All Forum Posts by: Daren H.

I recently went full time but had been doing it part time the last several years. Right now my flow is about ~2 projects in work at any given time, 1-2 completed projects waiting to close, 1-2 projects under contract waiting to close, etc. I honestly have no desire to flip a ton of houses per year. My first year goal is pretty simple. I left my job making up to $240K a year but working a lot. I was making ~$120K per year flipping houses working about 5 hours per week. My first year goal is to replicate my two previous incomes working ~20 hours per week. Based on the numbers I have been hitting I should be able to hit that with under ~15 flips. Having control of my time is the most important thing right now. I have no desire to have a bunch of employees I have to manage. Maybe after getting through this first year I will revisit. I try to fill up my day with tasks focused on finding new deals, checking on projects from time to time, talking to leads, and administrative stuff. My immediate near-term goal is to seriously step up my networking. I am woefully underperforming there.  

I am not understanding the comment 40% was put down to ensure there is an income buffer to cover expenses. Is this saying that you wanted a lower mortgage to cashflow better to cover expenses? Why would someone want to do that? You should be buying deals that cover expenses, vacancy loss, cashflow, etc. with the 20% down. What am I missing here?

If I follow you correctly, a past conversation was had about a change, and was followed by a new lease stating the utilities would be split after submeter installation which is in the future. I could see how that can be sort of confusing to the tenant, especially one who also is looking for a break. If the tenant was otherwise a great tenant, no headaches and we are not talking about a huge sum of money I would try to explain but might try to work out some reasonable resolution for July and August, but hopefully your new lease made the upward adjustment to the rent. If the tenant was getting a break on rent, that break should no longer exist. I would not deal with this tenant in conversation anymore about changes. It would all be in writing with explicit effective dates, dollar amounts, etc. 

If you don't have money to help find deals, you better be willing to spend a lot of time. You have to drive for dollars every day. You have to keep making those calls until you find the owner and they tell you No. Even then you need to keep following up over time. You drive every day or at least multiple times per week your list is going to grow. Eventually you are going to hit a deal through calling or mailing your list. I am assuming you are hungry and will put in the time. Do a public information request to your city secretary (can be a simple email or some cities have an online portal) and request a list of properties with open code violations. Go to the county appraisal district and find the owners of these properties. Skip trace that list and get to calling. The list is free. You can do the same with the county tax delinquent list. I made $80K on a flip that came off the tax delinquent list I got from the county. This particular county did charge me $40 for the list but it was worth it. Other counties provide it for free online. There is some filtering and leg work you have to do to clean up the list. I simply hire VAs to do it for a small fee. I would agree with you, work your local market first and make that work before you start trying to go into other markets. 

Because you are new to this still (your words), I would seriously look at doing your first few deals with a partner like someone alluded to above. If you can find great deals, someone will provide the money or access to it in exchange for a piece of the pie. You can get a great education and a slice of the pie. Primary concern here is you have to make sure you don't get into a deal with a crook. Find someone reputable and trustworthy in your market by asking around from people you trust and are in the business. Purchasing a deal, renovating, financing it, without proper experience and limited funds can be a recipe for disaster. I would say you even need someone experienced in your market to assure you that you actually have a deal. 

@Ricardo R. I am curious. Rich Dad preaches buying physical gold and silver. Neither produces cashflow but are considered assets. You spend money to purchase both. I understand that with a primary home you are constantly making payments, but with the gold and silver you still have to make payments to live somewhere as well. I agree with what someone said above that its regional. I personally view a primary home more like a savings account for some and a investment for some. For some people it is a liability but there are other issues that go along with that imo. There are some old people I am sure who bought a house many moons ago in prime LA and are now multi-millionaires because of that single choice. I understand upkeep of a house requires money that renters avoid. Whether tenants believe it or not, they are paying for upkeep, price of the house, cashflow, etc. and they get no tax benefit. Nevertheless, I believe in some regions and circumstances for individuals it might make more sense to not purchase a home and simply rent. My issue with Rich Dad is they make a broad statement applicable to all as if it is fact. I would imagine Rich Dad has owned multiple primary and secondary homes and expects them to grow in value just like his gold and silver. 

When I sell a flip, I don't accept the first offer at listing price and terms. I want that offer or offers that are even better. You can do this without violating any laws. That sums up my philosophy on renter applicants. 

1. First, get copies of the lease and confirm when the lease expires, if they are month to month, security deposit info, etc. If the lease runs past closing their lease is still good and its on you. If they do move out, they will be looking to you for their security deposit so make sure you get that squared away with the seller prior to/at closing. Unless there is some requirement/law that prevents raising rent, it is a business decision for you. Screw their feelings about what they feel the rent should be, but respect the lease until it expires. Why is the Seller giving notice to vacant after closing, its yours at that point. I wouldn't rely too heavily on someone who has their money already. I generally have the seller provide the property vacant or I want a further reduction on the price. 

2. For insurance you are going to pay for the first year in total and prepaids for insurance, tax escrow. This is normal to me but yeah it stinks. 

3. Dig into the details of the closing costs and have the lender explain each one. Don't stop asking until you understand fully. 

It looks like you are going to be spending approx $325K - $350K on this purchase all costs included for ~$2400 in rent at market value. I don't know the projected operating expenses or potential appreciation, but it doesn't look like a screaming deal on the bare surface. I could be wrong. Sometimes the universe is telling us something.

Are you talking about a remodeling quote or a quote for a structural engineering to come and do an inspection of the foundation/structure of the property? I wouldn't pay a contractor $75 dollars let alone $750 for a rehab quote but I can understand contractors not wanting to waste their time for free as well. If you are getting a licensed structural engineer to do an inspection and provide a report then I could see $750 being the cost although high in my area. I pay $600 for pier and beam foundation inspections by a licensed structural engineer and $400 for slab foundation inspections. I dont pay any contractor for just coming out to give me a quote to remodel a property. Then again I have been working with the same contractors for years. I dont know your area but that sounds wild to me if its a remodeling quote. 

It depends on a lot of factors. Are you paying interest and at what rate? What is your exit strategy? Do the properties need rehab (I would assume they do)? Do you have the rehab funds? Will the properties cashflow? Are you buying with enough equity that if something does not go as planned you can still escape and make a little dough? All financing is not good financing. 

In some instances it can work well with short term financing and balloon payments. I have bought several properties with 4 month and 8 month 0% interest seller financing terms and balloons. It just depends on what you are trying to do and the underlying numbers.