All Forum Posts by: Jim Froehlich

@Ed O. ...sorry for the delay, but yes regarding the reservation process (if you haven't already solved) - this might not apply in your case or state, but in our case because we were putting in infrastructure (new road) and had over 14 lots, our state law forces us to act like a new subdivision in terms of State Attorney General office registration, which is a real pain, but supposedly is for consumer protection. In addition, we had to Quiet Title (via courts) because TWO of the existing residents in this unfinished subdivision would not sign lien waivers they had against the former developer who left the road a mess - I tried to take the quick route, but they were stubborn and didn't trust me (I guess?)  Anyway, due to this quiet title action, we could only take NON-BINDING reservations during this time.  So my attorney did a simple reservation agreement and we collected $1,000 deposits and reservations (set up a website and small billboards advertising with Non-binding caveats).  In the end it was worth it I think because about 65% of the reservations converted to signed PSAs once we had the green light from the state.  I think they had 5 days to sign PSA or get money back and we had 10 days to return the deposits, which were held in escrow.  If you need a sample of forms we used, please send me direct message and I'll send to you.  Good luck!

@Ed O. and @Lesley Resnick - since you were the only ones who ever chimed in on this one and I happened to logon, which is too infrequent these days, I figured I would update you...

This is how it went down...

1. It was a pain to get good quotes and available people to build out spec homes and I needed a reliable/credible GC to qualify for the loans I considered anyway.

2. This was a half-finished subdivision from the late 80s with middle to upper-middle class homes - the residents had a lien against the former developer who went bankrupt and left the road in state of disrepair (never done the correct way)...so 10 years bankrupt...I bought it from the town for backtaxes and agreement to build new road.

3. Spent ONE YEAR having to quiet title with attorneys because TWO people wouldn't sign their lien waivers against the property.  Won that.

4. Allowed people to reserve lots.

5. Figured out via simple math that building/selling spec homes was not a better proposition than selling lots outright.

6. SOLD 22 of 24 lots in past six months for 10-15% more than we conservatively projected. NOTE: the largest builder in our state put them under contract for $100K per, then backed out saying there would be too much sitework and tried to get them for $75K each - they sold for average of $122K.

7. 150% ROI in 18 months - no sweat...hah

Unicorn, but certainly worth the work/trouble.

It's just too expensive to build in most cases these days...this is one of my strong conclusions.

Thanks for your earlier feedback!

Jim

Zackery - here's my two cents (...am also very familiar with both Houston and New Hampshire)...

1. What real estate investment strategies do you think are a good start for absolute beginners with no handyman skills? The easy answer here is "wholesaling", but in my opinion, it's a long-shot and you run into a lot of shady characters and uncomfortable situations of hoping to land deals with people down on their luck. It's not necessarily dishonest, but it's mostly a "starter" area because you DO NOT NEED any money, just time. It teaches you to analyze deals, markets, transactions, and puts your feet to the fire quickly by putting you out of your comfort zone on phone calls with prospects on either side of the coin (with cash buyers lists, sellers, etc.) In retrospect, my advice as a first strategy is to KNOW YOUR LOCAL AREA inside and out and look for property within striking distance that you know is undervalued in some way (whether on or off market)..in parallel, build relationships with people who have money and experience (offer something of use in return for their time/insight)...then, when you get a property either under agreement or think you can be part of a good deal - reach out to a potential teammate to do the deal with.  And then just keep building deals like that while "slowly" becoming a local expert.

2. What books, blogs, pages, channels, etc. would you suggest to learn any general beginner knowledge?  BP is one of the best places, so you're already there.  Rich Dad/Poor Dad series (for inspiration and specific strategies on syndications and MF property management), Joe Fairless has a great practical book on MF syndication, BP itself has a string of guys who wrote books on specific beginner strategies and analysis (like BRRR strategy). Based on your age, you could consider starting down CCIM path, so you're really well founded in all areas. Also, the A.CRE guys have an awesome "accelerator" course that allows you to really understand financial deal underwriting and different models - that's very valuable.

3. What are the biggest mistakes you made as a beginner real estate investor? How did you avoid these mistakes moving forward? When I was around 28 (in the late 90s) and read Rich Dad/Poor Dad, got pumped up about Real Estate, bought a "No Money Down" cassette and coaching class from Carleton Sheets - set up my first MF deal and made this mistake - let my "guru" coach set up commercial financing for me on a 6-unit in Manchester, NH - the company was out of Utah. The seller agreed to take back a large amount in form of note, I only had $2-5K to put in. The WEEK BEFORE the closing, the lender said they "do not lend in NH" - what?! (my address was in MA at an Air Force Base) - I had to back out of deal fast.  So, the biggest lesson was to DO YOUR OWN HOMEWORK and Due Diligence and don't rely on 3rd party experts when you don't have to.  Ironically, and tragically, a young child died (of poisoning) at this home and the seller (and property manager) went to prison for awhile (only 15 months) for LYING about lead paint.  Next biggest mistake was on my 2nd career start just 4-5 years ago in real estate - on one deal, I lost a $10K non-refundable deposit on 4-parcels - easy lesson is ALWAYS GIVE YOURSELF AN OUT IN THE P&S.  In that case, a capital partner who promised $750K backed out last minute and I had to scrap the deal.

Good Luck!

Marette, we are in the Lakes Regions and open to potential future projects. My wife, Kerri, managed a 2-family as STR here in Wolfeboro and her mother does AirBNB on a room; that first one is now full-time rental that she manages. My opinion is that for the Lakes Region, STR is a tough equation in terms of ROI in our limited experience. North Conway or someplace with at least three good seasons might pan out better. Many people would like to own a place up here and rent STR when not using it, but everyone (including the owner) wants to mainly only be up here in the summer (and maybe some fall). Year-round rentals in the Lake Region of NH make much more sense (than STR), along with limited development and fix-flips in my opinion (which is still going well I think). Good luck and please feel free to send us any deals you're considering where a partner might be required. Thanks!

For those people on here who have and use premium accounts and are Investors (not agents or service providers), I would be interested in getting feedback and how you have actively utilized your account to make better connections and deals with people and approximately how much time you've spent on your profile or ongoing time spent per day/week/month utilizing BP?

I switched to Premium awhile ago and haven't spent much/enough time connecting (less than I did on basic account), but ironically I'm much more involved (every day) with investing and frankly, only 1-2 of the leads that have contacted me over the past year have been genuinely involved in real estate investing (beyond a lot of wholesale startups).  Thanks for thoughts so I can tell my wife I'm not just wasting $100/month!

Am looking at a large multifamily (townhome style) Class B asset in Rockford that is 0% vacant...does anyone have a current/accurate feel for both cap rates and vacancy trends here in this area?

@Ed O. and @Lesley Resnick - thanks for the feedback!  maybe I will sell some of the lots up front and put that money in escrow for the road - I'll talk to the town about it - great idea.  I'm closer to solving this now as a couple local GCs seem interested in coming to terms.

No "smart people" have ideas on how to do this?  you mean I have to think for myself?  (I'm in trouble)

Smart people - if I own 24 buildable lots appraised ~$1.6-1.8 million in total (assessed by town at $1.4M), what do you think is the best way to build out the homes (notionally $300-400K builds/$450-550K sells) and make money: a) putting the least money out of pocket into project, and b) NOT signing on construction loan(s) if possible?  One of my friends said to subordinate the land to a GC willing to build/sign completion guaranties and bond and we split profits along the way.  Will any lenders hold multiple lots for collateral and release them for building maybe 3-4 at a time?  Please let me know if you have any experience with this situation.  Also, selling off any lots up front is not part of equation because I've agreed to fix the subdivision road these are in.  Thanks!

@Ryan Weimer - entitling raw land and developing (especially MF, SF, or Industrial) is our current focus and Boise is high on our list.  I went out to Meridian last year for due diligence on a deal we were doing, but had to pull plug when COVID hit to play defense for a few months.