All Forum Posts by: Will Barnard

Depends on you and your skills/abilities. Certainly you can save money by hiring each individual licensed sub contractor but if you do not have experience in managing projects like this, you may not be able to perfectly schedule and manage each sub efficiently eating into your savings. You may have one sub delay you or not show up on the scheduled day messing up your entire schedule. Many things can go wrong which would eat into your savings. That said, the best way to learn in my opinion is doing so plan as best as you can, get some advice from a pro and do one. Even if it ends up costing you the same or more than had you hired a GC for it all, you gained valuable insight and experience for the next one and the next one. You have to start somewhere!

Not everything can be explained simply. There is no legal term for BRRRR or househacking either but anyone with any experience in the RE investing industry knows their definitions regardless if they appear in a dictionary or not, so this argument does not hold water. It appears you have taken much of what I stated in my previous post well out of context. Note that I used the word "typically" on multiple occasions.

"Private lenders are your friends and family. Hard money lenders are in the lending business. (If a professional lender loans to his mom, is it a private loan or a hard money loan?)" - Taken out of context. To answer your question, did MOM use her lending license and all the docs used for any other hard money loan she typically uses and more importantly, was it all her money or that of OPM? If the license was used and the money came from investors, she was brokering and as such, the license was required in all states and therefore, it was a hard money loan.

"Private lenders don’t charge points or interest. Hard money lenders charge these. (If your mom makes a loan to you and charges points, is she now a hard money lender?)" - charging points is not a defining issue to private or hard money. On this topic, if the interest rate plus points is in excess of the state usury limits, then a lending license would be required and as such, a hard money lender would need to be used.

"Hard Money lenders are licensed. Private lenders are not. (So, I guess you can’t call yourself a private lender in a state that requires a license?)" - NOT what I said, I said "typically". No state requires a lending license to make a personal loan secured by real estate so long as it is within the usury limits of that state (although some states may restrict the amount of loans of this type you could make in a year before requiring a license).

"If your terms are strict, you’re a hard money lender. If they are less strict, you’re a private lender. (?????)" - That is sad if this is what you ascertained from my post. You are poorly paraphrasing here.

While I agree one should not get "hung up" on a title, there is a distinct difference between hard and private money lenders and investors should know the difference. If you preaching they are one and the same, you are wrong and are doing a disservice to other readers claiming that. There are a lot of terms in our industry which have been made up and will not appear in dictionaries or law books, that does not change the fact that they have specific definitions that the majority consensus uses to define the term, BRRRR or househacking as perfect examples.

" IF" the flood zone can be removed, that is certainly a value add opportunity for this specific property as it would remove a deficiency in the property.

Common issues with new investors. I often see this as putting the cart before the horse. You have some team members but not the experience or knowledge of your market or how to estimate rehab costs which puts you at a big disadvantage. You would be better served to learn the process to estimate rehab costs on your own and get your RE license if you are serious about making this a serious business for yourselves. Having MLS access will allow you to run comps on your own and immediate without the need to rely on others. It also allows you to rep yourself on the acquisition AND the resale increasing your spread in each deal. That said, you may have to give away commissions at times to get other agents to send you deals (which is fine).

Research here on BP in the forums how to accurately estimate rehab costs (there are many threads on this topic and I have personally gone into great detail on how its done properly many times).

Practice, practice and practice more on estimating rehab costs and exit values (ARV's). This will place you in a much better position to start making offers. Having deals being sent to you before you have this skill set is the cart before the horse mentioned above.

There is not a one size fits all answer to your question as the true answer is this: It depends! It depends on your market, your situation, the seller, and some other factors.

In a seller's market or any highly competitive market, your offer is stronger with no contingencies or a very short contingency (i.e. 5 days or less). Your offer is weaker with contingencies or longer term contingencies. The best practice is to walk the site whenever possible and identify the deficient items, then put together your estimated budget for repairs. You make your offer based on this info. Once under contract, you can then pay for your professional inspections if you need that. Re-trading the price using your inspections is typical from some, but keep in mind that it should only be used when items that were totally hidden from your eye are found. Re-trading the price claiming the kitchen and baths need updating and it needs landscape and paint is NOT a valid reason to re-trade the price in my opinion as these were easily identified in your initial walkthrough.

If you make offers sight unseen, then you will certainly need an inspection period contingency and get in there with your professionals once under contract.

No, you are not missing much as your scenario is common to say the least. I get several “deals” everyday and in my high priced market, their fees they try to squeeze out of each are often in the 6 figures which I find absurd for simply locking up a contract with a seller at or close to retail, then expect a buyer to pay more. Crazy times.

This is another perfect example of why investors who flip should stay away from properties with major defects like flood plains, major streets, next to commercial, railroad tracks, air port flight paths, etc. You lose a lot of your potential buyers pool with these properties and the result is often a loser deal. Drop the price and get out of your dog, then deploy capital in a better investment and chalk up your losses to your educational expense! Trying to make this work by holding will likely make matters worse, especially in the environment we find ourselves today.

My post was a reminder to ALL and was NOT directed at you. Your post did not contain any violations and I can certainly be empathetic to your feelings as I have experienced much of the same over the years. It was others who were doing the name calling, FYI.

 Yes and no. So many fail because they simply do not understand the real estate investing numbers behind each deal and/or they do not understand that strategy is a marketing business and fail at getting leads or buyers.

You can use it as an entry to RE investing (build capital, build a team, build contacts and relationships, etc) but doing one an actual flip will educate you more than any 20 wholesale  deals as you take the deal from start to finish. 
Also, it is just a job, if you want to invest, holding real estate over time in an appreciating market will do wonders for you.

 Do you plan to re-sell without any repairs at all? If so, then you could run into appraisal issues or perhaps not if you show appraiser that you paid all cash and under current market value at time of sale. Comps in the area will determine your value by any appraiser so make sure you have good comps to support your higher price. If you do intend to make repairs, those repairs documented will be your “improvements” to the value since your acquisition.