All Forum Posts by: Chad Shultz

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $154,431
Cash invested: $122,578
Sale price: $309,100

Hurricane flooded fix and flip. This property was a foreclosure auction purchase, so minimal information was known. Turns out, the previous owner did take many steps to mitigate the moisture damage and the home was very dry and mold free when we acquired it. After months of reassemble and some customization work, the property sold for a decent profit.

What made you interested in investing in this type of deal?

This was a clean foreclosure property, which is usually difficult to find. The basic demo was complete and the property was ready for reassembly when we bought it, leaving fewer surprises.

How did you find this deal and how did you negotiate it?

Found this property through our local online foreclosure auction site.

How did you finance this deal?

We used $100k of private money and the rest was personal cash.

How did you add value to the deal?

We put the property completely back together, making everything brand new overall. Basically, it was a 1980s block shell with a 2024 home inside, when we were finished.

What was the outcome?

While there were many "Na-sayers", we sold the property above list price and well above what others thought it might sell for.

Lessons learned? Challenges?

This property flooded again, about 20 days after we closed on the sale. This was the first property we carried flood insurance on, during our project. Be careful with flood zone properties. When doing them, it is best to be in and out as quickly as possible and preferrable during the storm "off-season".

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I am a licensed real estate agent as well, so I handle my own properties. I also work specifically with investors only in the real estate arena.

Bryan: California is a difficult place to learn, because everything is so pricy. Your risk vs. reward is way off balance there. If possible, you may want to learn in a place where you don't need to spend $750k on a fixer. In my opinion, the best "first step" is to find a local REIA to attend. Meet people and network with them. You will easily find link minded folks to chat with. You may even find one or two who won't mind if you shadow a project they currently have going. These are some of the best places to get started. Unfortunately, while all the online places area great sources of information, you are much less likely to take action, or find someone to shadow, when online in a forum. Get out there and "put on your work boots".

Hello John, congrats on you growing portfolio. I am an investor and an agent in the Daytona Beach and surrounding area. One big thing to keep in mind is that Daytona Beach itself is not very STR friendly. While there a few places where you can have an STR, you need to make sure you do your homework. If you decide to operate one outside of their desired areas, they will come after you with hefty fines. If you would like to chat more about anything specific in this area, feel free to connect.

@Mike Klarman:  Can you quantify what "not cheap" is?  I purchased flood insurance on a Zone A property in July this past year on a house that had previously flooded.  A 12-month policy was only ~$900

@Jason Hanson:  You cannot sell your AirBnB as a business.  While the owner is free to sell the property and the information about how they run it as a business, AirBnB does not allow them to sell their online identity for the platform. This means a new buyer must either already have an account, or must start one and the property starts over with no reviews, etc.  The seller can supply everything they used to market, pictures, ad copy, etc., but they cannot sell their AirBnB account to another person.

Quote from @Sam Dunlop:

Hey everyone, I wanted to get the opinion of someone with more experience than I have. I am looking to purchase a fix and flip in Daytona Beach, Fl. The deal makes sense financially however the house is in a flood zone A and flooded during this past hurricane season. This is the first time this area has flooded in years. With hurricane season now over and the house would (hopefully) be sold well before the next one I am curious if anyone has any seen any change/decrease in sales with areas that have flooded recently? Thanks!

Hey Sam: Daytona Beach is a great area, with a few exceptions.  I do many projects in this area and I’d be happy to discuss yours with you.  I bought a Zone A house at auction last year and everyone said I was wrong, or the value was not there.  Home sold in about a month, during hurricane season, above list and $40k more than the “nay sayers” thought it would.  It depends so much on the type of Reno you do.  Reach out via PM and we can exchange info, if you like.  I would be happy to go over pros an cons with you.

Hello @Dillon Lewis,

Welcome to the BP community and congrats on your starting a family. Hopefully you will be able to mingle all of your adventures into one successful journey. Don't listen to the "naysayers" with respect to the market. What you need is focus and discipline. If you follow correct MAO offers rules, which most successful investors use, then there is no "bad" time to be in the market. Right now is an excellent time to buy, because sellers are feeling more pressure and better deals are available for investors who can solve seller's problems. I recommend you stick to that approach and never "yurn" for a property. Most of my best deal projects come along when I am NOT trying to find them. This is especially true nowadays.

Being newer, I think you should be hands-on involved in your first few deals at minimum.  This will give you a better working knowledge of the process, time frames, materials, etc.  It will also help you keep costs down, so you can be more in control of profits, while getting started.  I have never met a contractor that cares about costs, unless those costs directly affect the contractor in a negative way.  For example, you can tell a contractor it costs you $100/day to hold a property, so the job needs done quickly, but it will not resonate with the contractor until the project gets to a point that it starts costing the contractor a daily fee, at which time the work will be done more quickly.  When I hold utilities on a project and the contractor wants the AC on, it is not uncommon to find the AC set to 68 degrees with doors open, or over a long weekend when nobody is there, etc.  When I tell contractors they can do what they like, but they cover the utility bill, I never find it set below 78 degrees.  This is just how contractors, and many other people, work.

I started my first project ever with a partner and only $33k all-in.  We did much of the work and brought in contractor(s) and workers for specialty items, etc.  In the end, we both made a little over $18k each.  Not bad for a $33k investment and some time.  If you can refrain from spending that "work" money and roll it into another project or two, before taking any out, it will be easier to get to the point that you can maintain.  From there, you can ease out of the "hands-on" side as much, and get more into overseeing crews.  You should always be sure to keep them in line and on track.  Make it a point to stop by your projects, unannounced, at least a few times each week.  This will help keep everyone honest and on track.

Finally, I would find out where your local REIA meets and go to occasional meetings. This will help you network with people in your area who are doing what you do. You can network and make connections that will help you avoid the pitfalls of using crappy workers. Many of the networkers will be happy to tell you who to use and who to avoid, etc. This will be one of your biggest money saving parts of your journey.

Best of luck.  If you want to chat further, about anything specific, feel free to reach out.

@Sergio P Ramos:  When I started working on Flips, my first project was with a partner.  We were both "all in" on the project at $33,500 each.  We sold for $114k.  From there, I was able to keep rolling my funds back into projects and keep increasing the margins.  I was fortunate enough to have positioned myself in a way that I did not need to use the flip income for living expenses.  This allowed me to roll 100% back into projects.  With a little patience and determination, and sticking to the correct formulas, I got to where I am today.  Too many people are willing to fudge the numbers to beat someone out.  All that accomplishes is increased risk.  You never need to be desperate for a property.  Now, I am actually able to fund two or three projects at a time, without using OPM.  I don't like paying interest.  I would rather pay myself that interest in the form of profits.  I do prefer to work with partners on projects.  You get ideas from two directions and you spread risk over more than one project, which is safer in the long run.  Two sets of eyes on projects also helps when it comes to keeping track of contractors, etc.

Quote from @Suhaib Rehman:

Good day everyone, 

I am interested in purchasing either a condo or a townhouse for short-term rental. I am also open to a longer rental as long as I could use this place for 1-2 months as a second home (summer or winter break). Budget at or under 400K. HOA and insurance costs as low as possible.
Can you suggest a few good cities in the FL with lower vacancy rates and close to nature/activities?

I am open to both the Gulf side or Atlantic/east side of south Florida.

I plan to travel to FL early next month and want to have some idea of good cities/regions to start with. Your advice will be beneficial.

Regards

Suhaib

Just be careful about where in the Daytona and Ormond market you look.  STRs are not welcome in most areas and not allowed in Volusia County.  There are some areas in Ormond and some in Daytona, but you need to make sure you follow the rules, or they will come after you.  Take the time to check usage/zoning maps.

Quote from @Sergio P Ramos:

How do you fair late in the year rehabbing/ flipping houses? Do homes sit a bit longer than usual? Is there anything that you do different rehabbing/Flipping late in the year?

 Sergio,

In my market, I rehab continuously.  If you were to try to guess the market, you would wind up losing time waiting until you thought it was "right", then you would be rushing to have a project done.  I keep working from project to project and sell them off as I go.  I can tell you this:  If you do a nice job on the rehabbing, you will never be short on customers.  So many people think "flipping/rehabbing" means you run in a house, stomp your feet and then paint anything that does not run away.  This is wrong on so many levels, let alone; unethical.  I deliver a first rate, top of market product and rarely do I see my properties sit longer than a few weeks.  I usually hit top of market pricing and/or set area sales price records with my properties.  If you do this type of work and you buy properties right, you will never be worried about a sale.