All Forum Posts by: Adam Giles

Congratulations Hayden. I wish I had started with a hack. It is the one strategy I regret having missed. Sounds like you are on the right track with your plan. As previously stated. Make sure you have those capex reserves. 

Welcome. If I can give an humble advice to folks starting out, work on relationships from the beginning. Some people call it "building your team". I am always evaluating, however some of my best deals have come from agents/brokers/wholesalers with whom I have previous relationships. Sometimes that was simply a phone call. I also have loan officers that routinely call to see what we are working on. You want people working for you so get started on those conversations now regardless of how much money you have in your pocket at the moment. Good Luck!

Agreed 100%, Stock Market is the same way. Changes in any market don't tell you IF you should invest, they tell you IN WHAT or WHERE you should invest. 

We use Charter Title and Escrow and I would Highly recommend them. 

I also have rentals in small town Nebraska. You absolutely can make rentals work anywhere. Just use the same research (employment / schools / etc) you would in larger cities. It's all relative. As long as your research shows ok demand, a strong tenant pool, and rents will make properties profitable.....you are in business. 

CRITICAL

• Agent/Broker - without question
• Loan Officers - I have a couple of creative loan officers at local banks that I have great relationships with. This has been critical
• GC and a list of subs  - treat these guys/gals well and they will prioritize your work. 

HELPFUL

• Insurance Agent 
• Title agent 

Relationships are the keys to consistency in this industry. 

@David A. I actually lived there for a number years to be close to my wife's family. She grew up in Sidney IA. I am very happy that this is where I began my Real Estate journey. The market there is consistent, there are quality tenants, there are a number of great tradesmen, and entry prices are very reasonable. These types of markets are a great way to enter long term holds without excessive risk while you work on your processes. 

I would reiterate that many of the deals we have done there were purchased well below what was being asked on MLS, or were purchased off market. Having great relationships with agents/brokers in these markets in very valuable. They always know a guy, who knows a guy in the next town over, that went to High School with his sister, and works on volunteer fire squad with a good friend of his brother's. Well, when that guy is thinking of selling, you can get in fast and low before anyone else knows. Love your agent.

Sure. Like I said, it is difficult to evaluate anything fully based on the limited information we get in posts. That's a respectable return. Glad to hear you are updating your calculations. Hopefully you never need them, but if you do, you certainly don't want them coming from your profit.

Good luck on your next deal!

I think like many of you, I like to have a secondary “out” when closing a deal whenever possible. We are in the process of closing a cash deal for a property with a bit of a unique secondary out. Here are the basics of the deal:

• Buyers are asking $59,000
• ARV is ~$100,000
• Repair estimate is just shy of $25,000
• We settled on a cash offer at $40,000

The buyer is gun shy and does not want to deal with counters after inspections etc. They want an as-is deal. I agreed to a “not subject to inspections – excluding termite” clause to get the deal done. I know the other players in town are looking at the property. I would not normally do this, however here is where the deal gets unique. Blocks in this neighborhood are comprised by 12 48ft by 120ft lots in a 6x2 formation. So 6 48ft wide lots make the width of the north half of a block, and another 6 make the south. This property sits on the three lots adjacent to the three lots on which an 8-plex we already own sits. The long term strategy (5-10 years) will be to tear down this home and build an identical structure to our existing 8-plex, making a 16 unit complex. We would secure the entire north side of this block. The three lots alone are worth $45,000.

I am very comfortable with this deal for obvious reasons. We would love to be able to rent a 3br home on a triple corner lot for the next 10 years while we wait to build. The ROI would be such that we would make money on the rehab as long as it stays within budget. However, even if we get into the nuts and bolts of the rehab and find the budget is too high, we simply raze the home and our existing tenants have a large yard for the next 7-10 years. We would likely secure capital to build sooner than that in the second scenario. Ultimately the land is what we want.

The part of this deal that is unusual for me is potentially tearing the home down. Have any of you done a complete demo of a 3000 sq ft, two story home? Any unexpected expenses? Fully understanding it can fluctuate, I would love to hear expenses ranges for folks who have had this done. I have bid requests out to contractors we work with, however I would love to hear some personal experiences. 

Agreed. Keep her. If the numbers are even close after considering the turn over, why even deal with the hassle?

Murphy will bite you if you lose her, and your next tenant will be a nightmare.