All Forum Posts by: David Lopez

Just a tip @Bilal Saleem if you want people to be interested add some more information. What is your planned ARV/profit and what is the timeline of the project. Do you have everything lined up for the build and what type of money are you looking for. Is this a wholesale property or do you need a lending partner or business partner. The more you elaborate and articulate the more interest you will get. From what I see above I would normally just keep on walking but in the spirit of helping each other I am letting you know you need a stronger message to get people involved in what you are trying to accomplish.

If its hard money you need start by going to the hard money section of the website under the "resources" tab. I am speaking with two preferred lenders already and have learned a lot in the last few months researching the site forums and online literature about the pros and cons which changed my view of what hard money can help accomplish. Some like it some don't but if you don't have a lot of capital or want to expand quicker than your own capital allows it is an option to leverage your money in to more deals. But don't jump in without understanding who the company is, what rates they offer, all fees, and most important how it impacts your assessment of a properties value and max offer.

Good Luck!!

@Josh Williams,

The best advice I can offer is to buy a duplex or income property and live in it. This allows you to go the FHA route and rent it out so your mortgage is next to nothing or even a go for a profit instead of renting or purchasing an apartment or single family home. This offers you a bunch of options. It allows you to get in with minimal money down through FHA and it offers you the ability to own your first investment property. This also means you can listen to @Steve Vaughan when he explains you need to look at money like a means to an end not an end. In other words, like Gary Keller explained in The Millionaire Real Estate Investor, you need to become a person who looks at cash earned as added capital and not as something that offers more ability for you to consume things. At your age I was more interested in which bar I was going to and how I was spending my salary instead of how many hundreds of thousands of dollars I could have in real estate now. So take our advice and focus on how you can create capital from your full time job not how it can buy you nice or fun things. House hack and create cash flow or the ability to jump from one property to another as you gain experience and more capital to buy a second. Live under your means to create wealth sooner then later. And finally keep talking to people who have been there and learn from their mistakes so you can avoid years of wasted opportunity. 

Good Luck!

I think Zillow is a great tool if used properly. It allows you to get a decent amount of information on a property for free. Personally, I give no weight to a Zestimate "AT ALL" but I do use the recent sold, tax information, sales history, foreclosure, school ratings, etc... to make my assessment. You need to pay close attention when valuing a property and make sure you are not looking at 2012 or 2013 comps when you are trying to create an ARV but they come in handy if you need a broader search to try and check your numbers.

So in short do not trust any simple sq/ft algorithm or Zestimate trend because it could cost you a lot. You need to collect as much information as possible and come up with the numbers yourself from all the facts you collected. 

You also need to look at current and future trends when you are considering a long lead project. This means what you think may be a good ARV today may be 10K or more off in 6 months, so understanding longer term expectations from inventory numbers in your specific location and average sales prices also play in to the mix. I currently almost took down a perfectly good existing home structure in lieu of losing 10 weeks in getting an unexpected variance because I was more concerned with the loss of buyers and home value. I was willing to add 15K-20K to the job to start digging next week to avoid what I feel would have been a bigger loss to lose 2.5 months.

So research yourself and don't just trust other peoples opinions with blinders on and that is what a Zestimate is. Hope that helps.

Thanks for the reply @Daniel Mohnkern

 and @Austin McClain

I wanted to write about a recent phone call that saved me tens of thousands and will change the amount of money in my bank account for the positive. 

After looking in to a recent flip opportunity in Allendale, NJ I decided to confirm some comp pricing with my landlord. I knew he was a realtor but besides sending him checks I never spoke with him after my first visit to the home. He immediately told me to stay away from the deal because the new flood lines put the property in the flood zone which I would not be able to locate easily, especially if I did not have updated maps. He also expressed his appreciation of me making the phone call to him for this information and taking the time to hear his full response. 

This one phone call saved me an $20-40K loss. It also started a relationship that will benefit both of us. In the process of talking to him he asked me if I knew he was a flipper and had (4) projects under construction. I was surprised to hear that but even more surprised when he told me he would be willing to sit me down and show me everything he does to find, evaluate, and profit from real estate. After a two hour priceless lesson, and looking at his 200 binders of statistics on every city and township throughout two counties, I was working on closing my first deal with him. 

The one phone call did not only save me a lot of money but opened up off market deals for years to come. He happened to be at a time in his career that he was not interested in growing but maintaining his accumulated wealth and enjoyed being a realtor. He could have hustled to do every deal that came his way but he was content now doing what his crews and cash could handle and helping people like me do the ones he couldn't get to in time. Talk about stepping in poo.

The moral of this story is talk to everyone you can. If at the 11th hour of my decision making on the first deal I had not listened to my gut or simply gave myself an excuse not to bother him I would have paid dearly.

The best contacts will come from the most unsuspecting conversations so make sure you tell everyone what you are doing and talk to people everyday. Business is built on relationships and the more you make the more options you will have to invest in real estate. Take time to respond on forums, make connections with other active members, make those calls, and attend those meetings because no matter what direction you take in real estate each new relationship can easily have a lot of dollar signs attached to it for all involved.

Quick info on the deal:

My first deal is a 1200 sq/ft Cape Cod I am adding 850 sq/ft to and converting in to a 3bed 2.5 bath colonial. We expect to net, before taxes, $97K. I took on a partner because I am in the process of moving to Florida but did not want to lose the ability to work this connection from there. I prefer 50% of something then 100% of nothing. Now, with the partner in place and me bringing the deals to the table with my new connection we are already looking at a second project.

Regards and Good Luck Investing,

David Lopez

Just my opinion but there is no substitute for a hard number from a good contractor, but over time you will be able to gauge this stuff yourself. I don't suggest using per sq/ft rules because when I break down my construction estimates, while I may be close, I am never right on and each situation is different. If you think it needs a roof call a roofer and get a number. Calculate all of your material cost from actual prices online. This all gives you baseline information to help you learn enough to create your own estimates faster on the next deal and so on. I have a list of costs that I try and continuously refine by market and through pricing updates. I remember when drywall was less than $5 a sheet now it is over $10. If your not watching actual costs or getting hard numbers make sure you know what current prices are in your area. Also never be afraid of asking to walk through because if the home owners didn't need someone like you to help their current situation you probably wouldn't be talking to them. Due diligence is a top priority and if you can't do it right don't do the deal. Short answer, call the seller and get your contractor in the place to give you the best chance at a good and profitable deal.

Dave

@Jean E. congrats and welcome to BP. I can offer a few quick tips:

1- Make sure you know the numbers. REI isn't rocket science but no calculator or analyzing software is going to tell you the numbers you entered are wrong. This means make sure you have talked to a solid and knowledgable agent or seasoned investor. I almost lost 80k recently and one out of the blue phone call to my current landlord prevented me from making a huge mistake. I analyzed the deal 5 different ways but one number was wrong in my research of the ARV and it almost cost me a lot.

2- Keep your emotions out of your decision making. The numbers don't lie. Trust them and when the deal doesn't make numerical sense walk away. Even if you are close to the counteroffer and the place looks great. Don't let the excitement of closing any deal trump what your research and calculations show.

3- Be patient and network. I feel this game is similar to any business. It is a game of pure numbers and relationships. Also some luck but you can't count on that. You are going to make a bunch of offers and it may take months before you get that first deal but always defer to tip #1 and #2. I can't tell you how many offers I have lost in the last 3 months but finally it looks like I will have my first flip in just a few days. Worth the wait and my constant networking has seemed to land me a 42 year veteran agent/flipper who is willing to not only tell me everything he knows but find me the deals his group just can't get too because they are already committed to their current projects. Maybe that is the luck part but if I didn't try and make contacts everyday I would have never made the connection.

4- Get your financials and people in order for quick reactions to good deals. Make sure you get your ducks in a row. Once you find a good deal you have to be able to move. Proof of funds, contractors ready to go after close, tenant paperwork, certifications, inspections, licenses, and marketing ready if the property is vacant. Getting the deal completed is just the beginning and if you are not ready for everything that happens after you could lose valuable time and money in closing a deal and getting the property ready for rent or even rented if you don't think ahead. I am constantly mentally running through every thing that has to happen throughout the process. Timelines, statistics of costs for various scenarios, and who and when things need to occur. This way I am prepared the best I can be for making all transitions fast.

5- if you are not good at something or have the time, hire an expert. Too many times we jack of all trades tend to take on more than we should and it turns in to more lost time. If you are worth more to yourself finding and closing the deals don't try and be the handyman, property manager, locksmith, landscaping contractor, plumber, and so on. Know what your good at and hire the professionals for the rest. Now I am not saying don't do as much for yourself as you can, because it does put money in your pocket, but build in to your numbers those cost that will occur over time like cap ex, property management, repair and maintenance, etcetera because your time is valuable and running a property can quickly become a full time job if not managed and delegated properly. Luckily my wife handles all the management stuff on our seasonal beach properties so I have an expert that doesnt cost me anything. She spends many hours replying to emails, getting cleaners in, contracts completed, deposits returned, marketing, getting issues resolved, and much more that would absolutely prevent me from finding more properties. So if she didn't like it I would be dumb to try and do those things myself because it would stop my REI in its tracks.

I could go on and on but I hope this helps you a little. Make as many colleagues as possible and start making offers as you find deals. The deals won't just fall in your lap and finding them is not easy but if you start talking to agents, running numbers, sooner than later you will be posting about that first rental and I look forward to hearing that story. Good luck and feel free to reach out with any questions.

Regards,

Dave

Welcome to the site. You should immediately look for active members to talk with about your goals and ideas and you will get a lot of solid information. I can tell you @Jason Muenchow has been a great real estate agent contact that I met so he might be able to offer some good advice on your license questions and network, network, network. Good luck.

Welcome to the community @Mel K.

You will find more information than you can handle at first, but rest assured in a few short weeks you will be a pro at sifting through the material so you can get the most from your experience on BP. Set up your word alerts and that will help you "stay in the know" on local investors and issues or simply things you might be interested in learning more about. I am shortly arriving in Sarasota (June 26) and starting my full time career at REI after years of casual dealings with rentals and this community has pretty much already put me there with the contacts I have made. Make sure you reach out to as many local pro's as possible. I am currently working with at least 3 people on BP from agents to lenders and it is an awesome feeling to get things jump started without having to start from scratch with no contacts. If you have any questions don't hesitate to reach out and I wish you the best on your journey.

Regards,

Dave

Everything above is correct. I was told by my realtor when making offers early they won't accept anything less than 90% of asking. @Christian Marin they did play ball with me even though I bid 70% of asking but they were almost to the tee with a counter at 90% of asking and then after that I decided to wait and watch for a while.