All Forum Posts by: Ed Caldwell

If you are getting into major flips that require structural changes, electrical and/or plumbing changes, I would HIGHLY recommend using a licensed contractor.  If you do this work yourself and the structure fails or the house burns down, you are opening yourself up to major litigation which will cost you ALOT more in the long run.  If you are only doing cosmetic flip (i.e. paint, carpet, cabinets and appliances), then you should be way under the cost requirement you specified and can do the cosmetic stuff yourself.  The whole reason for permitting in states is to protect future home buyers.  By acting as your GC, you had better have proper insurance to cover anyone hurt on your property, including sub contractors.  This is one off the good things about hiring a good GC and making sure they name you as a coinsured in case any sub gets hurt on your property.  Also, if you list the property for sale through a Realtor after rehab, it has been my experience that the buyers agent always asks for contractor invoices for the work performed to make sure it was up to standards.  Being able to produce them is a great selling point to support your asking priice.  Of course this is in AZ, so I can't say this happens in all states.

If you don't like paying the GC and are doing major rehabs, I would get the license.  Insurance is irrelevant as you should have it anyway to protect yourself unless you are covered by the GC insurance.

Just my two cents as a rehabber myself.

Hi Jason, as I said, I no nothing about the area.  I was just trying to help a seller get their house sold if there was an investor out there that was interested.  If anyone pops up as a buyer, I will let you know.

Thanks.

If anyone is investing in Dora Alabama, I received a seller lead off my website that I would be happy to refer. I invest in AZ and no nothing about Alabama.  What can I say, still tweaking my website to be state specific.

Message me here on Bigger Pockets and I will send you the information.

Thanks.

The Phoenix market has definitely become chilly. I have not been able to find deals on the MLS without 11 other offers on the same property, which just drives the prices up to the point of more risk. Foreclosure have all but dried up as well and the same investors are fighting for these like dogs over a bone (thus no meat left). I generally have flipped in the past, but ended up with 3 rental properties pushing my numbers to try and compete. I have been direct mailing, but I think sellers on these lists are definitely being bombarded by a lot of investors out there as calls have been random at best and in areas I don't care to invest in. I have also been tempted to go out of state, but like others the horror stories generally outnumber the successes. Thus, everyone marketing to out of state owners right now. I have seen other investors that used to run 10 employee crews have to cut back to a two man operation as deals are extremely hard to find here and a lot of competition. It appears the glory day of old are over and we are back to trench warfare that weed out the weak and weary looking for the "get rich quick" end game. Investing now will actually take some hard work and a lot of stamina to grow wealth longer term.

I am also interested in a meet up here in the East Valley if one is put together as iron sharpens iron for the long haul and two or more heads are always better than just one.  Best of luck to all.

I would start with the books offered on this website as they are coauthored by many investors here on Bigger Pockets.  You can even search this site for Buy and Hold Book suggestions, which I am sure has been well covered.  I am a CPA in the insurance industry, so that's how I know your designations.  I have several rental properties and the best teacher is just to do it and learn from experience.  You just need a good foundation so you don't make any critical mistakes.  Personally, I absolutely love Section 8 tenants and receiving paychecks from the government.  These tenants don't want to get kicked out of the program, so they take great care of my properties.  They also send out inspectors periodically to make sure they are not tearing up your property and that you are not a slum lord.  You still need to screen potential tenants to make sure they are not crazy or violent and would not care what happens.  

Best of luck.

Usually the highest energy usage for any home is the heat pump/air conditioner.  Unless this person is cranking down the air to keep his business servers cool, there must be a glitch in the billing or the meter may be broken.  I believe you can call the electric company and have someone check out the problem if it happens to be the meter. 

Mathew, I assume you are in the insurance industry based on your credentials?  I think CLU is a certified life underwriter if I am not mistaken.  If so, you are learning skills that will help with real estate as underwriting is what you do when before you invest.  I would spend a lot of time on the BP forum researching the types of rentals you are looking to invest in and read everything you can get your hands on about valuing properties, cash flows, rental laws in your area and land lording.  You are off to a good start by house hacking with your current renter, which will help you save money for down payments.  More than likely, you will turn the house you currently live in into your first rental as you can move and the next one you can purchase as your new primary residence and good financing as you only have to live in it for a year.  If you are not handy, start networking with other investors in your area and get referrals for handymen and contractors.  Associating with other buy and hold investors is one of the best things you can do as you will learn a ton from those doing this in your area.  Get involved in your local real estate investor association and clubs.

In short, educate yourself and work on networking.

I hope this helps.

As side note, you have worked hard to get your accounting degree. Passing the CPA exam is a great achievement, but only if this is what you truly want to do.  As Jennifer said, stable income is a great way to start investing.  It is much easier to get loans on rental properties with a stable paycheck than becoming a Realtor and trying to build a commission based business.  Lenders are not very enthusiastic about unseasoned self employed people trying to get loans.  My CPA has allowed me to put away a lot of money to invest and if you live well below your means and do RE investing at the same time, you will probably be better off.  You will also learn and interact with a lot of financially savvy people and the CPA lends a lot of credibility when trying to build an investment business or any other business.  My last post was more from the heart than the head at my own mistakes along the way. As long as you pursue both, I think it will serve you well in the long run. 

OMG Ryan, you are so me.  I had the same choices to make right out of college.  When I graduated a lifetime ago in 1988, Savings and Loans were imploding, interest rates were at 18%, and the market was flooded with finance people with years of experience willing to work for the same money.  Unfortunately, I did not know anyone in the RE business to mentor me, so I ended up going the CPA route.  I made this decision more out of fear from my lack of kowledge than following my passion of getting into real estate.  I knew as an accountant, I would always have a job, live a good life, and have some security.  Honestly, I TOTALLY regret not following my true passion so long ago.  Yes, you won't have a steady paycheck, benefits, security, etc., but if you truly love what you do, it will all work out in the end.  Yes, there is risk going into real estate and being an entrepreneur and only you know your own risk tolerance.  But, you have absolutely nothing to lose when you are young and right out of college.  It gets much harder to make these decisions once you are married with children who depend on you to provide for them.  Guess what, if you fail you can always go back and sit for the CPA exam! 

Once I became a CPA, got married, had children, I got lulled into a day to day life of work, children, activities, etc.  It wasn't till I woke up one day 48 years old and realized I hated what I was doing and was never going to retire if I kept doing things the same way!

I am now a middle aged CPA trying to follow my dreams of a better life for me and my family through RE.  FOLLOW YOUR DREAMS WHILE YOU ARE YOUNG MY FRIEND and don't ever listen to the nay sayers (parents, friends, family).  They will talk you out of it EVERY TIME!

Feel free to contact me any time if you have more questions.

There is no better way to get comps as quickly and efficiently as the MLS. You just have to know how to use it correctly. The average per sq foot is only a starting place. You need to try to limit your search to sales within 6 months, preferably 3 depending how fast your market is changing. Then you have look at the comparable properties for similar year build, square footage, and then research them to see how many upgrades were done and factor in amenities like pools. Based on this, you can get a good idea of the high and low in the development and what repairs are needed to fetch the highest price. You then need to see what your completion is doing on the currently listed and days on market. Same, look at the condition they are in and are the asking prices higher or lower than the sold comps. If they are lower and the days on market are adding up, you know the subject property may have to sell at a lower price to move it. If it is higher, stick to the sold comps as ARV. If you want to guaranty a profit, always use the low comps. It is really easy to talk yourself into the higher comp value as it will justify the cost of that property you think is a deal. As a new investor, I made this mistake on too many occasions. The biggest mistakes I have made are over estimating the ARV and under estimating the rehab costs. Also, know the price ranges of houses that are actually selling. I made the mistake of venturing into higher priced homes in my area and had to turn it into a rental to stop the bleeding as there were 40 properties in the development sitting for 6 months to a year. You have to have the pulse of your market and areas to see what is actually selling. If you are buy and hold, it is a lot more forgiving as you can always cash flow it until the market appreciates if you end up over paying. This is not an exact science, but knowledge will limit your risk.

I hope this helps.