All Forum Posts by: Christopher Gilbert

My experience with all of the local wholesalers is that their ARV is always at least 10% too high and their repair estimates are about 25% too low. The estimates may work if you are running your own crew but if you have to contract everything out be careful about the numbers and do a thorough walk-through. If you do not feel you are able to figure out repair costs at a quick glance bring someone that can.

3 weeks is not much time, it has taken us years to figure out ways to consistently find deals for flips and we have yet to get one through a wholesaler.  With that said their numbers are adequate if you want to get rental properties, just not enough meat for a flip.

Also keep in mind that you have to add closing costs to any deal that they bring you which can be another few thousand dollars.

I have been through similar situations, particularly with my earlier rentals and now I just rehab it at the time I purchase and figure it into my ROI. Generally the houses that I have bought are either forclosures or short-sales and need quite a bit of work to be habitable so fixing them up completely is not too big of a deal.

The houses look like new when done and since all the major systems have been repaired or serviced I have never had anything except minor make ready touch-ups since. 

As a bonus I find that you get better quality tenants with nicer places and they tend to stay longer which lower turnover helps pay for the up-front repairs as well long-term.

If that is in your lease then that is what you have to do.  Depending on the terms in your lease as soon as you give the landlord notice they have the right to start the process going of filling the upcoming vacancy.  Most leases have an option to pay a fee to the landlord to have the right to not show the property (usually a few hundred dollars). 

If the landlord fills the vacancy on Nov. 1st however, I would push to not pay the Nov. rent since the vacancy is filled and you are no longer the tenant.  If the vacancy is not filled you will have to pay the November rent and may be due a prorated refund if it gets filled before the month is over.

I generally do not like to show houses while the current tenants are in there because they are usually a mess and it can be difficult to coordinate times for showings.  I wait until they move out and can still have them filled within a few days so it is not a big deal for me.

I recommend whatever properties you look at have at least a high enough return that you could lose 10-15% in rent and still have an acceptable return on investment.  In my area I typically look for a positive $350+/month cash flow out of a single family house which gives me some flexibility should the rents drop some.

Rents have gone up several hundred dollars per month in the past two years and I doubt that it will sustain this level in the future.  If you feel like rents in your area are stagnant or are dropping be selective in your choice of properties but there are always deals out there to be found.

I recommend getting pre-approved first, preferably through a mortgage broker instead of just a bank.  Broker's have access to multiple lendors and if your needs change based on the deal you find they are pretty flexible as they can source your loan based on the situation.

Most property management companies do both traditional real estate as well as managment so you can get the best of both worlds if you pick the right one to work for.  It shouldn't take long to pick up the property management side so I recommend focusing on working with investors to build up your network.  You should be able to transition pretty quickly to solely working with investors on finding properties and knowing the management side will give you a leg up on understanding whether deals are really good or not for your clients.

You will have to go to a plumbers supply store, the big box stores are pretty useless when ti comes to items like this.  I come across this on just about every rehab or rental that I fix up.  There are a few brands like Delta and Moen that make "old" style kits that can be swapped out but they usually charge much more for them and there is a good chance of damaging the diverter housing if it gets stuck in there.  I usually just swap the whole thing out for a newer style and redo the plumbing since it will make future maintanence easier, especially if you are keeping the unit as a rental or for yourself.

Once you find some deals that they would be interested in, staying in touch is pretty easy.  If you are actively sending them deals every few weeks then you can call or email them. 

If you are not actively sending them deals and just want to stay in touch then using Linked In, Google or some other more "professional" type of social media works.  Facebook may be fine but a lot of times people use it for personal things and might be reluctant to talk business over it.

Also the monthly investors club meetings are an opportunity just to stay in contact with people.  Another thing that you can do is schedule lunch meetings at least a few times every week with different people.  The key thing is to be able to offer them something that they are interested in.  Listen to what they want, find a way to send them properties that meet their requirements and staying in touch won't be a problem.

The real question is are you doing this as a hobby or as a business?  If you are doing this for "fun" and some pocket change then you can split it anyway that you can get them to agree to. 

If you want to turn this into a full time business some day then the person putting in the money should always get at least 50%. If all that you guys are doing is putting in labor, in all honesty, I would take a serious look at your business model. You can buy labor pretty cheap. One of you should focus on finding deals while the other focusing on doing (or managing) the work. If you are just buying deals out of MLS you are probably not going to be able to sustain much margin on the project so trying to split everything 3 ways is not going to be worth it for anybody.

Take a good look at what your partners are bringing to the table.  They should be able to provide something that you cannot, such as a ton of money or some type of expertise that you do not have.  If you and your friend are doing the same work, then one of you probably does not need to be there and would be better of finding other ways to add value. 

You will be much more profitable to let other people do the work and focus on running a business and not a hobby.

An easy way is to go to local real estate investment clubs and start talking to investors.  You do not have to put on a sales pitch, just talk to them and see what they are doing.  Over time you will build up a network of clients and will probably meet some very interesting people.

Second, once you build up a network, focus on finding deals.  My thought is to learn what makes good rental properties and then go find them.  We typically find the house first and then send it out to investors.  Our rule of thumb is that if we would buy it for ourselves than it is good enough to send out to our investors. 

Once you know what to look for and what areas make good investments, you will have a steady stream of properties to offer and you will be amazed how quickly word will spread. 

Start with the deals and the investors will follow.