All Forum Posts by: Andrew Campbell

Hey BP family! I have been quiet for a long time, got a few extra deals under my belt, started a family, and ranked up in the Air Force.  It's been a crazy year.  All of it has led to this; I've landed my first multi-million dollar deal. Fully closed, and I'm taking control in the next few weeks. My new management is postured to take over (with full trust), and we are identifying additional maintenance personnel to come in and start bringing the units up to our standard. 

My question revolves around changing public image.  I know what people in the area want; once they come in the door and see what we are creating, they want to be added to the wait list.  However, what successful strategies have you found in actually getting people on property?

About the property: 230 doors, 2 pools, 2 club houses, 50% of property is direct golf course frontage, bad reputation in town for being run down, actually is run down and in need of renovation, currently running 22% vacancy as a result.

What are we are currently planning:  Training personnel to upholding our business standards, renovating units at a rate of 8-10 days per (based on previous experience), changing the name, new signage, creating actual curb appeal through external paint and landscaping. 

The real question: When you have actually been successful in turning around a larger property, was it organic? As you progressed, did word of mouth do it for you, or did you start a campaign of some kind?

I am looking at FB adds targeting locals looking for an apartment, they seem like a viable solution.  Newspapers are dead in my view, but a few people have told me they had success.  Additionally, I've been told simple picket signs/flags lining the property highlighting new ownership and renovations can drum up conversation. Honestly I'm not sure. It's a great neighborhood, we are the ugly duckling for sure; maybe visual construction along is enough to get people curious. 

What do y'all think?

There are deals in every market and in every economy.  The only things that change are tactics.  Several people have already mentioned cash flow.  I have to jump on that bandwagon.

While there isn't anything truly "recession proof," there are investments that are resistant to the effects.  Rents (if priced right) don't really flex too much in a recession or "crash."  So even though the value of your home may drop on the resale side, you will still have positive income from your renters until the market rebounds.  Not to mention, when a housing market gets weaker, rental market gets stronger.  

With all this being said, run your numbers. Make sure you can comfortably cashflow. Verify your calculations with someone you trust.  

The right time is right now.

One of the things mentioned in the BP podcast (quite a bit) is knowing what you are good at, or at least having an idea of what you might be good at, and offering that service for free to someone who is where you want to be.  That's a really long sentence basically saying, volunteer your time to a full time investor. 

When I was 21, I worked for my aunt for free. Once, I almost renovated one of her houses by myself.  I took the skills I learned there (tile work was my specialty) and offered those skills at a discount to a local investor in exchange for learning how he found/negotiated deals.  All the while I was saving what little money I made.  By the time I was ready for my first deal financially, I had a basic understanding of the roadmap ahead of me as well.

Do yourself a favor; save your money. Find a local investor, offer your service, learn from them.

Investment Info:

Single-family residence fix & flip investment in Kathleen.

Purchase price: $255,000
Cash invested: $37,000
Sale price: $302,000

First "luxury" flip.

What made you interested in investing in this type of deal?

Had a few deals under my belt and decided to tackle something much larger and test my abilities as a craftsman and manager.

How did you find this deal and how did you negotiate it?

MLS. Bought remotely as I was moving to the area on orders. Negotiated through an agent.

How did you finance this deal?

VA loan, as it was going to be my primary home during the rehab.

How did you add value to the deal?

Full gut. Took down walls to open up space in the master bath. Trenched slab for new plumbing runs, tile and wood flooring throughout, scraped/smoothed ceilings, paint, moulding, quartz counters, framed/built custom showers, marble backsplashes, artistic tilework, etc...

What was the outcome?

A house I was truly proud of turned bad. Unfortunately a divorce forced me to sell it off market well under value. 10k profit.

Lessons learned? Challenges?

We were falling far behind schedule, cabinets needed paint finishing. Our painter was on another job. We decided to hire someone off craigslist...I think I just heard you scream. I know. As you can guess, it only put us further behind schedule; 2 weeks to be exact, to undo their work, prep/prime, and finally finish.
Only hire people with solid references that live up to the quality of your product!!

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $105,000
Cash invested: $24,000
Sale price: $141,000

First flip, great learning experience.

What made you interested in investing in this type of deal?

It was easiest to get into. Young military guy buying his first home with VA benefits and a mind to break into real estate.

How did you find this deal and how did you negotiate it?

My real estate agent. I was looking for property in the 60-80k range. She asked if I'd be willing to go up a bit and introduced me to this. I should have negotiated the deal better; I could have got it much cheaper, and I knew it. But, I had a soft spot for the older lady that was selling it.

How did you finance this deal?

0% down VA benefit mortgage

How did you add value to the deal?

Complete facelift, to include some pluming and sub-floor work. All new windows, new front door, landscaping in the back, new countertops, appliances, all flooring, fixtures, and paint.

What was the outcome?

Roughly 10k profit and 6 months on the market.

Lessons learned? Challenges?

Always look at the location from the perspective of your end buyer! This was a SFH, and I didn't even look at the school zone once. It ended up being zoned horribly, and the better school zone had tons of new construction and availability. It sat on the market for a very long time and I had to do several price reductions to finally get it sold.
Also, don't be afraid to outsource your weaknesses. It's much cheaper to hire someone first, rather than attempt to save money by DIY and failing.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I would recommend Ed Perales Construction in Clovis, NM. They are very investor friendly and did an amazing job for me.

So I've found myself right in the middle of a situation I have feared for a while now.  So I'm in a military area with a high turn over rate. But over the past 6 months the market has been completely saturated, a true buyer's market.  Now while this is a great time for me to stock up, I fear it because I'm worried my standard formula in competitive markets may fold flat with so many available options to the end buyer.

This particular property has all the right math I usually look for, with a projected ROI of roughly 28% after $30K in rehab. It's an easy facelift foreclosure in a nicer part of town. Inspection checks out with my usual inspector and I can't seem to find any hidden liens to bite me. Everything is green, but I'm still hesitant simply because I don't want to get stuck with this thing on the market for 100+.

So what say you BP family?  How do you make your property stand out in a buyer's market?  Do you spend less on the rehab to afford yourself a few pennies on the dollar?  Or do you swim to more familiar waters?

@Stacy Weng of course you should be concerned with your ROI, however it can be difficult to accurately project these metrics in the beginning. There are so many factors that generally you only get a feel for after a few deals (i.e. rehab costs, whether an appraisal is accurate, neighborhood comps and how they relate to your project, etc.). My first flip yielded just over 15% ROI; I still think that turned out great for my first time even though I shy away from anything that low these days.

The point is @Alfie Bartley, has it right. Do your due diligence and crunch the numbers, but don't box yourself into a strict ROI just yet. You need a few deals under your belt to start to see past the calculators to real/true values.

The biggest pieces of the puzzle for me when I first started out were understanding the math, understanding and doing my due diligence, and having a general plan of attack for the flip beforehand.  Just understand that you will always win when you act.  Maybe not monetarily, but you will learn from every action, and money lost is tuition paid to the school of hard knocks.

Don't wait to be completely comfortable, that moment will never come.  Don't try to learn everything before your first deal, no one knows everything regardless of how long they have been in the biz. But do the due diligence, know the house, know the neighborhood, make a budget and a plan then follow it.

@Darren Davis, like everyone else I'd like to welcome you to BP! I spent a while here before posting anything, so good on you for jumping right in. I agree with Joe, gurus can be good for motivation at times; but make no mistake, they are in it for the money first. But who can blame them, we do the same thing. 

I understand your desire to get everything right the first time. No one wants to make a rookie mistake and lose, especially on their first deal. I was scared to death when I bought my first property. However, many people will research to the ends of the Earth and have all the knowledge you could ever glean, but never close a deal. I encourage you to learn and pick the brains of this forum, almost all of them are smarter than me. But the most important thing to do is act. Don't be reckless, do the math; but don't wait to be completely comfortable either, because that day will never come. 

There are many ways to get creative with your financing that are not immoral. My first property was a duplex that I moved into and rented out the other side. With that strategy I didn't have to fork over the traditional 30% and I used the rent to pay for renovations. Sold it off to another investor and I was off to the races. Of course I followed my initial success with cockiness and mistakes, but that's where my greatest lessons came from. 

Sorry for the long winded post. Keep talking to those you admire, play with the calculators, do your due diligence, and act! You'll do just fine. 

Hey James, I've been out of Nashville for about 2 years now but still have a few holds in the city and a good grasp of the current markets in the northern outlying cities (i.e. Hendersonville, Gallatin, Goodletsville, etc.). 

Drop me a message if you think I could be of any assisstance.