self fulfilling scenario.
Consider this: two teams I'm super impressed with have decided to focus all their investment efforts on a small section of a particular neighborhood. We have a couple of banks bought in and ready to make several asset based loans to several of us for projects in that target area.
So in the span of 18 months you'll have three or four great builders deploying several million dollars of bank capital in a two or three block area. That means you'll have a street with four or five projects all being built out by super talented custom builders. That also means that 12 months from now a street that was pretty junky is suddenly going to be super nice. We've functionally built our own neighborhood. And buyers ALWAYS want to buy in the nicest area they can afford. I suspect the coordinated build out could add as much as 10% to what were already pretty good deals.
I realize BP is an investor community, but I'm always a little surprised at how dismissive this community can be of builders and contractors. The brutal truth in most markets is investors need good builders WAY more then good builders need investors. So as you go about building your team really think about what you're brining to the table. Because there is a really good chance that you'll be adding a lot less value then you think. That's fine! We all start somewhere. But just be really thoughtful about what you're actually asking for.
Good luck and enjoy the ride.
The only think keeping you from your dreams is fear. If you haven't high tailed it after reading some of these comments then its all good.
I lived on whidbey back in the day, and currently live in washougal wa. Mt V. is a cool town. Just make sure your first deal is a good one. Talk to agents and property managers about finding flip contractors. the guys they usually know are in and out and what i do know about the NW is try to avoid market deals. Find deals that haven't hit listing. knowing some agents will help with this. If you have the money to buy cash, then make offers in cash. don't get in bidding wars. and don't get emotional with a "deal". The shows we watch on TV are far from the truth and nothing about today flipping is romatic or as profitable unless you get lucky. I have bought on the court house steps several times and i have never walked away with a flip "deal". if you can buy and hold for a few years, then that is very possible.
I am not a seasoned investor, Just someone who is fearless and willing to get up after being slapped around and knocked down. which has been several times by the way! Go kill it girl!!!!
Originally posted by @Johann Batista:
@Account Closed like myself has Thought this out for a while and has a plan for how to handle this investment. Liz, I planned on going to Home Depot and Loews while I was at my area, however due to weather conditions I opted out. But that is definitely a great idea!!
3 things I've learned in life:
1. Where there's a WILL, there's a way!
2. If someone else did it, then I can do it too (given I'm prepared to do what they did to get it)!
3. Never let a naysayer douse my fire.
If you believe you have a solid idea, and have crafted a solid plan, go for it! Take action, allow yourself room to make mistakes and learn! Obstacles are a surety, but they can be managed, mitigated and overcome!
#5 All Forums Contributor
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#5 All Forums Contributor
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- Lake Oswego OR Summerlin, NV
Originally posted by @DeWayne Mann:
The only think keeping you from your dreams is fear. If you haven't high tailed it after reading some of these comments then its all good.
I lived on whidbey back in the day, and currently live in washougal wa. Mt V. is a cool town. Just make sure your first deal is a good one. Talk to agents and property managers about finding flip contractors. the guys they usually know are in and out and what i do know about the NW is try to avoid market deals. Find deals that haven't hit listing. knowing some agents will help with this. If you have the money to buy cash, then make offers in cash. don't get in bidding wars. and don't get emotional with a "deal". The shows we watch on TV are far from the truth and nothing about today flipping is romatic or as profitable unless you get lucky. I have bought on the court house steps several times and i have never walked away with a flip "deal". if you can buy and hold for a few years, then that is very possible.
I am not a seasoned investor, Just someone who is fearless and willing to get up after being slapped around and knocked down. which has been several times by the way! Go kill it girl!!!!
if your competing in Clark county at the courthouse your up against Nyland and that is some stiff competition few investor anywhere in the country and I work in 14 states are as proficient and work on the margins Rod does..
- Jay Hinrichs
- Podcast Guest on Show #222
Folks, it's 2018... easy on the negativity please. Even bad ideas get medals now.
- Tom Gimer
#1 Ask About A Real Estate Company Contributor
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#1 Ask About A Real Estate Company Contributor
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I didn't read all the comments but to the OP's original post & to anyone looking to do long distance flips please stop drinking the Kool-Aid.
It's really simple long distance flips do not make any sense. Ya see if you are doing a long distance flip you already have the deck stacked against you.
- You don't know the market as well as the locals. This means your knowledge is lower.
- You have to outsource everything. This means your costs are higher.
If going into a new venture with lower knowledge & higher costs isn't enough to dissuade someone against this new business venture let's just go ahead & look at it practically.
- You need to find someone else to find you the deal.
- Assist you in closing that deal at a big enough discount to make room for a huge profit.
- Manage the entire rehab.
- Sell it for you at top dollar.
Let's ask ourselves is someone has the ability to do everything above why would they let YOU keep all that profit? What in the world is in it for them? What do they need you for? What value are YOU bringing? The answer is none & they won't because they would just do the deal without you. If you are thinking "i've got the money! They need the money!" Nope sorry folks, the hard money lending industry has solved that problem. You bring zero value to this equation.
So again, please put down the Kool-Aid. Anybody telling you that your gonna become a millionaire investing in long distance flipping is selling you a bill of goods or they have no idea what they are doing.
I see mention of moving the 3 hours away, so basically you are looking to flip a house you are local to, but it's a new are to you.
I think it is going to be hard to find a "good and reliable" contractor before you move there and get a job. You are just guessing on whether that person is good and reliable until they are working for you. I have had subs that were "rock stars", always did awesome work on time, budget etc. I recommended them to everyone. Since then my father has tried to get him to come bid a job, and the sub has "scheduled" with him 2-3 times, never showing up and never responding back. I made an attempt to coordinate it, was told it would happen... still nothing. My rock star sub never made it out. Moral, someone can have an awesome record, but things happen.
Finding a good realtor is a good first step. How to find the right one, no idea. The best deals are probably off market, so maybe a rock star wholesaler is another team member to focus on as well. A lender might be tough, without having a track record and being new to the area, but another member to start making phone calls to. Find a good title company/attorney (If you need one to close), insurance broker, maybe a home inspector if you feel you need one.
I would focus on the up front members over the contractor at this point.
LinkedIn recruiter is an amazing tool for finding talent. You could always pay agents to do BPO for you. Why do you need to leave your own market?
Originally posted by @Tom Gimer:
Folks, it's 2018... easy on the negativity please. Even bad ideas get medals now.
Tom, Are you saying no one has good ideas in this thread or the post in general is a bad idea due to the subject? :) Because I think it turned into a pretty productive thread.
Brad, I was looking at areas a little more affordable than the area I live in. I was investigating 3 different smaller town areas that have lower medium sales prices. One of the criteria was that it be somewhere I would be happy to live because I was going to relocate to that area.
Thanks for the LinkedIn tip. Been resistant to join that but may end up doing it.
Personally, I don't drink Kool-Aid, it's entirely too sweet for the likes of me. I've no intention of investing in this traditional long-distance game especially as a newbie. I was pretty blown away initially at how negative and sarcastic the posts were and I was only talking about a 3-hour drive!
HOWEVER, I ended up getting tons of great advice and tips on moving forward if I choose to.
I wonder with all the blogs, videos and books currently pushing this idea of people investing across many State lines:
- How that will affect the markets?
- Who will be deterred by posts such as those in this thread?
- Will it have a negative effect on the housing market, in general?
- Or will you end up with people who do one deal and then no more... which could be good for investors who are staying in the game.
Thanks for your input!
@Jay Hinrichs I bought 3 houses at the steps and none of them rod was bidding on. I should of known better. lol. when we were doing the auctions, we were small fish in a large ocean of deep pockets. everyone was bidding at or above market and it made no sense for flipping. learned a lot and i do miss the action for sure