All Forum Posts by: Jonathan Greene

@Kevin George one thing I left out. There is a way to do oos deals first and be confident, but it would take traveling over and over to the area so you know that area better than the locals. During that time you would make contacts and become like a local before buying. You could do that in smaller towns outside of Brooklyn going out to Westchester, before the price booms, as well.

For all new investors I say to try to make a really good friend who is an agent and an investor who likes to look at dumps like you. Then just see 7 a week for fun or 5 on a weekend for fun, whatever the agent is willing to do if you don't have your license. You have to see what 100k looks like in each market or 50k or 200k to get it and you have to start to recognize things that are off about properties.

For a first flip, I would flip a condo. You can usually find them in bad shape, but since there is HOA the exterior and many other things are safely taken care of. You work the interior and get a feel for that. The turnaround time can be quick, like 30 days. Or a small house, 2 BR, so that you aren't going to get in over your head. You also want something that is not a death trap for your first deal so you may pay more, but have less headaches.

@Kevin George my first point would be that you should never be thinking about building a team before you know the ins and outs of real estate investing. And how can know the ins and outs if you are looking on the computer for oos deals? You don't get any experience with turnkey investing at all. They do everything for you, you won't learn anything. You are just parking your money and will make SO much less than you can. Why would you do a deal and lose money to start when if you took a year to learn everything around you 50 miles you would never need to?

Basically, you are putting the cart before the horse. How much do you know about REI now outside of that job (which is some good experience by the way)? If not a lot, the team you won't need for a long time unless you have a lot of capital to burn. I grew up in Brooklyn and there are plenty of pockets you can find within 30-45 mins (or less) where you can make deals.

The real question is WHY would you be attracted to deals you can't touch? That just tells me you don't really want to be a real estate investor. Real estate is tangible, you can touch it and to learn about it you have to touch it and smell it and feel it and deal with it and turnkey won't help you with any of that. I hope that helps.

If you have no experience with commercial real estate, it will take much longer to get a handle on that business than residential. Commercial real estate does not run, market, or act like residential at all. Some of the best commercial agents and brokers have been doing it for years and know exactly where to go to get a property rented or sold. As a residential agent, every time I tried to dabble in commercial I screwed it up. It is MUCH more complicated than residential and much harder to break in. In residential there are 100 new agents every day in every town and there are Broker Open Houses and Open Houses to meet people and interact and there is plenty of business to go around. In commercial, it's tight because there isn't a ton to go around and much less camaraderie and little to no opportunities to connect. If you are even on knowledge, you will have much better growth potential in residential.

What are the multiple choices you are offering?

Is the property off-market? How much contact have you had with the seller? Are they expecting an offer? Will you be mailing the offer or do you have a sit-down set up with the seller? Why would you need an agent if it is all off-market?

It's not steering to tell a seller that they will do better listed than with a FSBO, it's a fact. FBSO is not on the MLS, no one wants to deal directly with a seller unless they want to send a lower offer and especially no one wants to deal direct with the flipper who thinks the property is perfect. Any listing agent worth their salt will get you more than their 5-6% listing fee by putting it on the market the right way and doing their job than you would get as a FSBO. Also, agents are the ones with the buyers most of the time for flipped properties. Agents don't show FSBOs. You are missing out on the entire market and looking for drive-bys and scragglers who go on FSBO dot com. I flip and I list all of my own properties, a perk to having a license. But I also list for my flipper friends because they know I will get them as high as they can go by doing everything the right way with listing descriptions, high-end photos, videos, floor plans, maps, response time for showings, Open Houses, etc.

In my opinion, if I see a flipped property that comes out as a FSBO I think the flipper is cheap and also was cheap in the renovation.

Me: "Where do you want to invest?"

Them: "Anywhere."

Me: <dies inside and throws up in mouth>

Them: "Cashflow, you know."

- - - - -

No. This is not how you invest in real estate. You are just asking to be sold a bill of goods with no real value. New investors get so eager that they will react positively to anyone who tells them a deal has good cashflow, or cash on cash return, or <insert acronym that no one uses in real life>. Don't go to real estate meetups and be open to any investment. You would be better served leaving all your money on the counter and letting pigeons peck at it for a while.

If you want to be a real estate investor, you have to know which markets are good or at least ask smart questions of experts about why some markets perform better than others. This is the reason many fully open to the public RE meetups are boring for seasoned investors. Because even when you try and help, you get vague answers or regurgitated nomenclature from the BP forums.

There are always new investors in the forums asking questions. Some very good, with background of where they are and how much they know, and some very bad, literally "How do I invest?" The only way you will find a mentor in RE or at a RE meetup is to bring something to the table. Maybe you are new, but what skills do you have that could help someone? Are you willing to bird dog? What can you do for a seasoned investor besides just take their knowledge. If you know this, you will do way better than this guy did last night.

Nothing about what you wrote is good for you. You want to buy two houses, out of state, based on calculations online, you've never been to the area, don't know anyone in the area, can't confirm how much work needs to be done, don't know if any major appliances are near end-of-life, don't know the block...all of this to make $6,000 a year. And that's with a calculator. If one furnace breaks in either house, your entire profit is gone in one day. Walk away and spend the next year learning about how to invest in areas near you that are the next up-and-coming town instead of throwing your money into something in a city you know nothing about for a profit you will never get.

You are basically asking to get swindled if you have no background in flipping. By the end of today, you will be approached by a local contractor who wants to partner with you. You put up all the money and they do all the work. But the work will cost WAY more than expected because this and that. If you are new to real estate, you have to learn the ins and outs of flipping before you go and try to flip a home with people you don't know very well. First-time flippers make so many mistakes and the main one is choosing the wrong partners. It's much safer to go to some REI events and meet some people doing active flips and go see what they do, how they do it and first understand all that goes into it. There are A LOT of bad flips that come on the market where the flipper wants market value, but actually devalued the property with terrible design choices and didn't take into account who the end buyer will be. If you want to keep your money, don't rush into flipping before you understand every aspect of it.

Just because there is a book on out-of-state investing doesn't mean everyone can follow that and it will work and that all these questions are answered. There are books on how to invest with no money down. How does that work out for 98/100 people? Not well. Out of state investing is perfect for people who have experience and can make contacts quickly in an area or who can do so much volume in an area that if one goes off the rails it's not that big of a deal. Anyone who reads these questions and says, "Hey, there's a book on it" will just lose their money trying it. It's not about whether you can or not it's about WHY you would do it for your first investment if you actually want to be a real estate investor. If you want to be a day trader, have at it and invest in towns you've never seen. It won't work out long-term. To be a real estate investor you have to get your hands dirty and that doesn't mean on a keyboard looking at values of a town you've never seen.

Local doesn't mean stay on the same block, it means keep moving outward to find the next "it" neighborhood. It's not hard if you are always out in the field. All of these new investors who are searching online for the best places to invest are a year behind. If it's out on the Internet, it's way too late. You missed all the big profits and will be scratching at bad deals and small margins with everyone else who is web surfing for "best place in the country to make money on real estate with no money down, no experience, and no will to actually see properties, but really want to get into investing today." :)

If you do a formal Use & Occupancy it's pretty standard and not a big deal. First, you need to evaluate how they have been as sellers in the deal. If they have been cooperative and keep the house up nicely, it's fine, especially if you can make over market for doing them a favor. Too many jump to the worst-case scenario, but if you were going to do light rehab what's the big deal (if they are nice people and take care of the house) to let them stay until they find a house and pay a small premium for doing it. However, if the house is a wreck, don't let them do it. If they were difficult in the transaction, don't reward them, but from what you said it sounds like they just ran the timelines wrong and need a little help.