All Forum Posts by: Asad Shaikh

@Hector Hernandez what is your current job? How much real estate do you own currently? What are your long term goals.

Set a goal, and then let's see if the BP community can help you reverse engineer it. We need a goal first.

@Logan Allec these are not my hacks. They are my father's, he owns multiple rentals and I have observed him over the years.

-He drives to meets contractors in a crappy car.

-He always negotiates pricing at first, but gives guys who perform repeat business what they are looking for as long as its fair. Reliable service > cheap service within reason.

-Once he establishes a contractor relationship, handyman, plumber etc. he gets their cell phone and will do a group text intro to tenant so they can coordinate mutual time to resolve any issue.

-I help him advertise rentals, and my simple hack is to have all prequalifying criteria in the first sentence of listing description to weed out all the tire-kickers.

-If I have a rental listing I need filled, I pay $100 for nice rental pictures and do one showing on the weekend only to get all potential tenants competing with each other.

@Ray Alvarez I am building my first spec home, but when I say I am building- I mean I am hiring a builder that I cross-referenced, researched, visited his job sites, and after checking all the facts sat down with multiple times.

Don't do it yourself, well actually if the bank is loaning the money they wouldn't even allow it.

The first step will be identifying an area of town where the vacant land prices make sense given the cost of construction. But to be honest, unless you are planning to flip the new build, it doesn't make sense as a long term hold because your build costs as a newbie will be high.

@Jeff Nobert my advice, and I am no expert:

-Three way call with your partners, discuss these details and iron out the skeleton of a profit sharing arrangement.

-Jot down major points (responsibilities, profit sharing, worst case scenarios etc.)

-Pay a real estate attorney for advice on what legal entity these partnerships should be done in and have them help you draw up an operating agreement.

-No matter how much you respect and trust these guys, make sure you have something in writing.

-Besides that I like your strategy, I would pencil in your goals in terms of gross profit on each deal, profit per partner on each deal, and how many flips you want to do in 2019. Then tackle those goals. Make them measurable. 

@Tamara Keith I am no attorney so I can't comment on anything besides what I would do in your shoes:

I would find three local attorneys that specialize in this sort of dispute and offer free initial consultations. I would discuss the facts of the case with these attorneys and get their assessment of whether you have a leg to stand on. If they are willing to take the case, compare their fees and see if their fees are feasible. If not, get one of them to write a threatening letter. 

It sounds like a headache situation to live in, I would just negotiate a lease termination while protecting your deposit. Tell the owner you just want to move with no issues, and see if you can work a solution amicably. 

@Edward Ruan

Full disclosure, I am commenting from Florida and I heard fees/laws in California can be ridiculously different. But lets keep it simple.

I would attend a local REIA meeting and find out who the reputable general contractors are. Then I would ask them what it looks like in terms of cost for them to permit and build an accessory backyard structure, including all their fees. A ballpark number is fine, talk to a few and then you will get an idea of real price.

After that, visit the city and see what the zoning laws are. What lots can you add a structure on? Which lots can you not?

Finally, the numbers don't lie. Add the acquisition price of existing house + projected price of add on structure, then look at projected rents for both units combined. Compare the rate of return to a multifamily structure. Thats a good place to see if its worth exploring further.

@Matthew Creel full disclosure: I am actually trying to begin this farming process myself, so maybe we can learn together but I'll share some of my thoughts here.

First of all, for for what purpose are you farming? I'll assume you are an investor looking for property to flip/hold. 

With that in mind, the first place I would start is to hopefully try and find a submarket that is within a consistently drive-able distance from where you live. I would say try and look within a 30 minute driving distance, preferably closer. I find that investing works best in areas where you posses a unique advantage, so in this case it could be a neighborhood that you are intimately familiar with due to local knowledge...growing up nearby etc...

After you find that submarket, I would drive the blocks/streets and get an unscientific opinion on the area around you, meaning how does it "feel." Is this an area you would feel comfortable investing in? Is this an area where homes are being renovated and improved, and new construction is in the vicinity? Are there major employers nearby?

Then I would dig into the numbers. Either get your real estate license yourself OR have a local realtor run comparables in that  neighborhood/zip code. See what the trends are in the last 2 years. Are prices going up or down? Are they stable? Look at cash sales as well, and then drive by the cash sales to see if they have been renovated and are being used as buy and holds.

I would also look at rent to purchase price ratios and see if you can cash-flow a good amount. Excel modeling will come in handy when running numbers on a specific property.

PS. I am no expert and these are just methods I would use to start.

Pictured above is a rough rendering of the first speculative home projects that I will be investing in. If you want a little context from over a year ago (when I was going to go down this path but it didn't end up working out), check out this previous discussion I started on BiggerPockets that had a ton of great discussion:

https://www.biggerpockets.com/forums/44/topics/517...

Anyhow, here are the cliff notes of the new project- what has happened up til now, rough numbers and structure behind the project, and challenges going forward.

-This project is located in the "North Hyde Park" neighborhood of Tampa. It is a gentrifying neighborhood with older resale homes trending in the 150-250k range, and new construction trending in the mid to upper 400s. This neighborhood is the closest to Downtown Tampa, and depending on the lot of a home- walkable to a brand new and hip Urban Park at the beginning of Downtown.

-I identified an off-market piece of vacant land in this neighborhood through a real estate broker who is a friend. I'm an agent myself, so I had told my network of agents my specific lot acquisition criteria a few weeks back. (Within 2 miles of Downtown Tampa, neighborhood with current new construction activity, price point for dirt under $100k.)

-Comps for single lots in this neighborhood were going for 115k-135k at the time I purchased. Now they are more like 120k-150k depending on the block in the neighborhood. That being said, those are standard sized lots which are 45X95 in dimension. The lot I purchased was for $80k, but a subprime size of 25X95.

-This lot was under the minimum size needed to build technically speaking, but still it was a historic "lot of record" it was fully buildable as I verified in person and in writing with the city. (Always get things in writing from the city. Pro tip on approaching the city, always approach them in a humble and open minded fashion. This helped me move through the bureaucracy a lot quicker.)

-After acquiring the lot, I quickly realized a few things: #1 I probably overpaid on the lot a bit or paid close to market value, it retrospect I could have probably negotiated $65k on it. #2 This was a very, very narrow lot and given the building setbacks, it would be very difficult to accommodate a sizable home on it. #3 Without any construction background, hiring the right builder to co-venture on this project with me would be critical. A cookie cutter builder would not suffice.

-My vision for this lot, which any common sense person would think is a narrow crappy lot, is the following (we'll see how it pans out in a few months): modern home, geared towards a younger urban buyer, three stories high with a master suite that offers downtown views on the 3rd floor, 3 full bedrooms and 3.5 bathrooms (so three full suites which adds value for a single professional that may lease out 2 extra bedrooms), striking interior finishes vs vanilla.

-I quickly began driving around town and taking pictures of homes that looked appealing to me, then looked up the addresses in our permit search system to see the contractors/builders who pulled permits etc.

-After doing this, I connected with 4-5 builders and finally the right fit that looked at this project as not a burden but saw the vision and was excited to work together. This builder also had a great track record.

-We visited the city together after developing a plan set (I generated ideas, he did all the detailed drawing and engineering). We were able to negotiate setback exceptions, stormwater drainage exceptions, and even a design exception for the style of build we were doing. We submit for permits within a few days. So what do the numbers look like? The build we came up with is around 1950 heated square feet and 3 bedroom/3.5 bathroom.

-Anyhow here are the costs:

Dirt-80k

Surveys etc (boundary, tree, topography)-1k

Construction budget hard costs-230k

"Oh sh**" budget-10k

Builder Fees, Architectural Plans, Architectural Consult Through Project- 35k

Total all in: $356,000

Projected sales price: $435k (conservative). Based on activity in the area, very realistically pull up to $475k.

On sales price of $435k, net proceeds after realtor fees & closing costs are $408,900 or profit of $52,900.

We are self-funding the project, and would pay out only 20k of builder fees on front end, so total investment is about 341k for a 53k return or 12.2% in my low-end situation. 93k in the stretch situation, which is 26%.

We are doing the first one in cash, because we don't want to deal with a bank draw schedule but I plan on doing the next with financing if this one is successful.

What am I missing? Will be sharing updates as project moves along.

Good morning BiggerPockets,

Quick introduction- my name is Asad. I’m a licensed realtor in Tampa, and have been licensed for two years. After a relatively successful second year, I’ve saved a good sum of money and feel comfortable venturing into a new arm of real estate: wholesaling.

The reason I want to start wholesaling is simple: I stumbled into it while looking for infill urban lots (vacant lots or teardown opportunities) in gentrifying neighborhoods near Downtown Tampa. I was initially looking for these lots to purchase with a small investor group (me and two family members) :some to buy & hold and others to develop cool modern single family homes on.

That being said, the methods I was using to find lots were pretty much connecting with other wholesalers and realtors for off-market deals. These deals often were at retail prices or very close to it. Then something crazy happened a few weeks ago: I happened to be showing a client a home in an up-and-coming neighborhood. After the client left, I saw some neighbors. I started chatting it up with them, and gave them my card and told them to call me if they knew anyone in the neighborhood was looking to sell.

A few days later I got a call from one of the neighbors, they referred me to a family member selling. After a 4 hour negotiation at the family member's house, I signed a purchase contract on the house for land-value. I used a standard AS-IS contract with an option to assign, but only did this because I thought I may assign it to an LLC I would later create. After running the lot by my builder partner, he wasn't too thrilled with doing a project on it… frankly neither was I after reviewing sales comps. We are a small group, breaking ground on our first project this month, we don't have the economies of scale to build at a low cost per square foot. The lot didn't make sense for us but…

I though, why not wholesale it. I’ve never wholesaled a property before, but was able to assign the contract for a net profit of $15k. 

I want to roll $5k-$10k of this profit back into a mailing campaign targeted at a very tight geographic region. I want to strictly target purchasing vacant lots, or homes that sit on double/triple lots. I figure I have multiple options once meeting a homeowner that wants to sell: I can purchase a lot and close it cash with my investment group, I can lock up a lot and assign it to another builder if the numbers don’t make sense for us, or I can list the property as a realtor if the seller’s price is too high. Where do I begin?

What lists should I buy, from where, and how can I narrow down the right properties? Where should I buy the mailers and in what frequency should I send them? I figure I should target 500-1000 specific properties and mail them 5-10X each for optimal results. I only want to focus on a tight geographic area because that is where my expertise lies.

I figure if I hit 500 hyper-targeted properties, I may have a 2% response rate of serious sellers. This is equal to 10 responses, and if I can close just 2-3 deals from a campaign with high margins, I'm sure I'll get my money back and then some. I can also blanket my geographic target area with cold calls via Mojo triple line dialer if needed.

I want to share my progress, as I learn & take advice from y’all, play by play in this thread. I figure it will be to follow along as I will be very transparent in my results either positive or negative. I know there are plenty of Gurus out there to learn from , but I trust my BP folks first and foremost! I’ve learned so much from the Podcasts and forums. Thanks for any help!

Any questions or advice?

Update:

The partnership with this builder didn't work out. We still have a cordial relationship, as a matter of fact I will be listing two homes for him as an agent. However, I will be starting a separate fresh thread about our first actual construction project (over a year later), which will be starting within the month. We are days away from submitting permits. 

The insight in this thread was invaluable, so kudos to all those who helped.