Quote from @Nolan Gottlieb:
I personally think you have taken the right first steps...I also think you're getting a bit ahead of yourself (I'll explain below). I totally understand the "drinking from a fire hose" feeling, I've been there! Here's a list of suggestions that I'd start with:
1. Read J Scott's book on estimating rehab costs. It's a great book on the process.
2. Get a lender (or bank) to pre-approve you and give you a purchase price and rehab budget that you can work in. This is why I said you may be getting ahead of yourself :/ You may already have this, but didn't mention it in your post. Unless you know what your budget is, there's no point in running numbers and pricing out plumbing, electrical, etc. unless it's just recreation.
3. Talk to and build relationships with contractors. Internet quotes also don't mean a thing. If you don't know any contractors, google a local plumbing company (or any trade) with good reviews and call the office...tell them you're bringing lunch by their office and sit and talk to them for the 30 minute lunch break or pay them for an hour of their time to ask questions. They won't be able to give you accurate quotes on anything unless they see a property, but they can explain how the process generally works and what pricing looks like.
4. Find a good buyer's agent in your area and start looking at houses in person...after you've gotten your pre-approval, of course ;)
5. Now run your numbers!
6. Start making offers.
7. Win said offers.
8. You will learn more in the first few days after closing than you will in months of hypothetical investing.
Hope that helps :)
@Nolan Gottlieb
Thank you for this! We do have a budget to start. We're initially looking for all-cash offers. We have $100K cash for purchasing, and I have a $50K HELOC for rehab budget. In this Houston market, though, we're starting to realize that may not be sufficient and we may HAVE to use lending for the initial purchases. Any house we could get under $100K looks like it would probably need more than $50K in rehab to get up to needed ARV.
When you purchase, do you use an LLC/Corp or do you buy in your own name? We were wanting to do everything in a company name from Step 1, but with no income and no property already in the fold, we know it'll be a hard-bet to get approved for financing as a company which is why we were focused on all-cash offers initially. Perhaps we would need to do things in our name, and then later move the property under an LLC or Corp.
I have J Scott's appraisal pamphlet printed up and on my desk. I'll check out his book. I see it's highly rated. I've reached out to a couple contractors so far, but everyone is tied up in projects right now and "currently unavailable." I need to find a way to bring value... so maybe like you said, bring them lunch or pay them for their time. Good ideas.
I'm excited to get started! I need to close on the HELOC hopefully in the next couple weeks, then finish up the business plan with my partner and file the docs with the TX SOS to get everything on the up-and-up. I've spoken with a couple of agents already and a potential PM who looks promising. Just need to get a contractor and/or handyman in the fold. Almost there!
