All Forum Posts by: Andrew Ware

I don't pretend to understand new construction. But $30k equity split two ways every 8 months seems like a slow and risky path. That first house you are putting up 150k (all the land plus first house and I didn't hear anything about the time and expense of parcelling the land) before you get a penny. And that assumes that values stay where they are. That time value of money and your inexperience make it feel quite risky for basically the same return you'd get from a flip. I say inexperience because you quickly realize that running a business is not the same as working for a company. When you work for a company your job is your job. When you work for yourself your job is everything. More businesses go out of business due to lack of available cash than any other reason. You can be profitable and if the cash isn't flowing favorably you can still be forced out. It happens all the time. I'm not saying don't do it, it might be great. But I would be very serious about learning the ins and outs of running a new construction business. The way I understand it, this kind of project succeeds due to the efficiency of scale. Unfortunately, at least early on you are giving away that advantage entirely.

I get very nervous whenever I hear grandiose plans like this. If you are a big developer already with lots of experience then maybe if you can show the trends headed in your direction. But you explanation is very muddled. That is kind of the nature of this kind of project without real expert analysis. It's unclear whether its forward thinking or wishful thinking. I will say this however. When you are gambling a huge factor in your success is limiting your downside risk. I understand the desire to make all the profit and to have a big multiplier by improving the whole area. But each project needs to make financial sense on its own merits. You need to be able to buy one property flip it, and sell it at a good profit so you can fund the next project. If you don't do it this way you end up in situations where you are forced to throw good money after bad. Don't put yourself in that situation.

Welcome Rhon! I'm in West Gardiner. I haven't bought yet because I'm getting my finances in order and working on buy in from my wife.

I mean to say there is a lot of variability in heating costs from house to house.

I agree that Cap Ex is probably low. I'm guessing it's a 125+ year old home. I'm guessing 116k is market rate? There's way too many distressed properties up here to pay market. And to answer all the questions about heat. It is typically included in most of Maine. You end up with big problems if they don't pay. And renters have trouble budgeting the money for a high expense 6 months a year. In fairness, it's difficult to budget for heat when you realize your are living in a home with single pane windows and insulated with horse hair from the 1900s.

I have a madlib question: Is course that costs worth the money? No. Seriously not ever. That is not to say that it's not worth spending more than $2000 on your education. It's just that those courses are a money grab. They don't have secret information, they aren't better than your local mentor, they are just good at marketing. You want to spend money becoming a realtor fine. You want to lose $10k on your first flip? Awesome! You think spending a ton of money on a course instead of using it as a down payment is just foolish. Spend $100 reading both of Brandon Turner's Books, J. Scott's books, Rich Dad Poor Dad, and Millionaire Real Estate Investor, Flip, Hold, and the E-myth and you are now $9900 ahead of the game.

If you haven't already, post your numbers here. People will critique your deal and point out things you may have forgot. Just be aware that it will mostly be downsides. Don't let it paralyze you more if the numbers still work.

This sounds like fear talking. If anyone gets mad at the price it's going to be the seller who feels taken advantage of. The buyers typically know the score if they know you are a wholesaler. You are almost exclusively dealing with flippers and other investors as a wholesaler on the buyer side. The buyer will be annoyed at other things like you marketing deals that aren't yours, trying to sell things that are already on the MLS, not knowing what you are doing, pitching them deals that stink, or otherwise being shady. If you are bringing them a good deal that is off market, if they don't like it they should be doing the hard work of finding their own good deals. But most people who get a good deal that lands in their lap aren't going to want to kill the rainmaker.

I believe you also have to own the property at least 5 years total?

What you are asking isn't clear or doesn't make sense to me. You can't use your investment property money to purchase your primary. It has to be investment to investment. I'm not sure what you mean about Refi? Buying it from yourself? If you are talking about combining the homeowner exemption and 1031 to chew up depreciation and/or a lower basis I've heard it is surprisingly actually possible. I'm going to try to outline it but please be aware that I'm probably getting details wrong. 1. 1031 an investment into another investment. 2. Hold that as an investment for 2(?) years 3. Convert it into your primary residence and live in it for I believe also 2 years 4. Sell it and claim your exception.