All Forum Posts by: James Guillot

 I agree with the answer he gave. It definitely felt like the response ChatGPT would give, yet it also made a ton of sense. We should worry less about the mouth and more about the words coming out of it.

 I'll be honest, I considered something along these lines. I think everyone deserves a chance to grow. I think that is a very good way to narrow down who I actually want deals from. I'm not sure why I never did it, but recently I started to. I even sent one wholesaler the link to the calculator I made and use for my first look at a property. He never responded. If it can't pass the calculator, it's not even worth further discussion or due diligence. Nobody panic, it's just a screening tool, not a due diligence replacement. Nothing replaces good due diligence.

Thank you. I always run my own numbers when presented with a potential deal. I trust almost nobody when they just throw numbers at me, but a lot of the time, they are close or dead on. I'm only expressing concern about wholesalers bringing more and more bad deals recently with rushed, inflated, deflated or missing numbers. I am more than willing to lose some profit for an assignment fee to avoid having to do all of the lead generation, but lately the deals being presented are just plain garbage. I was sent one today where the asking plus assignment fee was 10k less than the ARV, and they didn't even mention the approximate 40k rehab it clearly needed. No consideration for closing, holding, rehab, or sale. It's like they're not even trying anymore.

Funny you should ask. I just came across something today that I believe would be a great investment for one million. 

During COVID, in my area, the county was throwing permits at people to install, use, and lease RV hookups. Once it all died down, the county had a change of heart. Permits are expiring, and the county is not renewing many of them.

There is currently a small RV park that the county has denied renewal on, but instead wants 4 duplexes built in that spot, with septic systems already installed, and utilities already there. The park is up for sale for about 200k (I haven't checked on that, but that's what I am being told).

With $1M, I would purchase the park at the lowest price possible, and build all four duplexes the county is asking for. I have found in the past that if you give the city/county what they want, they make the process silky smooth for you.

I would then sell two, recouping most of the initial investment with half the property, and rent the remaining four units for around 80-90% cash flow (making up for any gap between the sale of the other two and the initial investment). Once the initial investment was completely recouped, I could do any of the following:

1. Continue to hold for a large cash flow

2. Leverage the equity, reducing my cash flow, but allowing me to invest more elsewhere

3. Sell one or both for a massive cash boost, and invest that elsewhere also

I know there are many possibilities, but that is just what I've come up with in the last few hours. I have a basic understanding of development costs vs property costs in the area, so all of this relies on what I know to be true. There is a lot of research and number crunching to do before this becomes a real opportunity. I mainly do flips, so this would be a branch out for me, but my ultimate goal is to move to development when funds allow, anyway.

Lately, I have been noticing a trend. Wholesalers have been sending me deals with ARVs too high, rehab estimats too low, and they aren't calculating closing costs, holding costs, or profit spreads (let alone extras, like hard money costs).

Obviously, this isn't a new problem, but it's more consistent than I remember. Is there a new "guru" in town teaching bad math? Should I dump these Wholesalers and try to find new ones for my area or is there something else going on?

Do you allow pets on your lease? I currently don't have any rentals, and I'm trying to get a feel for the landlord mindset before I switch over in a couple years.

Out of the flips that I've done, I have spent far more repairing or removing damage from cats than I have dogs. Personally, I prefer dogs, and I wouldn't have an issue with most breeds. Cats are okay, but the damage they cause with stains and smells is hard to ignore.

The way I see it, location is the most important factor for dogs, though. Small rental+big city=bored dogs (especially large and high energy breeds). Bored dogs do quite a bit of damage, so if it's a 1200 sq ft house in a big city, I would probably stick to lap dogs only, or none at all. One the other hand, in areas that are more suburban or rural, large and high energy breeds don't seem to be as much of a problem and would be more likely to be covered in a pet deposit.

I understand that much of it has more to do with the owners than the animal. What are your thoughts? Does anyone have any tenant animal horror stories?

@Derek Simkins, thank you. I also snagged it. I'll give it a test run.

@Denise Supplee, thank you. Yes, one of the biggest lessons I learned was that if I don't take time finding the right team members, I'll just be adding extra points of failure to the project. I've already started networking and getting referrals. Another lesson, always set a timeline and make a contract.

@Wade Wisner, thank you. That sounds like a terrible situation to be in. That story reinforces my belief that I'll be back up and running in no time.

I am restarting in REI after some time and mistakes.

(I apologize for the length, but I find this information necessary)

I started my investment journey back in 2021 in Oklahoma. I had been researching REI and mindset and soaking up any knowledge I could get my hands on. I also used my new mindset to fix my mindset. I had lived as a consumer my entire life and had a lot of repair to do. Eventually, I got to the point where I felt I had enough to start moving. I was able to show my value to an out of state investor as a foot man. I did small tasks for his properties and identified and analyzed potential deals for him. Eventually, I found a good flip and he offered to go in as a partner on it. He provided the lender and I handled everything. I found the contractor, agent, and even did some of the work myself. I was able to raise the down payment privately. The deal went well. The profit wasn't amazing due to some surprises and my inexperience. The private money plus the promised return from the down payment took most of it. I was happy with that deal, because I learned an unbelievable amount from it. I walked away with around 1k.

My next deal was very similar. I found it, contracted, and did some work myself. During that project, I ran into several massive problems:

1. The contractor (same one from the other deal) spent less and less time managing his workers. I didn't have the knowledge or experience yet to realize that things were about to get ugly. Work either wasn't getting done, or it was causing more damage or problems. Plumbing was done poorly and created a massive leak, countertops were dragged across a newly finished hardwood floor, paint looked like it was done by a four year old, etc.

2. I am military and had to PCS out of state in the middle of the project that should have been finished by then. I was unable to see any of this and didn't have a good contact to manage it for me.

3. I had an agent (same one from the other deal) who had agreed to keep an eye on the property and progress for me. She did for a little while, but then just stopped calling or answering. 

The whole thing had fallen apart. I was able to contact another contractor who knew mine to go in and fix everything and get that property out of my hair. He fixed it all at a discounted rate, I found a new agent to sell, and the market stopped moving. Nothing was selling. The property sat on the market for 5 months at much lower than it would have sold in a week for if I had exited on schedule.

The loan I received for it was private money from an investor, and he was willing to extend the contract. The expected profit was around 70k. After the sale, everyone got paid and I walked away with around 400 dollars. I consider myself lucky and I took those lessons. 

Unfortunately, the investor who provided the loan had taken my contractor referral during all of that. He was supposed to manage maintenance and rehabs for all his properties in the area (probably around 100). He did very little and took the money for months before the investor realized what was happening. My referral turned into a massive loss for someone I was on good terms with. He hasn't spoken to me since and I'm certain that that relationship is done.

During all of that, I had found a property at my next PCS location. My plan was to purchase under my LLC, then rent it to myself. After doing a live in rehab, I would move to something else and rent it out. I had the lender lined up, as well as the down payment and rehab costs. Due to the issues with the previous property (which were still ongoing), my down payment went to that problem. I located a down payment as private money and waited for close with my family in a little rented cabin. A few days before closing, the private money backed out and I had little to no money left. After an extremely stressful two days, I was able to find a new lender and a new down payment and moved in. I had been hit with several major setbacks all around the same time and it broke my financially and emotionally. Instead of learning the many lessons in all of that, I lost all interest in REI. I let myself fall back into a consumer lifestyle and mindset and quickly buried myself in debt again.

I still have the property. I did indeed rehab it and am at the tail end of the refinance. I will probably stay here and retire here. But now we're back to the present. I made so many mistakes, I learned all those lessons, and I climbed back out of that hole to put myself back in the right mindset. I have put myself back on the right path to remove this debt from my life. I am currently researching the Louisville market and started networking with investors and wholesalers. I am going to dive back in, taking the lessons I learned from some major setbacks. I am making this post in hopes that it helps someone else. I am not really looking for advice, although it is always welcome. I am now aware that due to the fact that I maintained my job, and never actually walked away from a negative deal, it was never really that big a problem. If you're thinking of commenting something along those lines, and telling me about how bad you crashed and got back up and kept going, congratulations. I am proud of you. I didn't do that right away. It took me time to figure myself out and learn the lessons from my mistakes.

If you got this far, thank you for reading. I hope you were able to get something from this.