All Forum Posts by: Derrick Gordon

"Obviously it would be better to buy and find a property that can cash flow. But it may be unlikely because I am not experienced with construction/repairing houses (can’t buy anything that needs major work), I do not know any real estate agents/real estate investors, and I am young and dumb and I doubt I would be able to find the best deal without connections. Instead of paying 1k (I live in Boston) in rent a month to a landlord, I figured I would rather build equity."

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Nothing you said here is a solid reason, to not attain a cash flowing unit. 

1. not experienced with construction? Read up the books and find a solid contractor (google and their reviews are your friend)

2. Real Estate agents are arguably the easiest thing to get! Go on any site look for a house and ask a question, they wont stop ringing down your phone.

3. Real Estate Investors are all over, find you local RIA and attend or just speak to people on BP. This place is filled with investors.

4. We were all young and dumb, but you balance the scales by educating yourself and learning the tricks to the trade. Bigger Pockets gives you tons of tools you can use to make sure you can be prepared if you want to commit to the process. Don't be in a rush, but don't procrastinate, set goals, read books, listen to podcast, get spend time researching properties. 

YOU CAN DO IT!!! Don't cut yourself short. 

Build a team of people you can trust (make sure your goals are aligned with your success), that is the best way to start.

DO NOT GET EMOTIONALLY ATTACHED TO A PROPERTY!!

DO NOT GET ANXIOUS BECAUSE YOU HAVE LOST BIDS!!!

RUN THE NUMBERS ON THE CALCULATOR - FIND YOUR PRICE AND STICK TO IT.

The worst thing you can do is jump into something because you want it too bad, and its a bad investment that cost you money!  There will always be a deal, find the right ones and go for them. This is a numbers game. When the numbers make sense, the deal makes sense.

Contractors will RARELY walk the house until you own it unless Its a personal relationship or if you have them on retainer for you team. You need to have the house atleast under contract and in Due Diligence and then you can have them bid on the job. I would not buy unless I had a solid idea of what the ARV is and how much you will have to put into it.

Take my advice with a grain of salt because I myself am a novice, but I will say you may be doing a bit too much for your first renovation! You really need to understand what the cost is and how you are going to make your money back.  There are a few good books you can read on Construction Cost, one is "The Book on Estimating Rehab Cost" by J Scott.

Doing additions to convert a two family to a one family really does not make sense. You are spending money to lose money. Why would you decide to lose the income from the other unit and add on construction cost to add space? You do not sound like you are going to make your money back from the limited information you provided. I would NEVER turn a two family into a one family. 

I would read that book to get a general idea of what the cost would look like. However, after you read it, go online search for general contractors in your area. The book tells you how to get good estimates from them either on the phone or in person. Most will come and give you a free quote if you know what you want to get done.

Good luck to you, but I would pump the brakes on the large work and just fix it up good enough to get a good ARV, RENT the other unit and pull out your equity. Its basically the BRRRR Strategy the covet so much on BP.

I have been examining deals for weeks to try and get the feel for how to be successful in REI. However, these are some questions I am having because it seems very important.

1. Does my lawyer, CPA, Insurance agent need to be local to my state? I live and operate in separate states which i believe are extremely different.

2. Are these people mandatory to have in place before I even attempt to make an offer on anything?

3. What kind of annual expense do these three garner? I have not budgeted for them in any of my deals, and it seems like that would be pertinent for me to do so.

I have been examining deals for weeks to try and get the feel for how to be successful in REI. However, these are some questions I am having because it seems very important.

1. Does my lawyer, CPA, Insurance agent need to be local to my state? I live and operate in separate states which i believe are extremely different.

2. Are these people mandatory to have in place before I even attempt to make an offer on anything?

3.  What kind of annual expense do these three garner? I have not budgeted for them in any of my deals, and it seems like that would be pertinent for me to do so.

I agree @Chinmay J. I intend on asking them for the rest or better information. However, its hard to know if its a good deal or not with a self made spread sheet information. I was asking around the room to see if its common enough for me to not be alarmed. Someone is prob going to over pay for this, I am just going through the process for my own experience and evaluation process. 

I totally agree @Bryan Devitt .. definitely not paying sticker price. I am still getting used to how much of a numbers game this is, failing 30 time to find one in a hot market. Thanks for you input. 

There was recent renovation done to all units, but the rent number are scattered to make it seem like rent was going up in increments because they had long term tenants renewing and not brand new tenants coming in. It is just leaving me with some concerns @Oren K.

1. If I am using a hard money lender I will be using "All Cash" but the Calc Does not offer an option for points if you pay cash, ONLY if you are financing.

2. If you have other income that is not Monthly income there does not seem to be a place to put that either. Only complete income number is for rent, but if I have a one time payment or something that is not recurring how do i add that in, or are you saying that is something i should not add into the equation.