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J Scott - Author of Flipping/Estimating Book - Ask Me Anything!
Hey everyone!
First, thank you so much for all the support after my recent Podcast episode and the recent BiggerPockets release of the 2nd Editions of The Book on Flipping Houses and The Book on Estimating Rehab Costs. I've gotten a tremendous amount of email and private messages with the kindest of words, and I sincerely appreciate it.
Unfortunately, there's been so many emails and messages that I haven't had the ability to respond to everyone, despite my best attempts. Many of them contained questions -- and I hate not being able to respond to all the questions I get! So, I wanted to start a thread to give everyone an opportunity to ask questions -- and since I get many of the same questions over and over, I thought this might be a good resource for future questions I may get.
Anyway, if you have any questions about the Flipping/Estimating books, about any aspects of real estate strategies, about investing in general, about running a real estate business (or any business), etc., I'm happy to do my best to answer.
There are a lot of tremendously knowledgeable people on this forum, so don't post here if you have a question best answered by the whole community.
But, if you want to address something specifically towards me, this is the place! Feel free to post in this thread and I'll do my best to respond to everyone!
Also note that I created this thread a few years back -- might be worth checking first to see if I've answered it there:
Hi @J Scott, I just wanted to say that I think this is great. I recently listened to the podcast as well, but was familiar with your work and contribution to the site and to the flipping world in general even before that. I have no questions for you at this time but really wanted to let you know that I really do appreciate you taking the time to really allow others to learn from you. I'm sure I speak for many when I say how appreciative we are of what you've done for our community. The fact that you created this thread is awesome. That's all I got! Take care!!!
Originally posted by @Polar Prutaseranee:
Hi @J Scott, I just wanted to say that I think this is great. I recently listened to the podcast as well, but was familiar with your work and contribution to the site and to the flipping world in general even before that. I have no questions for you at this time but really wanted to let you know that I really do appreciate you taking the time to really allow others to learn from you. I'm sure I speak for many when I say how appreciative we are of what you've done for our community. The fact that you created this thread is awesome. That's all I got! Take care!!!
Thank you for the kind words, Polar!
@J Scott My pleasure
If you get scarred half to death and then get scarred half to death again, do you die?
Originally posted by @Andrew Syrios:
If you get scarred half to death and then get scarred half to death again, do you die?
Did I miss something???
Originally posted by @J Scott:
Originally posted by @Andrew Syrios:If you get scarred half to death and then get scarred half to death again, do you die?
Did I miss something???
An extremely stupid joke perhaps.
Originally posted by @Andrew Syrios:
Originally posted by @J Scott:Originally posted by @Andrew Syrios:
If you get scarred half to death and then get scarred half to death again, do you die?
Did I miss something???
An extremely stupid joke perhaps.
I feel like you're just 1/4 alive at that point. Now, I don't know how long you can do that until all your 9 lives are gone.
Originally posted by @Andrew Syrios:Originally posted by @J Scott:
Originally posted by @Andrew Syrios:If you get scarred half to death and then get scarred half to death again, do you die?
Did I miss something???
An extremely stupid joke perhaps.
Oh, you were asking me a question... Now I understand. I thought you were making a reference to something else and I couldn't figure out what!
Good question...
I consulted a doctor friend and he said that most people round up when estimating percentage death from sacredness. We say "scared half to death" when in actuality, it's normally probably only scared 20-30% to death.
So, on average, you have to be scared half to death about four to five times before you actually die.
@J Scott I loved your breakdown of the economic side of real estate in your latest trip to the BP podcast. You really peaked my interest in the ups and down of the market. Is there any literature that you recommend on the subject?
@J Scott Great podcasts my man! Really enjoyed them! My wife and I are looking into our 1st multifamily property this year. We currently have 2 properties that we have mortgages on. We rent out one and live in the other. We live near Los Angeles County and are considering a local/out-of-state purchase. After reading the above about buying and hold markets (Population Growth; Income/Wage Growth; Job Growth). What suggestions do you have do you have for locating a suitable area? With your experience, where should I start the research for this investment?
Originally posted by @Mouhamad Rahal:
@J Scott I loved your breakdown of the economic side of real estate in your latest trip to the BP podcast. You really peaked my interest in the ups and down of the market. Is there any literature that you recommend on the subject?
Hey Mouhamad,
BP will be releasing something in the next month that I created...stay tuned!
Originally posted by @Orlando Perez:
@J Scott Great podcasts my man! Really enjoyed them! My wife and I are looking into our 1st multifamily property this year. We currently have 2 properties that we have mortgages on. We rent out one and live in the other. We live near Los Angeles County and are considering a local/out-of-state purchase. After reading the above about buying and hold markets (Population Growth; Income/Wage Growth; Job Growth). What suggestions do you have do you have for locating a suitable area? With your experience, where should I start the research for this investment?
Hey Orlando,
I always recommend starting where you know, where you know people, and where you can easily get to...
What places have you lived? Where do you have family? Where do you have friends? Where have you visited that you like? Where would you like to visit? What's an easy commute from where you are by plane, train or car?
These are the places you should start looking, as they will all provide you some benefit. Whether that benefit is that you know the area already, or you have someone on the ground that can help you, or it's relatively easy to get to, having some advantage going in will be important when you're ready to start investing.
So, make a list of these places, and see if any of them work. If not, then we can talk about Plan B...
Originally posted by @Julia Fair:
Originally posted by @Andrew Syrios:Originally posted by @J Scott:
Originally posted by @Andrew Syrios:If you get scarred half to death and then get scarred half to death again, do you die?
Did I miss something???
An extremely stupid joke perhaps.
I feel like you're just 1/4 alive at that point. Now, I don't know how long you can do that until all your 9 lives are gone.
All nine? I'm not a cat unfortunately... Hahaha!
Originally posted by @J Scott:
Originally posted by @Andrew Syrios:
Originally posted by @J Scott:Originally posted by @Andrew Syrios:
If you get scarred half to death and then get scarred half to death again, do you die?
Did I miss something???
An extremely stupid joke perhaps.
Oh, you were asking me a question... Now I understand. I thought you were making a reference to something else and I couldn't figure out what!
Good question...
I consulted a doctor friend and he said that most people round up when estimating percentage death from sacredness. We say "scared half to death" when in actuality, it's normally probably only scared 20-30% to death.
So, on average, you have to be scared half to death about four to five times before you actually die.
Now this is the type of lucid analysis I've come to expect!
@Orlando Perez I recommend investing in an area where there is a college population. In San Luis Obispo, Cal Poly students cause a need for more and more housing and have increased the rent year after year. Message me, I would love to send you some listings that pencil out in regards to ROI and ROE.
I want audiobooks on CD. Are your 2 books available on audiobooks? I haven't found them thru Bigger Pockets.
Originally posted by @Chuck Glover:
I want audiobooks on CD. Are your 2 books available on audiobooks? I haven't found them thru Bigger Pockets.
BiggerPockets has an audio version of The Book on Flipping Houses. It's a download, not a CD. The book is also available on Audible, I believe.
The Book on Estimating Rehab Costs is not sold in the audio format, simply because it contains a LOT of tables, and these wouldn't read well in audio format.
What are your thoughts on doing a lease option as an exit strategy on a property that was planned to be a flip? The contractor has dragged the job out so long, that any relief from carrying the payment on this one is appealing, but do you think I'll risk a down shift in the market by giving the potential buyer a 24 month window to buy? Stress!!
Scott, what would you rather do if you had 60K as in @Eric Barber's post above.
I have two questions . In the interview you spoke about "6 things to prepare for." One of those concepts was to "figure out a reasonable worst case scenario" and then build the deal from there. In the interview you talked about worst case scenarios as somewhere in the 15% range This seems low to me, but I also use conservative numbers for worse case scenarios. My plan is to buy an 80k homes than need between 10k-20k worth of repair and then sell them for 140-150k (where the comps are now). I plan to sell them traditionally or by cashing out and refinancing. So what is a reasonable low? Or How did you determine 15% to be your "low"?
This brings me to my second question. My original plan for those $80,000 houses was to cash out refinance. But you specifically talked about NOT leveraging and keeping as much cash as possible for the down turn. My thought was I didn't want to pay taxes on the flip and wanted to 1031 out of the properties later on. Is this a poor strategy considering the potential market downturn? Almost all my money is liquid cash as of today, very little is in the stock market. I know you're not an accountant or financial adviser but you are someone who I am taking advice from directly. If you need tangible numbers to make an assessment PM me and I can tell you how much cash I have.
Thank you for your books. They have been an unbelievable help.
Just ordered both books over the weekend can't wait to dig into them... going to use them not only for flips but also BRRR strategy on long term holds...
@J Scott you should update your signature
- Podcast Guest on Show #10 feels decades old
-
Broker California (#02082022)
- [email protected]
Originally posted by @Shawn Regnier:
@J Scott you should update your signature
- Podcast Guest on Show #10 feels decades old
Unfortunately, I don't have any control over that (I don't think)! That was put there by BP staff...though I agree they should update it!
Originally posted by @Austin Works:
What are your thoughts on doing a lease option as an exit strategy on a property that was planned to be a flip? The contractor has dragged the job out so long, that any relief from carrying the payment on this one is appealing, but do you think I'll risk a down shift in the market by giving the potential buyer a 24 month window to buy? Stress!!
Lease option is a viable way to *extend* your exit strategy, but the reality is that most lease options don't sell to the option buyer. In most cases, the buyer isn't qualified to purchase, which is why he's doing a lease option. But, habits are hard to change, and whatever it was that the buyer was doing to put him in a position where he wasn't able to buy outright is unlikely to change.
I've heard numbers like 30% of lease options will actually sell. My experience is lower numbers than that.
All that said, if you're looking for a short-term solution to generate cash flow and wait for a better time to sell, this could give you that runway. But, expect that in two years, you may find yourself in a position where it hasn't sold, the value has dropped and you have to lease option or rent it again until the value returns.