All Forum Posts by: Alan Crookham

I am just getting into purchasing/rehabbing/renting properties. I own one small house in Panama outright that I have rented for years, so I have land lording experience, but not so much in investing and flipping.

Someone gave me the Rental Property Investing book by Brandon Turner, and am in the chapter on analyzing a property and the numbers don’t make sense to me. I know I’m missing something because people obviously make millions of dollars in real estate.

But here is simplified (and very rough) example from the book.

A property costs $100k to purchase and rehab. You can bring in $200 a month in cash flow after all expenses. You hold the property for five years, then sell for about $130k, but still have to spend $17k on expenses in the sale, plus pay off the loan, and all the other stuff, but hurray, you still made $13k on the deal! Also, you made about $17k from rent over five years.

That sounds good on paper, but don’t you have to go buy another house now, and you will have to use all that income on plus to rehab the new house, which puts you back to zero. You would have been better of just continuing to rent and make your $200 a month. I don’t understand what the actual profit is here.

Can someone please explain what I’m missing, or are these the actual margins to expect? How does anyone actually make real money doing this?

Thank you!

@Andrew LeBaron Awesome tips. I’m learning, but getting there. I appreciate the response Andrew!

@David Wright Oh, that’s very smart David. I like that. Thank you!

Okay, so I didn’t quite think this through, but I paid for a list of absentee houses in my area thinking it would be a gold mine for getting deals. I’ve spent tons of time driving for dollars, it has been great, and I’ve focused on vacant homes. Thus, having a list of 1,000 absentee homes sounded amazing, save all that time driving. The huge hole here of course is that when I drive for dollars I have pictures and notes of the condition of each house. I’ve never used an absentee list so I don’t even know how accurate it is (even though I’m assured it is very up to date of course), and I also find myself not even knowing what to say to the owner if I cold call. Any suggestions on how to start that conversation? Or should I just do direct mail. It seems to me like calling would be far more effective, but I might be calling for someone’s beautiful summer home and don’t even know it! Thoughts?

@Ronald Troy Whidbee Hey Troy! In pretty new to this as well, I am sending out my first direct mail campaign today. You can get the information by googling your local Tax Assessor and searching for the property by address. It will give you the name and current address for the owner. The main issue I found was that sometimes, even though the home is abandoned, the owner still has that abandoned address with an untouched mailbox as their mailing address, so you know they won’t get your letter. At that point, I find whitepages.com can be useful, but actually I have really liked MyRelatives.com, which often gives you more info for free. Last resort is skip tracing, but that costs money.

I have been interested in doing real estate for years. I have lived overseas for most of my adult life and just moved back to Texas. I own a property in Panama that I have rented out (not much rental money in Panama), and would like to flip houses here Stateside. Because I’ve been in the non-profit world from right out of high school, I have no start up money whatsoever. My question is this. If my end goal is to fix and flip houses, is it better to start wholesaling houses to earn the startup money, or find a house for a wholesale price, get a loan and buy it/fix it, and sell it? The loan is riskier of course, but the payoff is bigger, but it seems like wholesaling could potentially provide a payoff quicker with the right marketing. I’m just not sure how viable wholesaling actually is. All the gurus make it sound easy, but the people I have written in these forums asking about it have all said something like, “I’m working hard, and one day I’ll get that deal!” But it’s been months and no dice. So is it worth even trying to get into wholesaling in the first place?