All Forum Posts by: Paul B.

I would absolutely love to get a look at that company's books. It is a mystery to me how they can provide $500 worth of "security deposit" for less than a hundred dollars.

When tenants have so little of their own money invested in a security deposit, they don't care as much. Sort of the whole reason we ask for a security deposit, right?

So, just by design, you have a class of tenant more likely to wrack up costs and damages. I am guessing that the company is banking on landlords magically forgetting about these funds (unlikely!), OR claims are very hard to get approved and paid, OR they are very, VERY good at getting and collecting on judgments against the tenants (my thinking is, unlikely).

I know it's a volume business, but all you need is one in five tenants to have a $500 claim made against them, and you're sunk. (Or is this an annual payment? I am working on the assumption it's a one-time thing.)

Can someone shed some light on the economics here?

I don't follow. You plan to have the property on the market for 40-60 days while you wait for someone to get financing? Why does it take 60 days to get a loan? Because of the seasoning issue?

Also, are you suggesting that you're going to list the house, THEN do minor painting and outside cleanup? I am not a fan of that at all. When that house hits MLS, assuming you have it priced right, that is when you're going to get most of your traffic, if you're going to get any at all. You absolutely want the house done 100% before you put it on MLS or show it. One hundred percent.

Most people can't look past things like paint in progress or outside cleanup. They lack vision. All they see is something that's not done, and off to the next house they go. Don't be in a rush to get on the market. Get your product in tip-top shape first.

Danny, I'd like to hear from people who have more experience than I do (I've only done 5 flips), but I've had two situations that you might consider here.

First, if you were to sell it as it is, would that be to an owner-occupant or another investor? If to an owner-occupant, and if that buyer needs a conventional mortgage, then you might be subject to seasoning the property. Some lenders won't make loans for people to buy flipped property; they feel the value is inflated. I had a buyer for a duplex pull out of a deal because the lender did just this. They could not get comfortable with my $115K purchase price against her $175 purchase price only 5 months later.

Now, as to listing it in its current condition. I tried this once, too, thinking I could make a smaller but faster, less risky profit. I am not 100% sure why that didn't work out, but you have to remember that in this market, people have many options as far as houses go, and most people don't want to deal with fixers. They want their place ready-to-go and immaculate when they move in. How bad is the condition of the property you're talking about? I would think very hard about trying to retail a property that needs paint, carpet, updating, and some mechanical work. A retail buyer will require an inspection that is going to uncover a host of issues that will inevitably kill your deal because retail buyers do not want to deal with all that stuff -- especially nowadays.

Another thing to think about if you go the MLS route now and don't succeed, your previous fixer listing will still be on the books when you present your updated, higher-priced property, so everyone will know how much more money you're making on your updated version, and they will also see pictures from the "before" version. It may not be an image that you want potential new buyers to see.

How well do you know this Realtor? Are you confident in his/her experience? Have you talked to other investor clients of this Realtor to be sure that s/he understands your business?

This is a personal decision.

Could you learn everything on your own that a mentor would teach you (assuming that you were to work with a really great mentor)? I think the answer is, "Yes, most of it." Especially with the help of these forums where you can get a bunch of really great feedback, advice, and ideas for free.

It's pretty plain to see that 98% of the people here have no hidden agenda. They just like helping other people.

Fact is, you could learn almost everything in the world from books, videos, and the Internet, all without the aid of any teacher or mentor. You'd make a lot of mistakes along the way (especially if you're trying to learn how to do a heart transplant), but you'd eventually get there. Good ol' trial and error...

Thing is, with real estate, most of us don't have the financial ability to make too many mistakes. One bad deal could very well sink you for the next few years, so you don't want to make mistakes.

In my view, mentors do two things. The first is to share wisdom and knowledge. Sort of a "learn at the feet of the master" kind of relationship...

The second thing, though, is that they ought to provide you with confidence, and to some degree even motivation. All the knowledge in the world won't get you anywhere if you don't ever try to apply it somewhere. But if you lack confidence and/or motivation, you're sunk.

I would encourage you to do some real soul-searching as to what is holding you back from getting started, assuming that you have not done so. Or, if you have gotten started on a small scale, what specifically is keeping you from achieving your goals. And then think about whether a mentor, in the traditional sense, will help you fill those gaps.

I agree that if a mentor is the only thing standing in your way of tripling your income, then paying for one is an incredible bargain. But you have to have a very high degree of confidence that, whatever it is that's holding you back, a mentor will help you fill that gap.

I know I thought about real estate investment for years before I ever did anything about it. Then one day, I read Ron LeGrand's book on becoming a "quick turn millionaire." Now, I knew that a lot of that was hype, and I knew that a lot of his methods weren't for me. I was really looking for more "nuts and bolts" opportunities: Buy low, sell high. Rinse, repeat.

However, I do give credit to that book for getting me started. For whatever reason, it really compelled me to get off my rear-end and DO something. And within a month of making that decision, I had a contract on my first deal, a duplex that ended up netting me $39,900 in 5 months, 5 days.

The bottom line here to really, honestly think about what it is that's holding you back, then ask yourself if a mentor relationship is going to help you crack the code. When all is said and done, however, it's going to be entirely up to you as to whether you succeed.

Let us know what you decide, and good luck!

Ph.D. from the School of Hard Knocks

(summa cum laude, naturally...)

Put it in writing and include POF.

As with any investment, you need to be very careful here. I do not like that you're walking properties without having a contract of some sort in place. How do you even know that they have a lock on the property?

I have a pretty good idea who you're using (NetWorth Realty, correct?). I am not in any way saying that they are shady, because I know nothing about them as a company. The president of the company in Houston is a licensed, active broker, and he has a stable of agents working under him. So that's a plus; at least you're dealing with someone other than your typical bird-dog.

However, here's a look at one of the "deals" they currently offer, a house located at 3816 Brandt Street. They say the ARV is $275,000 and that the cost to remodel is $45,000. With their asking price of $165,000, that leaves a profit "potential" of $65,000, according to them. We all know that's baloney, though, since there are usually other considerable costs in selling a house.

Since I am not in Houston, I can't say what the house is really worth fixed up, but I'll wager it's not $275,000. While I would not stake my life or reputation on a Zillow.com value, this site says the house is worth $224,000 -- and Zillow is usually high, not low by 20%. So that's another number that I would question.

Lastly, they are offering this house as a deal at $165,000, when it was on MLS recently for $175,000, then dropped to $149,900 with the listing removed. So, no takers at $149,900 as a listed property, but a deal at $165,000?

It's just not adding up for me.

I am not suggesting that people don't make money buying properties from wholesalers. I am sure many of them do. But, in my experience, I have never, ever seen a wholesaler give real world numbers with respect to the true ARV or repair cost, and I've caught many of them trying to sell properties that they don't even control. It always made me laugh to see a wholesaler offer me a "deal" that was $20,000 higher than the property was currently listed on MLS.

That just goes to show that some wholesalers -- not necessarily NWR, of course -- rely on lack of buyer knowledge to make their business work.

As with any investment, caveat emptor.

The landing page is the easy part, relatively speaking. How are you going to drive traffic there?

I do not understand who you are giving money to or why you are walking a property without having it under contract.

Is there anything that you learned from this? Did you have a feeling that these tenants would not work out from the get-go? What happened, and could you have foreseen it?

I am always interested to hear about how and why tenants go south. I know it's part of business, but it seems to be the most important part of making any rental property work.