All Forum Posts by: Reese C.

Well I do apologize if I was blunt.. however there is this company called Morris invest.. you should check out the threads.

and from day one I called BS on this company and guy.. and went on for hundreds of posts.. me repeating the risk these folks were taking and the investors thinking I was just nuts ..

well here we are 2 years later over 400 investor going to lose a little to everything.. some their entire lifes savings.. I get about one PM a day from those who actually listened to what I had to say and thank me.. for having them take pause and then do something different and not get caught up in that HUGE MESS.. and I was not the only.. one but I am the first to say it BLUNT was putting it mildly.

BP is about folks helping and since I have been lending to rehabbers in all these markets for about 2 decades I think I do have some solid advice and generally its just this.. Highly risky.. if you have never done it at home and have a lot of experience even more risky.

and maybe some other method would be safer.. that's all.. I know the way the scheme is presented it sounds great and all.. but so do all guru's selling systems ..  and its a tough one.. one reason the flipping gurus can sell their how to for 40k.. so many people think they want to do it but have no experience. And they try to buy their way in be it the big time guru or the 10 dollar book.

My main point is there is nothing more risky than what is talked about in that scheme.

There was not a worse investment than what Morris did to all those nice folks..   20 years 3 thousand plus fundings in the space believe me I have been screwed over every which way you can be.. there is no one perfect and I certainly am not..

And I think one thing that got me going on this as well. is there was 3 folks from Denver about 3 years ago that tried this in Atlanta and all three got with a smooth talking GC and all three lost everything. and we are talking over 200k in the aggregate lost..

So to go into these low value assets this author was talking about in Jacksonville ( which Morris has sold a bunch of junk there as well) I am just cringing. Folks tend to take advice from BP on the blue sky stuff with irrational exuberance.. so just trying to balance the scales like any good Libra would do..   

please don't take offense . however if your at this point you really should partner with someone with a good amount of experience and showdown them.. your the Mark that many of these contractors look for. you are going to have a very hard time learning this in a book.

Just sayin..  

and I guess the bottom line Is when your talking these lower value assets IE under 100k rentals.. what are you saving the turn key guys are making 10 to 15k doing it all  .. you probably cant buy as cheap as they do and you probably cant rehab as cheap as they can and then you have to go through your learning curve.. is it worth 10 to 15k to lose 10 to 30k ??? and what is that a month 50 bucks.. is it worth 50 bucks a month or a 100 a month over time to risk this.. not to mention all your time and energy.. I mean you have to go there and have to show up.. if you think you can do this all remotely I just caution you..

I cant tell you how many deals I see from 1/2 finished or 3/4 finish homes where the owner is dumping it after losing untold amounts of money..  

So case in point my GC in Charleston.. were I am doing 500 to 2 million dollar new builds.. He is a long time family friend .. X coast guard champion in marshal arts.. and one heck of a GC and he can strap on belt when needed.. but even that we have controlled draws with inspections .. our banks require it.

But what happens is he has credit at the lumber yard and other places and the draws are for work done and in place.

your going to have a very hard time finding contractors for low end rental rehabs that can carry a tune.. IE carry a job.. they will all want deposits before they start.. and that is the risk.. you send the money its not spent were it should have gone.. and boom. you have no controls.  and or they are very poor at what they do and that's why the only work they can do is a 15k rehab for you.. there is no money in it they can only hire the worst of the worst day laborers and your workmanship sucks..  on and on and on..  

now if your going to do 20 or 30 in year and etc that can change but to think you can do one pretty tough.. honestly..

and not sure its worth the risk.

I know two or three turn key guys that do turn key light these are respected clients of mine that have been doing this for a decade or longer .. rehabbed 500 homes at least.. and they will do everything you want to do the BRRR and charge a flat fee of 6 to 8k.. but that assures you a quality product at the end .. and you get what you pay for. you don't get ripped off.. I call this turn key light.

But I get it if its your burning desire to do this and I have given you the contrarian view points and the book has given you safety measures as well.. then go for and I do wish you the best of luck.. of course some of these folks will do fine but a big number get hammered .. the question is do you want to risk it.  

If you said Hey I own 10 rentals and have been working in and around real estate for 5 years and understand how these rehabs basically go because I am doing turn overs in my units.. then I get that..  but someone with zero experience is who I am talking about and I don't know it your the latter or the former.  just sayin

Yup it all starts and ends with the GC... along with third party inspections that you pay for.. and controls on draws and lein waivers.

just look at how any hml company sets up their draw process and emulate that..

going to be a lot of people lose a lot of money thinking this can be done as described.. but one thing I agree with you can lose money on any flip.. I know being a HML for many years I have seen enough of my payoffs were I was the only one who made money and or the borrower lost money.. far more prevalent than one would think. So the point is BP being the land of predominantly beginners there is irrational exuberance that this can be done.. theories are great.. and analogies are great but reality it can be a beotch.

Top producing agents unless your American homes for rent or some other hedge fund that are going to be buying 10 to 50 homes a month are not going to give many one time out of state newbies much love in this..  Newer agents you stand a better chance getting their attention.   

I like the BRRR concept and I fund a few folks that do that for their clients fee based.. but they are not brokers.. they are VERY experienced flippers with substantial portfolios themselves.. that is far better for the out of state investors than trying to do this as described by the book..

@Reese C. This thread is very similar to one I started not long ago. We ended up just picking Indianapolis to start in because we were tired of being stuck in analysis paralysis. We decided that our time would be better spent analyzing a specific market, rather than continuing to debate over different markets when we don't have any experience yet. I've had a lot of people tell me not to attempt a brrrr strategy out of state for my first deal, but I believe they are missing the point, or rather what my goal is. Yes, of course there is more risk, but that is what an investor does. Manage risk. Yes, we could buy a turn-key for low risk, or invest closer to home. But I want to drive two hours to my investment property just as much as I want to take a 5 hour flight to one. I don't want to do either of those things. I want to make this into a business by developing systems. Systems like "Long-Distance Real Estate Investing" and the "E Myth" teach us to develop. I would rather not make any money on my first deal, even lose money on my first deal, as long as I learned from it.

My advice is to just pick a location and start mitigating your risk by learning about that area and networking. Only you know the amount of risk you are comfortable with. I don't know about you but I already have enough people telling me I can't do something. That is the beauty of BP, it is full of people doing things I once though was impossible. You can do this and so can I.

Disclaimer: I haven't done my first deal yet so take this advice with a huge grain of rock salt. I'm just trying to offer a little encouragement in a world of dissuasion.

Brrrr hardly works in KC ....well let me rephrase that, in areas that are a good fit for new landlords that are out of state.

Everyone invests in KC and there's no shortage of buyers couple that with first time home buyers being squeezed out of rentals you have desperate people bidding on houses.

Deals still exsist and you can still make money, but if you go into it thinking you're going to get a house like 75% of market value and then cheap remodel to bump up the apprisal it's not likely to happen. That good of a deal would either a not hit the MLS b) get marked up by a wholesalers, or c) bidding war on MLS and sell for over list.

Then you have contractors... construction is booming all over the country and KC is no exceptions. People have more work then manpower .... it'll be tough to find good contractors and unlikely to find cheap ones...

With all that said it's still possible, but you're going to need to alter the generic strategy and get creative.

@Reese C. You forfeit your potential equity when buying turnkey since you are essentially purchasing at full market value and just receiving the cash flow. I'd suggest finding your own deal as that equity can be key to helping you grow your portfolio and acquire more deals moving forwards which sounds like your goal since you want to BRRRR.