All Forum Posts by: Chad Shultz

One of the issues, which helps to grow the problem is there are too many television programs on investing/flipping, etc.  When these scripted, fake, programs don't tell the true story of how the projects go, everyone and their brother want to jump in and make some of the millions, getting their piece of the glory that is television life.  With all these people jumping in, the problem gets larger by unscrupulous individuals who start selling, and up-selling, so called "Real Estate Training Courses."  Many of these courses get very expensive and lead to nowhere for the average person.  Most of these people fail, lose money, get sour on real estate, etc.  However, their presence in the markets raises the entry point for everyone and the actual investors need to start breaking their "rules" in order to be competitive.  At some point, the scales will tip and then everyone left wants/needs to jump off in order not realize coming loses.

It is a cycle, like most things in life, but one that can be avoided if you stick to what actually works rather than taking unnecessary risk just to force a deal.

Haley,

Glad to see you are moving forward and taking the next step in your investment journey.  Obviously, different people have different reasons for the way they approach their investment strategy:

Personally, I prefer to use personal funds and "pay" myself the interest.  The majority of my projects are rehabs that get sold, (fix and flip).  I find there is more profit to be made and more flexibility if you use your own funds.  I started my "official" journey in 2016 with only $35k of my own money.  Today, I can self-fund more than one project at a time.  When you invest smart and you are not paying out to everyone, you can grow cash quickly.

On the other side of the coin, there is a place for hard money.  I have used it on occasion, but it is rare.  If you want to scale, hard money is helpful.  It might allow you to go from 3-5 properties per year to 12+.  However, keep in mind interest does not pause.  If the market changes or costs go up, etc., your flexibility is limited and interest keeps ticking.  I know many investors who are much busier than me, turning more homes each year, but they never have any money.  I am not interested in making $10k-$15k per property, even if I do that 10 times per year.  I would much rather make $60k-$75k and do three to five.  The risk vs. reward margin is in my favor this way too.

My opinion is to start off with your own funds, if you can.  Learn the ins and outs of the projects and learn how to manage your money and maximize profits.  Once you have done this, it is easier to manage other people's money and keep your profits coming in.  Ultimately, don't be one of those people who jumps into the deep end without knowing how to swim.  You'll thank yourself later.

Hello Steve K.

If you are looking for help in the Orlando area, or farther west than Volusia County, I would tell you to contact @Shawn McCormick for help. If you are looking in east Volusia and/of Flagler, I may be able to help you. I am an active investor who has done about 50 personal project over the last few years and I am very familiar with the market and the investor side of things. As a Realtor, I typically only take on investor customers, because we speak the same language. Reach out and I will be happy to help you. I have lots of references, including a large history presence on FB and I am currently the Vice President of the country's largest non-profit REIA group.

Investment Info:

Other buy & hold investment.

Purchase price: $640,000
Cash invested: $1,200,000

Turned a shuttered and rundown 13-unit waterfront motel into a brand new vacation destination with added lakefront "tiny homes". Property has no "on-site" employees with exception of cleaning staff. Customers book and manage everything online and we use a property manager for Q&A and handsfree management. No on-site office, nearly autonomous functionality. Several large Georgia State tax breaks were also part of the deal. Yearly Gross $500k+ with cash flow of approximately $30k-$35k/mo.

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

This was one of only three hotel/motels in the city and the only one with lakefront access, including a dock. Popular year around 4-season activity area on the 2nd largest lake in Georgia. Property was just a good combination of the "right place and right time."

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

I found this deal by "stumbling" on it during a weekend get-away trip with friends for a celebration on another property. I like to make a celebration part of the end of every successful project and this celebration brought us through this area. The "For Sale" sign and phone number were posted on the front of the building, nowhere else. It was not listed. My business partner spent over six months negotiating with the seller and we ultimately purchased at a 20% reduction from asking price.

How did you finance this deal?

This deal was financed through three funding rounds over the approximate 18-month time frame for the renovation and construction of new tiny homes. Investors, (two of us) ultimately funded about 32% of the project with cash and additional money was raised from members of the local REIA, simply by word of mouth.

How did you add value to the deal?

The deal was valued based on a recent sale of the local Holiday Inn, (only real competition for us) which also needed to undergo renovation. We also did many calculations of income and expense models over time, based on usage.

What was the outcome?

The 13-unit original motel, built in 1958, has been completely renovated to 2023/2024 standards and upgraded with all new electrical, plumbing, and internet structure throughout. The six tiny homes were build from the ground up to our specs. The project was very well received by this small town and it is a fully operational 20-unit, lakefront, property in a wonderfully busy four-season destination.

Lessons learned? Challenges?

No matter how much vetting you do, you will always run into contractor issues. Being remote for us, this was a big hurdle, which we eventually overcame. Traveling back and fourth from Florida was a bit taxing, but ultimately it was worth the investment and work.

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

No. This deal was completely done off-market.

Investment Info:

Other buy & hold investment.

Purchase price: $640,000
Cash invested: $1,200,000

Turned a shuttered and rundown 13-unit waterfront motel into a brand new vacation destination with added lakefront "tiny homes", for a new total of 20-units with yearly gross over 500,000 and cashflow averaging $40k monthly. Project took approximately 18-20 months due to contractor delays. Exterior areas are still being finished, but property is up and running at 100% with many long weekends at full occupancy. Property has no "on-site" employees with exception of cleaning staff. Customers book and manage everything online and we use a property manager for Q&A and handsfree management. No on-site office, nearly autonomous functionality. Several large Georgia State tax breaks were also part of the deal. Two investors in the deal at approximately 32% of total investment. Remainder was raised through local REIA members and debt will be refinanced out at end of this year.

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

This was one of only three hotel/motels in the city and the only one with lakefront access, including a dock. Popular year around 4-season activity area on the 2nd largest lake in Georgia. Property was just a good combination of the "right place and right time."

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

I found this deal by "stumbling" on it during a weekend get-away trip with friends for a celebration on another property. I like to make a celebration part of the end of every successful project and this celebration brought us through this area. The "For Sale" sign and phone number were posted on the front of the building, nowhere else. It was not listed. My business partner spent over six months negotiating with the seller and we ultimately purchased at a 20% reduction from asking price.

How did you finance this deal?

This deal was financed through three funding rounds over the approximate 18-month time frame for the renovation and construction of new tiny homes. Investors, (two of us) ultimately funded about 32% of the project with cash and additional money was raised from members of the local REIA, simply by word of mouth.

How did you add value to the deal?

The deal was valued based on a recent sale of the local Holiday Inn, (only real competition for us) which also needed to undergo renovation. We also did many calculations of income and expense models over time, based on usage.

What was the outcome?

The 13-unit original motel, built in 1958, has been completely renovated to 2023/2024 standards and upgraded with all new electrical, plumbing, and internet structure throughout. The six tiny homes were build from the ground up to our specs. The project was very well received by this small town and it is a fully operational 20-unit, lakefront, property in a wonderfully busy four-season destination.

Lessons learned? Challenges?

No matter how much vetting you do, you will always run into contractor issues. Being remote for us, this was a big hurdle, which we eventually overcame. Traveling back and fourth from Florida was a bit taxing, but ultimately it was worth the investment and work.

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

No. This deal was completely done off-market.

Renzo,

Glad to see you here on BP.  I am a very active investor/realtor in the Greater Daytona area.  I ONLY work in real estate with investors, so if you need/want help, let me know.  There are many, many agents out there and 98% of them really have no idea about how investing actually works.  I put my investor customers' needs first, because I don't need to make a real estate paycheck to pay my bills.  With that said, to answer your question:  Cape Coral has been well over done.  For the past two years, or more, it has been about the hottest place in FL to invest.  Now that it is saturated, it is starting to fall off.  Lots of big investors went in, driving prices and now pricing is very high.  Many sellers are having to make huge price cuts to sell flips and/or new construction, so be careful there.

With your buying criteria, Daytona area is still a great market with strong numbers.  You should be able to find a decent property, if you can put in a little sweat equity.  However, finding a turn-key for $200k is not likely possible.  The places you will find for $200k won't make the rent rule, which should be a non-starter for you.  You will need patience and need to keep your eyes open.  I just recently sold a duplex property to an investor for $225k, which was bringing in $2800/mo, so you can find them occasionally.  Sorry, I don't know anything about Tampa or Panama City areas.

Hey Kwame,

Get out there and network in person at a group or meet up. Facebook and all these online or social media based groups can only get you so far. Central Florida Real Estate Investor's Association is the largest non-profit REIA group in the country. Come visit us second Tuesday of the month in Orlando. CFRI.net I guarantee you will find people doing what you want and you can start a journey.

Not to burst any bubbles, but there is no such thing as a “Licensed Wholesale Agent” in the State of Florida.  A person can be a licensed agent, or someone who wholesales, but to say “Licensed Wholesale Agent” is a bit deceptive, especially for new investors.  Everyone should do their homework.

I am a licensed agent in the Ormond/Daytona area, fluent in investor properties and needs.  I also do occasional wholesales too. I have done many fix and flips and I am very fluent in transactions in this area.  I am happy to help if anyone has questions.

Out-of-the-area Investors, be cautious. Short term rentals are not allowed in Volusia County and only in very limited areas of Ormond Beach. If you can find a legal property, an STR can be lucrative, but be sure to do your homework. I have seen many people burned AFTER they buy a property, because they assume.

Sarah B.,

The allowed use for STR in Daytona is crazy. They strictly enforce against those who attempt to run a STR in any area where it is not allowed. To that end, there are several places where you will find STR allowed on one side of a street, but not on the other. It is best to get to the source. I have the Daytona STR maps, given to me directly from the City Zoning Dept. If you want to connect with me, so we can exchange contact info, I can email them to you. I don't know of a way to put them in a thread here.