Tips for first-time investors

[Ian Hannon]

Congrats on getting started to everyone on this thread. I’m coming up on 2 years flipping and holding myself and have completed 7 projects and I feel compelled to touch base with new investors because I learned a ton of things the hard way. These are a few things I have learned over the past couple of years:

-Get everything in writing with any partners, contractors, or anyone else that affects your project. I have been fortunate to have a couple of great partners, and having things in writing is especially important in maintaining relationships that are already good, in addition to protecting yourself. My operating agreement with partners is nearly 3 pages long.

-Even if you happen to like a specific contractor, I wouldn’t put them on more than 2-3 jobs at a time. It puts you in an exposed position unnecessarily. Even if they are good people, they hold all the leverage when they are on all of your projects. I would also have a system for vetting contractors and never stop looking for new ones. Also, always make sure you are listed as “additional insured” on their insurance policy and confirm permits have been pulled before they do any work.

-No deal is better than a tight deal. Don’t force anything and be patient. You will get farther ahead if you do this.

-Always run your own comps and never take anyone's ARV assessment at face value, especially when buying from wholesalers (which I still do). Always overestimate your construction budget and underestimate your ARV and make sure the deal still works when you do that.

-If you’re new to the construction side of things, teaming up with a construction expert is huge, even if you have to give up some equity in a deal. Even seasoned pros run into problems with construction.

I hope this info helps. In addition to this, I always enjoy helping newer investors navigate the funding side of things and do so on a daily basis with my company. I am passionate about being a resource for newer investors so they can have less speed bumps than I did. Have a great day and good luck out there!