All Forum Posts by: Account Closed

How about this for a real life fix & hold scenario (just finished this one last week)

Duplex: price 92.5k

ARV: 150k

Rehab: 6k

Refi: 105k CASH BACK

Profit: 6.5k

Equity: 30%

Rents: $1k/side

PRICE FOR THE PROPERTY: +6.5k 

And you're saying you can't get houses for free. I made 6.5k on just this deal with 30% equity

@J Scott

I'm locked in my LOC's for 7 years. And I live in Ft Worth, TX. Housing shortage is a real thing here. And rental properties are even more scarce. 400k people moving here this year along with the first installment of employees following their industry (Amazon, Toyota, Facebook, etc). Do I think that will come to a complete stop? No. Do I think I might have some trouble in the next 12-18 months with the market where it is? No. Will I have trouble when the market tanks? No. Will my bank pull my note? No. Will my tenants stop paying? No. You know what I will do when the market tanks? Raise rents.

And your acting like I am incompetent of basic real estate knowledge. Everybody knows about the cycle and where we are. And you don't think I have a plan and investor money to buy up all the cheap houses in the next year or two when the market crashes/corrects? You are sadly mistaken. 

Give it a break @J...stop being a troll

I know where I am and I know the risk involved. 

Well, @everyone 

First, I would like to say thank you all for commenting and discussing on this thread. I am giddy about the topic. And I appologize if I offended anyone or if my tone came across aggressive or unfriendly. I am a happy-go-lucky guy and do not mean any harm to anyone. Also, I am still learning. I don't pretend to have all the answers or even half of the answers. But I will be excited as all get out finding cool new things. And new to me might not be new to you (talking to the old heads here).

The goal of my strategy is to have assets so I can leverage against them to get more assets. Repeat over and over. But not endless. There is a exit at some point. When that point will come is a better question. Residential real estate is a starting point for me. The launch of my empire. A hedge against riskier investments. Real estate or not. But will most likely be commercial value ad strip centers. The same thing I am doing in resi but bigger numbers (in a sense). 

So say in 7 years I have 100 rentals (I will be 31 years old in 7 years), 50 free and clear, and the rest with 30+% equity. All of the properties I have received great returns, steady through the years, and a huge net worth from my assets. Now, I sell all of my free and clears and make anywhere from $5-10mil. BUT I still own 50 other income producing assets with high(ish) equity. When you are exclusively or heavily in the flip game, would you be able to hold you pockets to save $5-10mil? And how long would that take? And would you have income producing assets still pumping with that much cash on hand? I think everyone would say no. Especially in residential. Now, with your $7.5mil (avg) in cash, 50 properties to partially leverage against and producing income, the sky is the limit. And that sky is commercial RE where you follow the same pattern as you did earlier. But the numbers are much bigger, barriers are harder to breach, and you have millions of dollars cash on hand. Does that sound like the perfect storm or what? 

I have flipped my fair share for my time being in the game. I have done big, small and scape & builds. And out of everything I have done, investments properties with rental income is my favorite for the many reasons I have listed. But, I am not against small, quick flips. I recently did a 4.5 month overhaul to this historic property with a 900 sq ft addition. Between working with the Historic Committee in Fort Worth and the hassle connecting one house to another house, I can tell you I will not be doing that again. The stress, capital and time does not make it worth it for me. I made a pretty penny, but I won't do that again. Ever. 

But putting in "work" for these investments are minimal. A quick 2-3 week reno, and the 4th week its rented. And my two, full time workers are super easy to deal with and work their butts off. I could flip if I wanted, but I rather throw a LOC on it and lever up. Get my money back for other investments, get rental income, gain property increases. And on average, I put in 2 hours a week in PM for all 18 properties (some weeks as much as 5-10 hours, most weeks 0 hours). I manage all of the properties too. I can tell you the most popular call has been a plumbing issue. So I call my plumber, and he tells me the kids flushed a stuffed animal or whatever down the toilet, and I give them the bill. Very typical from my tenants.

I said this earlier and will say it again. I have nothing against flipping a property if it's easy and quick to get some cash. But I don't think I would do that full-time again. But in Ft Worth, those quick flips are few and far between to make it worth your while. 15-25k sounds nice. Equity and LOC sound much better to me most of the time. Esp when your under my "ARC70 Rule".

For flipping, you can bust your *** and make 7-figs a year. But what if you don't work the next year? What's your income then if your asset holdings are small. If it takes me an average of 2-3 weeks to fix and rent my houses. Double that for finishing touches to flip. Putting me around 17-20 house a year with my crew. Income producing. @J...I get that you're scaled, but I'm not necessarily talking to the people who already set themselves up like you have. 

But I said this earlier and I'll say it again, my goal in real estate is to set myself up for the long term, but more importantly, have my money work for me. Not me having to work for every dime I put in my pocket. 

@Jay Hinrichs If I am a landlord in 5 years, I will give you a contract and my gun so you can shoot me in the head hah! Already in the works of getting that ironed out. On the fence about hiring a part-part time or get a management company to come down to 4% and use my contractors. I can get them to 6% using my guys, but they won't budge unless I pick up a few more houses.  

@John Chapman Okay, I appreciate the comment. I think this will help. I am new to BP and still learning the ways to communicate to the crowd.

I can agree that I sounded a bit like a guy knocking on your door selling a the unbeatable two-ball cure-all. FREE FREE FREE! You had the model correct:

"If you are talking about buying at 70% minus repairs, fixing them up, refinancing so you're out no money, then I can at least understand that model" (VALUE AD MODEL)

My whole point of the post is that some flippers in my area grossly undervalue long term holds. And many people are looking at the wrong places. 

There is a threshold to these hold properties where a snowball effect comes into play (at least in DFW). Once you hit a certain point where cash flow is coming in, tenants are happy, contractors on lock, deals are healthy, the sky is the limit. And at this point, if you have to pay 5-10k for an investment property, then your rents will cover (the # of investments will vary depending on how people manage & charge rent). If you run out of money, put another LOC on your current equity holdings that are not levered. And those deals are easier to find than people make it out to be. In my opinion, if you are playing the game right, then your contractors and purchase price are the ticket. But if you are looking for these types properties on the MLS, Zillow, Realtor, NetWorth, or Western Acquisitions the you are certainly looking in the wrong places.

The vast majority of the deals are found from your local "mom & pop" wholesalers. And where I am from, there are thousands. I have found that these types of people have full time jobs, they are looking at real estate for a new profession, and want to make some quick RE play money before they get fully invested. These are where you find your deals. 

@J Scott I am not trying to "dis" the flip game. I've made good money flipping property. But I learned that it's a one time payout. And I didn't like that. Once I ran my numbers on how I can manage these properties, where I buy them and how I ad value to them, I realized that I am better off just getting investment properties. Not to say that I won't do a flip every now and then to get some cash. But it is not the primary focus of my business.

The point of my post is to explain my opinion that flipping houses is not what it's cracked out to be if you haven't truley scaled the business. 

@JD Martin Don't be raining down on my parade ;)

As a 24 year old real estate investor who has been in the industry for 13 months, everything I find is new to me. And it gets me excited. Enough to write a post about it. 

And I would beg the differ, most people I talk to do NOT know about this strategy. When I tell people that I can get houses for free their ears perk up and the questions start rolling in.

@JD Martin I guess I am talking about my market, Dallas/Fort Worth. Growth here is crazy and big industry is moving here like it's going out of style. 

My whole point is that you get automatic money for years to come. And yes, you need to know the costs that come along with it. And location is always a huge factor in real estate. 

I thought I would share my strategy in hopes that people would see the awesome strategy to get homes for FREE, income producing every month (esp in my market where rentals are in great need), and the property increasing in value every year. 

This was an eye opener to me because I always thought that you had to pay 30% to get a rental property. And when I found out that you can actually own 30% equity in a property for free, I freaked and started doing my research.  I got so excited about it that I changed my entire strategy around this concept. 

This strategy is the essence of why I got into real estate: making money without having to work for it. Making my money work for me. 

For example: If I have 50 rental properties free and clear in 12 years, making 50k a month gross, 600k gross annual (around 200-250k net after taxes depending on your situation), and you didn't have to work but 2-5 hours a week on all of these properties. Is that not the American Dream at its finest? 

I think you guys really, really misinterpreted what I was trying to say. Instead of taking my strategy as it is, you have decided to try and prove it wrong. That was not the purpose. 

This is a proven strategy that if you ACTUALLY did some REAL number digging, then you would find the truth. 

To put it in one sentence: would you rather get paid once for doing work, or every month for the rest of your life?

Answer seems super simple, to me. Esp if you had no money down.

And J Scott, guru pitch, I feel so honored to be called that lol. But we are talking real estate, not banking/finance. Plus I would rather get paid EVERY MONTH AND HAVE 5-7% annual growth than wait 20 years to get my money.

@Mark Allen  I am still brand new to the game. I thought that diversifying 40 houses instead of 40 unit apartment would be smarter to start out with. 

Hey Guys!

I wanted to share some knowledge I learned with you on this beautiful Saturday here in Fort Worth, Texas. I live only a couple blocks away from the TCU stadium and so I can hear when the big plays happen. This is a very electric atmosphere. Anyways, I have been into real estate investing for about 13 months. I have flipped 6 houses, built 3 houses and have 18 doors for rentals (just picked up another duplex). And I have been contemplating whether I am doing the right thing or not. But I found my solution through a mentor which is stated below. It was vague, but that was his intention. 

So I had a guy on BP ask me a series of questions about my flipping and holding strategy and this was my final message in the DMs. 

The last question he asked is if my strategy is short or long term?

"Long term. My strategy is all long term. You have heard before that real estate is not a get rich quick game. And the only way to truly become rich is through long term holdings. But, don't let that scare you, you get paid every month too!

The way I see it is this: If I flip a property and make 25k, I only make 25k, one time. But when I get a property for free (through financing), own 30% equity (free through financing), and charge a $1200 rent, I can make my money back in about 5 years. You do that 20 times in a year for 5 years, you have some serious cash flow and have enough earning power/assets to do anything you want. Ever.

This whole thought process started with one of my mentors, who is worth around $500m, asked me 6 months ago: "Beau, why are you selling your houses. Why would you want to give away net worth?"

And I thought about it. Best described in an example: say I make 25k off a 100k flip house. But through financing I can retain that house for FREE and have had a 30% equity, or 30k (increase your net worth). So technically, I am making LESS money up front selling the house (25k cash vs 30k net worth), and loosing infinite money down the road through rent and property increases.

The way to make your money back through retention is to slap a home equity line of credit on that house. Usually around 70-80% of your equity holding which would be 21-24k disposable money for business. So, what would you rather have? 25k profit up front OR 21-24k profit up front, a 30% equity stake and rent for many years to come?"