All Forum Posts by: Alex Ficco

Good opportunity for a fix and flip or buy and hold. This is an assignment of contract. Cash or Hard Money only. 

ARV: $210k

Price: $105k + Closing Costs (Win It Now: $120k)

Message me for more info and full home inspection.

Reno, Sparks, Carson City, Gardnerville, Minden, Tahoe, Fernley, Fallon, Dayton, Silver Springs, Mound House

Earlier this week, I was talking to a few guys after the Real Estate Investors meetup that I put on once a month here in Reno, NV. We started talking about something we all hear ALL the time when consuming anything about the current single family real estate market.

“How can anyone afford these prices or these rates?”

I get it. I've been there too. Graduating highschool in 2009, I was becoming aware of housing prices during the downturn. My local base level knowledge was set at "a 3/2/2 SFR is $100k". Just like everyone else, I've seen those same houses climb up to $400k in the current market.

Real estate is hyper localized, so I can't speak on any other market, but running a flipping and wholesaling company here locally, we track the SFR metrics weekly, along with what a payment would be at the current interest rate on a $400k note.

In Q1, I was having a “how the **** are people still buying houses right now” moment. I googled the most current local median and average household incomes and went through a few different sources. A big piece of the equation that I (and many other locals) forget about is how much our area’s income has grown.

This isn't a post about stats or the market, so I’ll save it. But what I found from that search was like “oh… no this actually makes total sense. The income almost exactly matches the payment a Buyer would get approved for to buy a pretty average home here.”

In a nutshell, I was just wrong. Prices are “expensive” compared to what my base was for what the price “should be” and also my idea of what people make locally was wrong. Same thing.

Back to the meetup, explaining this discovery to the guys, one of them made me repeat the stat and clarify if that number was HOUSEHOLD income or SINGLE income. A few seconds later, he followed up with, “oh okay good, I was just wondering if that’s how much I should be making by myself.”

Attribute 1. Mindset. We talked for a bit after this, but without even recognizing it, his mindset is “make as much as the average.” Everyone has heard the generic Henry Ford quote “Whether you think you can or you can’t, you’re right,” but take a second and think about how that applies across everything - income, if you can do your first deal, how many deals you can do in a year, how many doors you can acquire, etc.

The vast majority of people just cruise through life on autopilot and quit on themselves VERY early in the game. They get a little comfortable, convince themselves this is “good”, tell themselves lies about why they can’t or shouldn’t keep advancing, etc.

In my opinion, mindset isn't a switch, but it's ongoing. Your mindset SHOULD keep improving as time goes on.

But it’s a catch 22 right? A lot of us struggle with something along the lines of “if I could just make $10k a month, then I could get to $20k, then $50k, etc.” The problem is… we don’t have the mindset to make it to $10k a month and we THINK we get the mindset AFTER we make it to the first milestone to prove to ourselves that we CAN do it.

Attribute 2. Faith. After the mindset shift comes, we still need faith to pull it off. I learned about wholesaling and thought I could do it. Did I KNOW I could do it? NO! Not until after the first deal when I proved it to myself… but the difference was I THOUGHT I could do it. I had a little bit of faith in myself.

The next milestone I want to hit at the company is 100 deals per year. How ridiculous does it sound to say we want to do that, and then say “we haven't done it yet, I don't think we can do it, but after it happens, then I know we can get to 150 per year.”

But how often do we miss that middle step of FAITH in other areas of life or even to get your first deal?

Attribute 3. Confidence. Confidence comes from actually doing the things you tell yourself you’re going to do and the reps you put in while doing it. Was I confident on my first deal? **** no. Was I confident on my second deal? No, but slightly more than the first.

I think people mistake faith with confidence. I guess faith is a FORM of confidence, but at the same time, they are two separate things. Right now, I don't have faith I can pull off the same type of deal that we do 8 times a month… I KNOW I can. On the first deals, I just THOUGHT I could pull it off. Big difference! And I’ll be right back to the faith step as soon as we move into other types of bigger deals.

All in all, if you don't have the MINDSET of wanting to improve and get more, you’re likely going to keep doing what everyone else does. If you don't have the FAITH that you can pull it off, then you never will, and you will never develop the CONFIDENCE it takes to keep making steps up the staircase.

If this post can help one more person recognize the flawed thinking they have and start down the track to more, then I’ve done my job. Hope this helps.

Hey everyone. Reminder for this month's Reno Real Estate Investors meetup this Wednesday, 7/26 from 6-8pm at the Ant Space in Sparks. 1325 E Prater. Upstairs in the back building. Free to attend.

Topic:

EVERY QUESTION ANSWERED IN 1 HOUR!I see so many people through the meetup, facebook group, bigger pockets, etc. that want to either flip, wholesale, and buy rentals and know they need to find off market deals to get there. BUT they get hung up on certain things that prevent them for ever doing a deal in the direct-to-seller world.I used to have all of these questions too, and what I found out 5 years ago is that a single person currently doing deals can answer all of these questions in about 14 seconds. My goal is to do that for you guys and then open it up to some more in-depth Q and A on whatever we need to get answered. Maybe we'll fall short of answering every question in an hour, but we can certainly put a dent in it.6:00pm - Attendee Introductions

6:20pm - Topic Discussion

6:50pm - Q and A / Open Discussion

7:30pm - Networking

8:00pm - Finish


Reno, Sparks, Carson City, Gardnerville, Minden, Yerington, Fallon, Silver Springs, Dayton, Mound House, Stagecoach, Fernley, Cold Springs

It’s interesting how we keep getting the same lessons over and over sometimes. As simple and generic as some of them are, those are usually the most important ones.

Admittedly, I’m not a great networker. It’s actually one of my biggest flaws. I have to be super intentional about talking to people, going to meetups, talking to people specifically about work, etc. When I started my own local real estate meetup about 4 years ago, I didn’t realize how much it would help me network by default - it’s much easier to network when you’re the host vs being an attendee.

This week, I was at a different real estate meetup here in Reno, NV. Doing my best to talk to some new people afterwards, I got talking to a younger guy who had an off-market deal in contract that he doesn't know what to do with.

I give props to anyone that has a deal in contract, because truthfully that’s further than most people ever get. I talk to a ton of new people at my meetup. A lot of them want to get into wholesaling, and the vast majority never are able to make it work.

For the few that do make it work, 9 times out of 10, the first deal they get in contract isn’t a deal (which is why they probably got it in the first place). I don’t blame them. You don’t know what you don’t know. I was there 5 and half years ago too - contracting my first deal while simultaneously ******** my pants not really knowing what was next.

Back to the kid with the deal. He said it was a land deal. Just a single family lot in a remote mountain town nearby. Land without zoning, small town, 45 min outside of the metro area, yeah… basically no chance this is a deal, and also basically no chance he finds an actual buyer for this at a meetup.

But he found me! Some of our best deals this year have been land just like this. We got the first one by accident, forgetting to filter land out of our SFR data. So I asked him about it.

Surprisingly, at face value, it sounded like something we could actually make some money with. I’m eager to dig into it more, but this post isn't about the deal.

When I was asking him about it, he said he knew the Seller and had a pretty good relationship with him. Knowing how to process this lead, and knowing land takes a bit longer, this was good news because we would probably need to extend the contract he signed.

I asked him “how long do we have?” His response… “3 years.” … He signed a contract for 3 years with the Seller… irrelevant but I just thought that was funny. I was expecting him to say “we are supposed to close tomorrow, please help.”

The point? Talking to people. This kid probably contracted this only by talking to the Seller about it. He probably heard about wholesaling, thought “who do I know that owns property” and asked the Seller about it.

If the deal is what I think it is, the kid is only going to be able to successfully make money on this deal because he talked to me at the meetup.. and vice versa.

When I was thinking about this situation, I was reminded of the first house my partner and I ever flipped. A 90’s build single family in Sparks NV. I had experience wholesaling and he had experience managing rehabs, but we had flipped on our own yet.

How did we get the deal? From someone I met for the first time at my meetup a couple months prior. He wholesaled it to us.

More importantly, how did HE get the deal? This was his first EVER deal. First ever contract, etc.

He didn’t do any paid digital marketing. He didn’t send out any mail. He didn’t make any cold calls.

He literally just started telling people he was buying houses. He started talking to everyone he knew saying he was looking for a fixer-upper. By taking that simple action and a friend-of-a-friend situation, he came across this deal. Distressed condition, divorce, and a set of Sellers needing speed and convenience.

Because he knew us through the meetup, he reached out for help before he took the appointment in exchange for getting us the deal. So we helped him along the way and he was able to get it to the finish line.

You never know how you can work with people. What you might be able to do to help them. What they might be able to offer you.

We actually track "network" as one of our marketing KPIs. It's a catchall for any deals that we didn't have to directly pay for through direct-to-seller marketing or weren't listed on the MLS - wholesalers, agent pocket listings, people from the meetup, etc. It's made us well over 7 figures in gross profit over the last 4 years.

Your next (or first) deal might be one conversation away. Hope that helps.

 Definitely. And yeah, that's why I'm glad it happened when it did, not on our first deal! We were able to make it work but that could've been devastating if we didnt have the reserves or the active income business to make up for it. 

Some deals are better than others. And some deals sting for a long time afterwards. Although I learn something on just about every single deal we do, usually the ‘stings’ come with a lot of education, so I’m here to pass it on to you guys.

For context, my partner and I own a direct-to-seller SFR flipping and wholesaling company. We've been able to keep some rentals along the way, but operating in a west coast market (Reno, NV - median home value of $525k), and even finding our own off-market deals, it's REALLY rare where we can fully cash out refi an SFR deal to pay off the short term debt and have the rents cover the new mortgage… even when rates were half of what they are today.

When we HAVE had those in the past, we’ve kept them. But even being able to do a full cash out, it's hard to pass up the $40k-$60k pay day for a rental that produces negative cash flow. (Yes, I know my 60 year old self will call me a dumbass for this, but that’s for another post).

Rewind to February 2022, a 6 unit pops up on the MLS. Super clean brick building, under rented, and sitting on some good zoning that will allow more units in the future with no parking requirements. Bingo! We'll keep this one forever and develop it later. We offer non-contingent and go into contract for list… $825,000.

With the current cap rates for multifamily in Reno, checking the rental comps, and after a light rehab and re-leasing at market rents, there's NO DOUBT that this building is worth $1.2mm, even without the zoning! *Laughs in DSCR at 7%*

If this is true and assuming 75% LTV on the refi, our new loan amount would be $900k. Full BRRR after the estimated $50k rehab!

After doing about 50 SFR flips, how are we going to fund this thing? Well… the same way we've funded every other deal in the past… with 100%+ financing of course! Private money, high interest, and a 1 year term! $550k in first position and $300k in second position to be exact.

After raising the $850k and paying for closing costs, we close on the deal and get a check BACK at closing to start the rehab. Common practice for us in the flipping world. Let the lessons begin!

Was the building what we thought it was going to be? Yes. Was the rehab what we thought it was going to be? Yes. Were the rents what we thought they were going to be? Yes. Sooo what happened?

Our first mistake (we just didn't know it yet) was how we funded this deal. We would have been far better off bringing in an equity partner up front and using less debt. More on this later.

Lesson number 2. For our specific situation - running the flipping company full time, having other rentals, having a team in house - we would have been better off leasing the units ourselves after the rehab and THEN passing it off to a property manager. I’m usually one to pass off everything I can, but for this deal and the resources we have at hand, we would have had the building leased up WAY faster and probably would have had better quality tenants too.

Number 3. Location, unit type, and rents! Reno is kind of a unique market in the sense that there really are no “war zone” zip codes like other cities. There are worse parts, but there’s really no part of town everyone stays away from completely, at least in the flipping world. This building wasn't in the best area, but we’re going to keep this thing forever right? It will get better!

All 6 units were studios. And of course, we’re doing all of this work to get the highest valuation possible, meaning we need to push the top of market rents… right? Well we did. We got the rents we wanted. But interestingly enough, we also got some pretty low quality tenants from that as well. It almost seems backwards, but with such low inventory, anyone who DID have options probably just skipped the studio and went up the street for a 1 bedroom unit for $100 more, or to a slightly better area. Just a hunch but I think we got some people who had no other choice.

Lesson 4. The market and not understanding commercial refi products. I don’t blame us for getting caught in a shifting market. We were just doing what we’ve always done. We’ve done this before with small multifamily and it was fine… but we definitely got a first hand lesson on what happens to refi products when there's a shift!

The previous two lessons added to this one though. Getting better tenants, and getting them much FASTER would have put us in a better spot in the market cycle to start the refi. By the time we had all the units rented and started the refi, it was too late.

Basically, this was right at the peak of fear locally. Late summer into the fall. The "oh ****" had set in for all of the flippers and retail buyers alike after seeing our market literally take a 10% hit in most SFR product overnight in June… and it had been continuing to drop since then.

The only halfway reasonable refi products we could find for this deal were DSCR, and with rates as high as they got, the building ended up only qualifying for right around a $550k loan amount. Enough to cover our first position lender, but remember, we still had another $300k of debt in second, plus some of our own cash we'd put in for the rehab above that.

We looked at it every which way we could; Bring in an equity partner now. Not a good deal for them. Refi and pay off the lender in 2nd out of pocket. This would basically bankrupt our business to keep one property. None were good options for anyone. But the building is still worth $1.2mm right? Lets just sell it, pocket our $200k+ in profit, and use it to keep building the business!

Yep, sounds good…

Until lesson number 5 came around. Buyers for multifamily are not retail buyers. Even though multifamily in Reno has been absolutely insane for the last 5 years, the potential buyers knew what was going on as inventory started to creep up…

The longer they waited, the better deal they were about to get. And more options kept popping up in better areas.

So wait they did. And so did we. And after several months of price cuts, we still owned the building. Funny, if we would have listed for $1mm right away, it probably would have sold at that price right away. But that was breakeven for us. No way! This is a good deal… until it's not.

Lesson 6. Chasing the market down. Luckily, we didn't run into this issue on any of our SFR flips during this time period. We priced aggressively and were able to move all of them pretty quickly, even the few that we lost on. But with this bad boy… chase it down we did!

We end up selling the building for $875k. A net loss of $110,000. That really hurt going to the bank and getting a cashier's check for $53,000 to take to the title company… to be able to SELL the deal. "Due From Seller: $XX,XXX" is never something you want to see on a HUD 😂

So is there risk in real estate? Of course. BUT… every deal works with a long enough time horizon. We got ****ed on this because of being overlevered with short term debt. If we could've held on even until now, it probably would sell $1.1mm or more. The market came back a bit. But it was looking pretty bad when we were listed!

So when you hear the guys talking about all of the distressed multifamily deals that are going to be coming soon because the operators can't refi out of their 2 and 3 year bridge debt they used to take down the deal in 2021 or early 2022… Yep. I just took you through a mini case study of what they are talking about.

All in all, it's all good. We lived to ‘buy’ another day. We’ll be in the game for life and it's a blip. I’m glad that happened to us when it did (not on our first deal) and we know a lot more now for next time than we did about a year ago. MOST importantly, we did right by our private money lenders. They trusted us enough to give us a lot of money for this deal, and even with the things that happened out of our control, both of them got paid back in full with the promised return well before the note was due.

Hope this helps.

“Team-Work Make Da Dream-Work!” Right? … Takes from Different Rich Guys.”

Kind of a funny post coming from me. To my detriment, I’ve unknowingly been ‘anti-team’ my entire life.

Teams have never been my thing. I’ve always done everything solo; only child, only really ever been into an individual sport (motocross), continued that pattern into adulthood with crossfit, an ‘Individualist’ profile type on Predictive Index, pursued music for 10 years because hip-hop was something I could get started alone… One of the same reasons for starting out in wholesaling real estate over 5 years ago (along with having no skill set, no money, and no other options, but those are for other posts ha!).

This is not a post to say just “work with other people and you’ll be successful”... but it IS a post to say “work with other people and you’ll be successful.” Let me explain.

I run a monthly real estate meetup here in Reno, NV. I really enjoy doing it. I love teaching others about what we know how to do in real estate and sharing everything I’ve learned in this business.

Obviously, the business indirectly gets things from me running the meetup - deals, private money, relationships, etc. The flip side to that are the takers. People that see you’re willing to give them something for free, and then proceed to get everything they can out of you until the well runs dry, then it's onto the next well they can tap into.

I see posts from people like this all the time (especially from new wholesalers) and it's always something about “let's squad up and do deals!” which 9 times out of 10, is a direct translation for “I can't figure this out on my own, you do the deal for me, and I have nothing to offer in return.”

That’s why this is NOT a post to say just “work with other people and you’ll be successful.”

Even with my background, I learned a long time ago that I cannot do everything I want to do on my own. Not even close. But I did do SOMETHING on my own. I learned how to wholesale. I completed 18 deals before partnering with my current business partner to start flipping houses.

For us, I knew how to find deals and he knew how to run rehabs. To a couple of dummies that have never run businesses before, that was all we needed to think that this partnership makes sense.

We both had something that the other needed to go to the next level.

Just from being active in the local market over the last 5 years, I’ve got to meet some pretty awesome real estate investors and work with them regularly. A few of them stand out as these guys that yes, they flip a lot of houses, but every time I talk to them I learn about more and more businesses or deals they are somehow involved with.

This week, I had separate conversations with two of these guys that fit the description above. Once again, I find out about a $20mm development deal one of them is working on, and find out the other is buying heavily in an out-of-state market I didn’t even know he was in, but my takeaway from each was the same.

They don’t do this alone. Not even close. In just about everything they do, they take a smaller slice of a MUCH larger pie than one they could bake on their own.

And that’s why this IS a post to say “work with other people and you’ll be successful.”

The difference is, these are both guys that have their own unique skill sets and they OFFER those skill sets in different types of real estate deals, partnerships, businesses, etc. This has allowed them to get their hands in a ton of different pots and both become successful in BIG ways.

Everyone has something to offer. Skills, capital, or even just the hustle to go out and find a good deal to put together. As long as you’re bringing something to the table, go for it. But don’t just post “lets squad up” because you didn’t make enough calls this week.

Sounds super sketch. I've raised a lot of PM for flips here in Reno from individuals and not once has anyone asked for my social (unless you're dealing with a firm like kiavi, civic, anchor, etc, but it doesn't sound like that's your question).

They want to see your track record and proof that you're an experienced operator that isn't going to lose their capital... but every time I've never once thought to myself "is this guy legit or trying to scam me?" It's the other way around. The conversations are always "how does this work, what's the return, send me a copy of the documents you use, where can I see your past projects, send me info on the deal" and that's about it. 

“Control Freaks Don’t Eat”

This is less of a specific real estate post and more of a general mindset one, but is extremely applicable to a ton of people I talk to who are starting out in real estate investing.

Earlier this week, I was talking to a newer investor here in Reno, NV. We were going over how we do a few different things at the company. Basically, she brought us a VERY hard deal to close, but we pulled it off, got it to the finish line, and she’s cut in on the profit, but she also stressed that she wanted to learn through this much more than get paid.

Getting to see a deal like that be completed front to back… learn she has! As have I. It was a fight every step of the way to get that one done. A great one for her to witness. It was everything most youtube videos and programs leave out about going direct to seller to buy deals.

To set the stage on her so the rest of this post makes more sense - she is the type of person that gets overwhelmed easily, but it's not for lack of effort. She’s hard working. She’s driven. She takes action. BUT, like some of my posts from earlier this year have pointed out, she falls victim to playing the ‘comparison game’ with others and also from a bit of shiny object syndrome.

She’s constantly comparing herself to people younger than her in some coaching programs they are in, hearing stories of their success and then questioning her capability as a person and landing at the conclusion that she must be doing something wrong.

She knows that in the future, she wants to be doing a different strategy than she’s currently pursuing. This causes her to pull focus away from what she’s doing now and want to learn more about that. Which triggers wanting to learn about other things she hears about, etc.

Back to the deal. Now that it closed and we could do a debrief on the last steps, we were going through a few things and how we did them. She, clearly with a feeling of overwhelm, stopped me and said “How the **** do you know all of this? How did you learn it all? How did you get to this point?”

First of all, I’m no expert and I’m not sure what “this point” is, but I can answer the other two questions.

I learned what I know from DOING DEALS.

It’s very simple. There is only one way to do deals. TAKE THE RIGHT ACTION.

Especially at the beginning, there’s nothing else to do. As long as you know the action you’re taking can directly result in a deal (which she does, cause I’ve told her what to do)... THAT’S IT.

We are obsessed with trying to control everything and getting things right now and are always thinking we should be farther ahead than we are or things should be different than they are right now.

What does that even mean? Nah, you SHOULD be right where you are because all of the action (or inaction) you’ve ever taken has resulted in you being here, right now.

You can consume endless hours of videos and course modules and podcasts, but it’s not the same as doing it. You cant waive a magic wand and do 100 deals by tomorrow. You need to get the reps and reps take time.

I’m all for learning. I dedicate time to it each week. But there’s a line. You have to DO THINGS with what you learn. And you don’t need to know all that much to start.

You can’t control MOST things.

You can’t control how good other people are doing (and it doesn't affect you anyway).

You can’t control that homeboy on youtube is 14 years old making $40k a month doing Amazon FBA.

You can’t control that after 4 confirmed calls and conversations saying “we need the house vacant for 2 hours for inspections, so you and your aggressive dogs are going to be elsewhere, right?” and the seller was still there WITH the dogs and only left after a 10 minute BRUTAL dog fight ensued and the one dog literally almost killed the other and they had to go to the Vet ER. (I wish I was joking. I had a rough week 😂).

BUT you CAN control how those things make you feel… and you can control picking up the phone and talking to more people, setting more appointments, and making more offers.

Whatever that ‘right action’ is for you, you can control doing THAT, and not doing other things that take away from it.

“Ask Questions… Just Ask the RIGHT Questions”

I get it. Doing something new is exciting and scary. Especially when we’re talking about something like getting into real estate with no background in the industry.

Through my local Facebook Group with about 1400 people in it and the monthly Real Estate Investor Meetup I run here in Reno, NV, I get to talk to a ton of new people interested in pursuing all sorts of strategies.

I was the new guy in 2017. I was scared shitless to go to my first meetup. I had no idea what it was going to be like. And just like the new guys now, I had a ton of questions. But most of them were the wrong ones to be asking.

A ton of new people start with wholesaling, so the rest of this post will be geared towards those types of questions. We’ll keep it to that because OBVIOUSLY if you’re flipping your first house, you should probably know a thing or two about financing the deal and rehabs before taking title to the property. Same with buying a rental, etc.

Depending on your current availability of time and capital (lots of time and no money), I think wholesaling is a good way to start out. You’ll learn how to find deals, talk to sellers, the language of the industry, the process of purchasing a deal, underwriting deals, more about the asset class itself etc., all while not being exposed to the risk you take on when taking title. All skills I use today to buy flips, rentals, etc.

When I started, I had no background in real estate or the trades, no connections, no money, had never bought a house, but was willing to dedicate the time and effort to see it through.

With that type of background, or lack thereof, I had ALL the questions. What I didn’t realize back then was that every question I had could be answered in about 45 seconds from someone that’s currently doing it.

So I understand why people keep asking the same questions over and over in the group and at the meetup. They just don’t realize that the questions are pretty unimportant to where they are right now. Some of these are very important LATER, but not now.

If this is you, right now, all you need to do is find ONE person that can answer things for you, and find more LEADS.

Leads are everything at the beginning. If you talk to enough Sellers, take enough appointments, and make enough offers, you WILL get a contract. People highly underestimate the volume in this step and focus on getting ALL of their questions answered instead of picking up the phone. And all of the questions are about what comes AFTER the contract.

"Which title company do I use? Do I need an LLC? What about taxes? How do I find a Buyer? What if I can't find a Buyer? How does earnest money work?"

This is NOT a post to say just do whatever the **** you want and jump in to anything before learning a single thing. But it IS a post to say I’ve seen literally hundreds of people at this point get stuck on all of those questions listed above and NEVER contract a deal.

They spend 6 months or a year taking minimal action, getting their answers on these, getting things all set up and ready to go… and then they quit because it doesn't work.

From the actions they actually DID take, it would be unreasonable to think a deal was ever possible. They didn’t talk to enough people to ever GET a deal OR develop any of the skill sets to have a better conversion on their leads.

If they found just ONE legitimate investor that’s willing to answer questions (probably in exchange for them bringing him a deal when they get it 🤯) all of that time would’ve been saved and could've been spent asking more important questions as they come up… the ones that you need answered from the experience of doing deals.

Hopefully that helps anyone that feels like they can't quite get the flywheel turning. Don’t get stuck needing all the answers to everything.