All Forum Posts by: Bryan H.

Hi, I am looking to purchase a property in Detroit that has been sitting Vacant for the past 2 months. The property seems to not have been winterized from what I saw when doing the walk-thru. (water in toilets, tanks, and bowels from leaking sinks) I am using this as a point of negotiation with the seller to get a significant reduction in price due to this. I have not seen any water damage through the property but I am afraid that there might be leaks in the walls once I get utilities turned back on. I am doing the renovation on the property myself and wanted to know if anyone would know what I should do. ( this will be my 4th self renovation and I have 6 years of experience from my time in the military) There is only a kitchen and bath on the first floor with laundry in the basement which is not finished so it would not be too difficult to replace plumbing but is it necessary to open up the wall and replace everything?

Investment Info:

Single-family residence other investment.

Purchase price: $115,000
Cash invested: $15,000

This is an older home in the city of Wayne that has sat vacant on the MLS for a year. We came in and fixed the major problems with the house including but not limited to Replacing the sewer main section with PVC, repairing foundation issues, fix hills and valleys of the houses sub-flooring, replumb first-floor bathroom,removed and replaced damaged and leaking HVAC piping and did a full house renovation to update the house.

What made you interested in investing in this type of deal?

I knew the value of the house would be about 180-200k after 15-20k worth of renovations

How did you find this deal and how did you negotiate it?

This was on the MLS and it was negotiated with my real estate agent.

How did you finance this deal?

Traditional financing

How did you add value to the deal?

I renovated the home

What was the outcome?

it is currently a buy and hold

Lessons learned? Challenges?

How to fix sewer issues and foundation issues

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

N/A

Quote from @Kyle Ebersole:

Quote from @Bryan H.:

Quote from @Kyle Ebersole:

I echo what Alan said! J. Scotts book, Gerber's Emyth and How to Grow Your Small Business by Donald Miller are great books to help you build a foundation for scaling a flipping business. You've got a great edge as you are a contractor. If you are wanting to get to 1-2 a month, you will either need to hire more employees or sub things out. Decide which route you want to take there first. Secondly, build out your networking for finding deals. There are a bunch of different ways, but find 1 or 2 and become great at it. Follow up systems and sales are key for getting deals off market. Thirdly, get some very good lenders that you can call on. Handling 8-10 properties at a time requires access to a lot of cash and enough cashflow to be able to handle all of the monthly interest payments. Its definitely doable, but takes a lot of hard work! 

I appreciate your response. It seems so far away but I know it is the next step in my journey to growing my real estate. I need to get a few flips under my belt to build up some cash reserves then I will look into scaling and building an in-house team. I think I want to focus more on the project aspect of everything and partner with someone who can deal with the lenders, books, deals, and selling of the properties.

 That is definitely another good option! Partner with someone who is good at what you are not good at, grow and become success together. Great way to learn and build yourself up to a point where you eventually get to the point where you can do it all on your own. 

 Thanks, Kyle I appreciate the reply. I am looking into that. Currently, I am dealing with some major issues on my current property but in a week's time I will hit the group running. I already started joining some off-market Facebook groups for my area and have had flippers reach out that I can work with when my days are freed.

Quote from @Kyle Ebersole:

I echo what Alan said! J. Scotts book, Gerber's Emyth and How to Grow Your Small Business by Donald Miller are great books to help you build a foundation for scaling a flipping business. You've got a great edge as you are a contractor. If you are wanting to get to 1-2 a month, you will either need to hire more employees or sub things out. Decide which route you want to take there first. Secondly, build out your networking for finding deals. There are a bunch of different ways, but find 1 or 2 and become great at it. Follow up systems and sales are key for getting deals off market. Thirdly, get some very good lenders that you can call on. Handling 8-10 properties at a time requires access to a lot of cash and enough cashflow to be able to handle all of the monthly interest payments. Its definitely doable, but takes a lot of hard work! 

I appreciate your response. It seems so far away but I know it is the next step in my journey to growing my real estate. I need to get a few flips under my belt to build up some cash reserves then I will look into scaling and building an in-house team. I think I want to focus more on the project aspect of everything and partner with someone who can deal with the lenders, books, deals, and selling of the properties.

Thank you for the advice @Alan F. I have found some investor-friendly agents and I will use the other resources you provided.

I was hoping to get something that has 2 exit strategies which would be sell and rent like I have done with every property so far including my own personal just in case. I want to get something off market so I can get a great price and really hit a home run when it comes to my profits.

Hi everyone, I wanted to get on here and reach out to the BP community about fix and flips and scaling. I currently own 2 long-term rentals and my own primary. I have done all the work on all the properties up to this point including all renovations and management. I run a small handyman company which I plan to grow with my real estate business to hopefully start doing large developments. I have good cash flow on my current properties but I want to learn flipping so I know how to turn a decent quick profit. I see others on here talk about doing 1-2 flips a month and I want to know what it takes to get to that point. I have no experience getting off-market deals and I need to learn to build the systems and team in place to make everything happen. I appreciate your time writing your responses.

@Chris Seveney

Thank you for your honesty. I understand where you are coming from and my question back is twofold. 

1 What should I do instead? I feel like this leaves me to believe that I should not tell the truth about my expectations and the expectations of other professionals who have looked at this deal and agreed with the numbers provided including real estate agents and 2 other more experienced investors. 

2 How about my prior deals? I have the financial history to prove that I am getting a 30% and 51% ROI on those deals. Are these numbers too high and I should deflate them as well? I want other partners and lenders to see the type of returns I am getting but also don't think I am inflating them either. I understand that this is unusual for real estate investors and I didn't believe it till the rent was coming in and the money was in my account. How would I be able to prove I can get these types of returns on investments to partners and lenders? Is it just a numbers game and I need X amount of deals before people will trust that I can continue to repeat my results?

Again, Thank you for your honesty and I am glad you pointed out what you think. I seem to be doing really well and I am very diligent with everything I do. I want to continue this growth and I know at this point I need to allow others in so it can scale quicker.

Hey David, glad to see you started on our journey. You have a ton of questions and that is okay. I had some of the same questions myself when I started. I will start by saying I at one point worked in personal finance but am no longer working in finance and am not licensed. Let's start with your question about extra payments on your duplex. There is no right answer to this question. Everything depends on risk tolerance. I will give you the main options you have here. First and the safest or the Dave Ramsy way as I call it is to make sure you have 3-6 months of expenses for the property saved up then pay as much of your mortgage down as possible as quickly as possible. This is the mindset of my parents and grandparents. This is great for older people who are wanting a very low possibility of losing the property due to an inability to rent out your property. The problem arises with opportunity cost. Every dollar you put into that mortgage is a dollar that you can't put into the down payment of your next property. On a fully paid-off house, you may get 10 cents on the dollar unlike if you only put 20% down on a mortgage even after the mortgage expense you may get 33-50 cents on the dollar. The second option is the middle ground. Pay your mortgage every month and put $100 dollars extra away to knock down that mortgage. You will pay it off faster in the long run but again the opportunity costs of that extra $1.2k per year that could be reinvested in another property. With the reminder of the cash flow put it in a savings account and wait for the next property. The third option would be the riskiest but most profitable. Pay your mortgage and take the rest of the cash and save it for the next down payment and as your rentals grow so does the ability to get a down payment faster and faster. This is the option that I choose but I am in my early 20's and have nothing to lose. The risk vs the reward makes sense to me. If I was retired and did not have any W-2 or 1099 income I would lean in the other direction as now I have responsibilities like children my partner with the potential of ever-increasing health care costs. There is so much more I could cover but it would take me hours to type. I hope this helped and if anyone has any direct questions I am more than happy to respond with the knowledge I have.

I currently have 2 properties that I have done the numbers on and I believe they are pretty solid deals. I have experience working with my 2 buy and hold deals that I renovated myself without contractor help. Both of my current properties are cash-flowing $850 each per month and I am looking to expand while finishing up my residential builders license.

The first property is the multifamily property currently owned by the city. I am working to get hard money for this property and I believe it would take 3-6 months to renovate with contractor help. The estimated ROI on the property would be 127% year over year assuming a down payment of 20% as it would be refinanced as a primary residence. This assumes that it is rented out as residential and not commercial as it is classed for both. It includes a second lot next door that is also zoned both residential and commercial which means the rent may be increased if it is rented as commercial. This area has been increasing in value over the past ten years and they are about to see a huge jump with two well-known employers bringing both white-collar and blue-collar jobs.

The second property is a single family that is currently off-market but was on for 5 months prior. I have talked to the owner and he is very motivated to sell. The property is in disrepair and is way below market value due to that reason. This property is small and has a lot of chance of upside for a fix and flip or a fix and hold. If it is to be fixed and flipped the estimated ROI would be 530% putting only 20% down on the purchase price and the renovation being 100% financed. If it was to be held and rented out long-term the estimated year-over-year ROI would be 67%.

I am looking to grow a lot in the next 5-10 years when it comes to my real estate portfolio and I think these are the next few steps. The ROI on these properties is pretty grand and I do have experience behind me with prior deals I have done that show I have gotten other unheard-of ROI's. My first (and worst) deal is a single-family home that is currently rented out and has a yearly ROI of 30%. My second deal was another single-family home that is also currently rented and has a yearly ROI of 51%. Both of these deals were market and currently sitting above water if selling was required.

Who I am looking to partner with? I am looking to partner with anyone with a passion as deep as mine in real estate. I am willing to look at financial and sweat equity partners. I am wanting to grow my network of people who are real estate investors in any kind of real estate. I think that the more people the more opportunity to find and make money on great deals. Even if you don't want to partner please feel free to reach out I love learning new things and teaching and helping others while I go. If you are interested in talking further please comment or send me a message I normally respond within 24 hours and can give you more information on the deals listed above.