All Forum Posts by: Joshua Michael Hauman

It depends on what resources you have at your disposal.

If you were a military general and wanted to make your military campaign as successful as possible you would put together a plan of attack. Your first step would be to assess the weapons and resources at your disposal. You want to know how many troops, what weapons you have, what strategic objective your campaign accomplishes and the layout of the battleground. Once you have that you can begin to allocate those resources strategically, matching their strengths to specific objectives.

Where do you have equity that you can leverage?

Who do you know that can help you?

What are you trying to do and to what extent? Using military strategy example, how big is the battle and what outcome do you want?

A few ways I’ve battle planned this when it comes to a renovation in the case of flips or BRRRRs:

When I started my first deals were done with Personal Loans.

Personal loans are based on your personal creditworthiness. They are typically unsecured meaning you borrow the money with no collateral. I’ll talk about secured loans when we get to hard money which means some kind of collateral is offered up in case you can’t repay the loan the lender can repossess the asset that the loan is secured by as collateral.

Strong credit and income make it easier to get favorable terms. I was making north of 6 figures in my W2 and had a credit score above 750 so it was advantageous for my scenario. The goal was smaller renovations under 30-40k.

Borrowing amounts vary by lender, typically ranging from $1,000 to $100,000. You can use personal loans for any purpose, including financing property renovations.

If this one is not for you one of the future options might suit you better.

Hard Money Loans:

Hard money loans come from professional lending companies that specialize in short-term real estate financing. The hard money lender's sole focus is providing bridge loans secured against the property itself rather than the borrower's financial strength. This is often why they are called hard money because the loan is referenced to a hard asset. After my first few deals I graduated from doing personal loans to hard money. Hard money loans in my experience are very quick to secure. This might work for you if you don’t have a great credit score but have a great deal.

Hard money loans are often used in real estate transactions where the property or another asset serves as collateral. They are easier to obtain than traditional loans but come with higher costs. Lenders focus on the property's value rather than your credit. Be cautious and understand the risks, as the property is at risk if you default on the loan. Due to the high interest you want to get out of these loans quickly whether it be renovating, stabilizing, and refinancing or selling the property.

When I was using this, I would take the hard money loan and collateralize it against the asset and then use personal cash and credit cards to fund the repairs. For recommendations on the credit card I used for this check out:

https://www.biggerpockets.com/forums/52/topics/1101330-credit-cards-for-real-estate-investors

After I did some hard money deals I began to raise money from friends and family and did some more deals using private money. I don’t have a rich uncle or anything but the renovations I was doing were not that extensive, so I didn’t need to raise a ton of money. By this point I had a track record and was talking about my deals all the time. This led to networking and raising capital.

Private money loans are provided by individuals the investor knows personally, such as business contacts, friends, or family. The funds come directly from these private parties rather than banks or mortgage companies. Private lenders earn interest on the loan as their return. If you have a network of friends and family that trust you this might be a good strategy. Private money allows for highly customized loan terms and conditions since it is based on personal relationships and lenders can set their own criteria. Interest rates, in my experience, typically range from 8-20% based on the borrower's profile and the deal specifics. The application and underwriting process is also less stringent compared to traditional lending sources.

If you’re looking to understand the differences between hard money and private money more in depth and want to pursue one of these strategies, you can check out the article I wrote here which goes into more detail on the differences between the two:

https://www.biggerpockets.com/forums/67/topics/1142068-the-investors-guide-to-private-loans-vs-hard-money-loans

As I grew my toolkit and did more deals, I used creative financing. I did some buy and hold transactions using seller financing. In these situations, the sellers owned the property free and clear meaning they had no mortgage on it. Seller financing involves a loan agreement directly with the property seller, bypassing traditional lenders. It can be useful if you have credit issues or lack a significant down payment. At a high level it works by negotiating terms with the seller, signing a promissory note, and repaying the loan over time. On the exit, refinancing with a traditional lender is often considered once you have some equity buildup or your financial situation improves.

That is for buy and hold but we’re talking fix and flip, so how does that work?

There's a strategy I’ve used to pay more for a seller’s house than other buyers and still profit. I’ve heard this referred to as a novation agreement or a contract for deed. Essentially what I would do is partner with a seller who wants to sell their house but can’t. Either it needs to be renovated badly or nobody is willing to pay them the price they want. What my team and I would do is offer to come in and renovate their property, sell it, and pay them their price on the proceeds of the sale. Doing this saves me from closing costs and downpayment on the front end and works for them because they get their price on the back end. We only pay closing costs one time and I have no money in the deal other than renovation costs. My profit is then :

Whatever I owe the seller on the sale + the renovation costs – the purchase price we sell the deal at.

This is the strategy I’m continually pursuing now as well as partnerships with other investors whether they have deals and need help getting them done or have money they are looking to partner in as a private investor.

Alternative strategies I know about but have not personally used are the following:

401(k) Loans

Home Equity Loan or Line of Credit

FHA 203(k) Loan

I can’t speak to them as I haven’t done them, but these might be worth looking into.

It is imperative in fix and flip that you get the budget down when taking on a project. Having the correct budget gives you a clear picture, helps you manage risk and understand the profitability of the deal. But you know that, that’s why you’re here. You’re here for the how to, so:

Step by step this is how its done.

1. Have a deal
2. Get it inspected
3. Get quotes
4. Include Permits, Fees, and Contingency
5. Maintain an Organized Budget Tracking Sheet
6. Review and Adjust Along the Way

Start with an inspection

There’s no substitute for an on-site inspection when creating a rehab budget. Estimating a rehab without doing a walk through is irresponsible. You don’t have enough information to make clear decisions. If you’re out of state have someone boots on the ground. We do this through agents, contractors or investor partners. Pay close attention to any major issues with the roof, foundation, walls, windows, plumbing, electrical systems, HVAC, and potential mold/pests.

One thing I always look back and wish I had done differently on my first projects was documenting the growth. I get a lot of satisfaction from looking back at past projects and seeing the before and after shots and having data on those properties. Photograph or video document the home’s current condition in plenty of detail. I keep all that on a google drive folder with the name of each property in a separate folder with subfolders for before and after.

Organize Repairs into Categories

Next, organize the needed repairs into categories like demolition, exterior, interior, kitchen, bathrooms, flooring, plumbing, electrical, etc. Breaking down the project makes it easier to collect pricing estimates. Also determine which repairs are critical versus cosmetic. This helps me allocate budget properly. We always want to ensure we are rehabbing above market because we take pride in our work and want to get the highest valuation possible. In my experience higher end renovations move faster than dated properties which is important so that we can dispo the properties faster and get back to redeploying the capital into other deals.

Gather Contractor Quotes

Researching what the average price is in your area is a waste of time. Material and labor rates can vary significantly by region but also vary significantly by contractor. I’ve found this especially true for specialized repairs like plumbing or HVAC. Gather a bare minimum of three quotes from licensed contractors. This provides more opportunities for you to find someone you would like to work with and greater accuracy and options for choosing cost-effective providers. It also tells you more about your local market pricing, which will come in handy later down the road as you do more deals as you gain experience and dial in your estimates. A lot of investors I’ve met simply don’t pick up the phone enough. You must make calls and talk to people who know more than you. Its really a numbers game. The more reps you put in the more information you have and operating with speed, options and clarity is what’s helped me expand and get the most out of my network. Ask contractors detailed questions to understand what’s included, best if they can provide a line-by-line scope of work.

Include Permits, Fees, and Contingency

Depending on the project scope, building permits and municipal fees may be required. Not all projects require permitting. Obviously, a new construction is going to be the strictest from this standpoint, like in the new development or redevelopments we do. That’s beyond the scope of what we’re talking about here. Permitting for residential renovations may apply in cases where you’re making additions or alterations. Basically, changing the building’s footprint. Examples would be adding a new bedroom, bathroom, garage, fence, awning, deck, HVAC as well as plumbing and electrical. To find out if you will need a permit, you can google the city where you’re doing the projects [Building and housing department]. On this website you will typically find a tab labeled Construction Permits. Contractors will know, if they aren’t sure or say they don’t pull permits for a project where you feel like a permit needs to be pulled or you see listed within that municipality that is a red flag. They also have a phone number listed for each areas building department where you can call and ask more specific questions.

Even after doing millions of dollars of deals there are still small things that we decide we want to change or add or don’t account for which can eat away at profits if you’re not careful. Some of the projects we take on are over 100k worth of renovation. In these cases, it’s difficult even for experienced investors to nail down every single cost with 100% accuracy in a rehab budget. I recommend building in a 10-20% contingency fund for unforeseen expenses. 10% on the lower end if you have a smaller more cosmetic project. 20% if its much larger or you have a lower level of certainty. Always operate with a margin of safety to maintain profitability. Renovations often reveal hidden issues. The contingency offers financial breathing room.

Maintain an Organized Budget Tracking Sheet

Use a spreadsheet to track estimated costs versus actuals across all rehab categories and tasks. Update this document continuously throughout the project. Budget tracking ensures you catch any inflated expenses early before they spiral out of control.

Review and Adjust Along the Way

If project costs exceed estimates in certain areas, meet with contractors to understand why and find solutions. Be ready to adjust budgets, make substitutions if needed, or delegate more work to DIY. Careful cost management is key for maintaining profit margins after you are committed to the project.

We tell ourselves overthinking is “responsible”. That we’re just being diligent and doing our homework. But in reality, analysis paralysis is dangerous. When we obsess over predicting the future, all we’re really doing is procrastinating progress. Knowledge and experience are what truly mitigate risk. Yet we gain neither while frozen in indecision.

What Is Analysis Paralysis?

Analysis paralysis manifests as an inability to make a choice. We compulsively gather more data, concocting endless projections and scenarios about what might happen. Perfectionism takes over. We keep searching for some elusive crystal ball that will provide certainty about the future. But 100% certainty doesn’t exist.

Overthinking becomes addictive. We equate more contemplation with effective work. But it often masks a fear of failure, risk, and the unknown. Our worrying mind tricks us into believing every decision must be air tight. So we stay paralyzed in the present, never learning by experience.

Why It Happens

Analysis paralysis strikes when we face major decisions. Career changes. Moving cities. Starting a business. Things that disrupt our comfort zone often trigger worry and perfectionism. We also overthink more on unfamiliar terrain, like when learning to invest in real estate. Self-doubt creeps in and hijacks the analytical process. Suddenly confidence gaps and blindspots loom larger than rational data analysis.

It’s natural to feel uncertain when navigating uncharted waters. Challenging yourself inevitably involves some stumbles. As cliché as it sounds, the journey of a thousand steps starts with a single one. Each lesson builds wisdom, skill, and belief in yourself. But you’ll never take step two if you’re frozen in place pondering step one. The French writer and philosopher Voltaire noted, “Perfect is the enemy of good.” Progress demands action.

Reframing Overanalysis:

How can we reframe overthinking to get unstuck? Here are a few mental models to short-circuit analysis paralysis:

View it as an addiction. Compulsive behavior keeps us trapped in our heads instead of learning in the arena. If you don’t make a move, the demons of self-doubt and worry keep growing. Starve them of inaction.

Set a deadline. Limit your analysis timeframe, then force a choice. Waiting indefinitely for the perfect moment leads nowhere. As Reid Hoffman of LinkedIn said, “If you are not embarrassed by the first version of your product, you’ve launched too late.”

Focus on adjusting, not predicting. No major decision will be perfect. But almost anything can be refined once started. See choices as a first step to build on, not a final destination. Progress brings new data that static analysis lacks.

Talk to real people. Veteran investors can share what overthinking pitfalls to avoid. Having a mentor cuts through information overload. You gain confidence knowing someone has your back as you navigate unfamiliar ground.

Accept imperfection. Rather than demanding guaranteed certainty, have faith in your ability to adapt. No one can see the future. But we can handle most of what it brings. Staying stagnant is often the greatest risk.

Gain experience. Knowledge builds belief in yourself. By diving in and earning your stripes you realize fears were exaggerated. As positive results compound, small steps snowball into real momentum.

Trust your intuition. After gathering data, listen to your gut instinct on what feels right. Logical analysis has limits. Some choices are a leap of faith. But that leap is needed to grow.

Investing in anything requires bravery. Only hands-on experience builds true mastery and confidence. At some point the training wheels have to come off. Analysis has diminishing returns - conduct enough to make an informed choice, but not so much it breeds paralysis. Perfectionism is the enemy of action. If you wait until you feel 100% ready, you’ll be waiting forever.

No investor I know got where they are without some bumps and bruises. It's part of the journey. My early missteps were invaluable lessons. So start small and give yourself permission to stumble a little. Don’t let fear of the unknown hold you hostage. Widening your comfort zone requires boldness and willingness to adapt. If you can reframe decisions as a starting line rather than a final destination, progress becomes a lot less daunting.

Trust that you will figure it out as you go. We all experience doubt, but self-belief is a choice. If you stay focused on incremental improvement, small wins inevitably build the momentum, experience and confidence needed to invest successfully. Perfect is not possible, but developing any skill simply takes commitment and patience. Rather than overthinking, just start chipping away. Progress compounds, knowledge builds, and soon enough those first intimidating steps are far behind you. The only way out of analysis paralysis is straight through it.

I've added an unconventional decision making framework I use here: 

https://www.biggerpockets.com/forums/48/topics/1142782-a-sur...

@Julien Jeannot did a fantastic job covering this as well in his post here:

https://www.biggerpockets.com/forums/12/topics/1138580-how-t...

We all face difficult decisions where the best option isn't clear. Your mind races as you worry about what to do, uncertain what path to take. Desiring to act but anxious you may make a mistake.

Have you considered flipping a coin?

I know, I know - how could leaving our fate to chance possibly help us make better choices?

This isn't your ordinary coin flip.

The solution to analysis paralysis is definitive clarity. The coin flip example asks you to first clarify the two sides of your decision. If it's between Option A and Option B, assign heads to A and tails to B. Then, flip the coin.

If the coin lands on A and your heart sinks, then B is likely the better choice, even though the coin said otherwise. Vice versa, the same is true. Our inner voice holds wisdom that our conscious logic tends to miss. A simple coin flip allows that inner voice, that intuition to speak up and guide us more clearly.

But what if neither result feels right? Then it's time to step back from the decision entirely. Don't do A or B - sit with your options again with fresh eyes.

Research shows we often trust our reasoning too much, when in fact our senses provide a distorted view of reality. In the noisy rush of life, we fail to listen to our quiet inner voice of intuition. The coin flip technique forces you to tune in to that inner wisdom when it matters most.

So the next time you're faced with a difficult fork in the road, give this technique a try. The answer may surprise you. You just might make the choice you secretly knew was right all along.

With Discipline,

Josh

Quote from @Andy Sabisch:

Interesting read . . . . curious, was this done with ChatGPT?

I write because I enjoy the process of wrestling with my thoughts in real time. Putting it out publicly helps in sharpening my skills, writing for an audience and getting feedback. Copy pasting some AI would defeat the purpose and erode my reputation. 

See this article here to understand my belief system:
https://www.biggerpockets.com/forums/62/topics/1125426-your-...

All my posts are written by Josh GPT. Feel free to check me.
https://writer.com/ai-content-detector/

If you’ve ever taken a loan from a bank, you know funding can take months and come with headaches. Experienced investors rely on unconventional ways of financing deals. Two methods of this are private money and hard money loans, so what's the difference? How do you know whether private or hard money is the right choice to fund your next project quickly? Which option provides the fastest access to funds? The lowest costs? The highest loan amounts? What are the trade-offs between personalized arrangements and standardized processes?

I break all of it down in this article.

Private money and hard money loans are two common forms of financing used by real estate investors, particularly for short-term purchases and projects like a BRRRR or fix and flip. While they serve similar purposes, there are some key differences between these funding sources that investors should understand as they can be very expensive if not respected properly.

What is Private Money?

Private money loans are provided by individuals the investor knows personally, such as business contacts, friends, or family. The funds come directly from these private parties rather than banks or mortgage companies. Private lenders earn interest on the loan as their return. They may also charge origination fees. These are often known as points or lender fees, more on that later.

Private money allows for highly customized loan terms and conditions since it is based on personal relationships and lenders can set their own criteria. Interest rates, in my experience typically range from 8-20% based on the borrower's profile and the deal specifics. The application and underwriting process is also less stringent compared to traditional lending sources.

What is Hard Money?

Hard money loans come from professional lending companies that specialize in short-term real estate financing. The hard money lender's sole focus is providing bridge loans secured against the property itself rather than the borrower's financial strength. This is often why they are called hard money because the loan is refenced to a hard asset.

Interest rates for hard money loans range from 10-18% with origination fees of 1-3 points. The funds come from the lending company rather than private individuals. Terms and conditions are more standardized than private money since hard money lenders have specific loan programs and guidelines.

Key Differences and Considerations

While private and hard money both provide alternative financing sources, there are some notable differences:

• - Private money involves a personal relationship between borrower and lender. Hard money is strictly a financial transaction.
• - Private money offers more flexibility in loan terms and conditions based on the specific situation. Hard money uses set loan criteria.
• - Private lenders have more variable rates based on the deal. Hard money rates fall within a narrower band.
• - Private lenders focus on both property value and borrower profile. Hard money focuses on asset itself.
• - Private money decisions involve personal trust and mutual understanding. Hard money uses defined lending formulas, primarily the value of the property and specifics of the deal dictates how much risk they are willing to take on and ultimately willing to lend.
• - Private lenders have more discretion on amounts lent. Hard money uses set lending parameters and LTVs (Loan to value).
• - Private money can fund deals banks won't touch. Hard money is still mostly business focused.

Assessing Private vs Hard Money

So how should an investor choose between private and hard money for a real estate project? Here are some key factors to consider:

Available Sources - Which type of financing do you have access to through your current network? Do you have private lenders ready to fund deals? Think of the proverbial rich uncle.

Speed - Hard money can often provide the quickest access to funds. Private lenders may still be faster than banks but lack the dedicated infrastructure of a hard money company.

Costs - Private money interest rates can potentially be negotiated lower than hard money rates due to the personal relationship aspect. But this depends greatly on the specific lenders.

Loan Amount - Private lenders are often willing to provide more sizable loans than hard money firms since decisions involve trust rather than strict lending formulas. This is not always the case but rather a general rule.

Flexibility - Private money allows for more customized arrangements like interest-only payments, extensions, or unique payment structures. Hard money offers standard loan programs.

Lender Requirements - Private lenders focus on both property and borrower. Hard money focuses far less on the borrower and considers real estate asset as the collateral.

Securing Private Money Loans

Private lenders must be cultivated through networking, referrals, and building strong relationships over time. At least that's how I've done it. Tapping into private money funding starts with casting a wide net within your contacts.

Let friends, family, business associates, investors and other networks know you provide attractive returns financing real estate deals. This goes far beyond just asking directly for money. This takes networking, build connections first and fostering trust. A good way I do this is talk about my deals and the framework I use for this is inform and educate.

I wrote a separate article on that framework here:
https://www.biggerpockets.com/forums/62/topics/1141846-how-d...

When networking with private money lenders with the intention of raising capital its important to:

Set clear investment expectations upfront regarding typical returns, timelines, risks, and how you mitigated them. The more professional you appear; the more confidence private lenders will have. All deals have downsides, the more clearly you can articulate these and show you’ve planned for when things go wrong the more trust will be built.

Draft a one-page overview of your experience and accomplishments as a real estate investor. Provide examples of successful projects and returns. This “track record” document establishes credibility.

If its in your investment strategy, give lenders the option to finance specific projects that match their investment goals rather than requiring blanket funds. This creates more flexibility. This is a balance I’ve found of creating one specific offering for one type of investor rather than trying to serve all of them. Focus leads to expertise and scalability.

Follow best practices in legal documentation, reporting, payments and communications. This keeps private lenders satisfied and willing to use you again thus creating stronger relationships and increasing lifetime value.

Obtaining Hard Money Loans

The process for securing a hard money loan is more streamlined than private money in my experience and qualification is focused heavily on the underlying real estate asset.

Step 1: Reach out to hard money lending companies operating in your area or that finance projects nationwide. If your broker or real estate network recommends a provider, start there.

Step 2: Research lenders’ requirements, experience, and preferred project types. Different lenders prefer different deals. By asking them what deals they typically take on and what projects they have done most recently you can match up the appropriate debt to the asset type. Target those that fit your current profile and needs.

Step 3: Prepare key documents upfront for pre-qualification including a summary of the project, comps and valuation estimate, scope of work and budget, and exit strategy. I would underwrite the deal as a flip and a BRRRR. You wont want to hold onto that expensive money for long. You need a strong exit strategy and more options can save you if things don't turn out as expected.

Step 4: Be ready to move quickly providing due diligence like purchase contracts, appraisal, insurance documentation, and any other collateral. It’s best practice to have an attorney review loan documents and understand the risks and costs associated with hard money financing.

Which Loan is Right for You?

It all starts with the deal. Analyze the amount required, collateral available, your risk tolerance, and expected project timeline. Weigh the benefits and limitations of both private and hard money. For new investors with fewer assets, tapping personal contacts for private money may be the most accessible starting point. It provides more room for error through personalized arrangements or even partnerships with more seasoned professionals. Experienced investors flipping houses or doing renovations may prefer the speed and standardized processes of hard money lending companies. Either way its a premium worth paying if you find the right deal.

I use a mix of both financing sources and found that provides the most flexibility based on the situation I’m in. Overall the best option depends on your specific financing needs, profile, real estate niche and unique circumstances. For larger customized loans with flexible structures, private money has advantages. For urgent capital on strict business terms, hard money may be preferable.

With Discipline,

Josh

Quote from @Benjamin Sulka:

Quote from @Nathan Gesner:

Quote from @Benjamin Sulka:

Depends on what you are asking them for. Are you looking to buy it? Help them sell it?

@Nathan Gesner

Thanks for your comment. 

 I'd be interested in doing either. My goal is to get an idea of what they're selling it for, the justification for that, as well as networking with another local investor/landlord. 

This wouldn't be a property that I could purchase because of my timeline but I'm trying to determine a conversation script for future owners that I'll call when I am ready to purchase my first investment. 

Hey @Benjamin Sulka I have a "Script" its more of a process and has a lot of questions on there so you can pick and choose which ones suit your situation. I'll see you at the REIA later tonight and provide some more guidance!

How do you scale your portfolio without any money?

Many investors turn to capital raising. Capital raising is no easy task and often takes a long time to build relationships and establish yourself, especially when you’re newer to the game. If you’re struggling to find the right sources to fund your next real estate deal you’re not alone. For many investors, finding and securing financing remains a frustrating mystery full of rejection and dead-end conversations.

How I’ve managed to overcome this successfully overtime is what I call the enthuse, inform, educate framework. Which I’ll cover in a moment. Before I do I want to highlight a story of what this looks like when executed properly.

There's a scene from the tv show Billions where hedge fund manager Bobby Axelrod is meeting with an investor and the investor gives him a quiz on how particular stocks performed overtime. At the end, Bobby asks, “How’d I do?” To which the investor responds, “How would I know? I remember I gave you a quiz like that the first time we met, and it wasn’t the fact that you knew so much it was how you lit up. These companies are living organisms to you, and I knew that If I gave you my money you wouldn’t sleep until you put it in all the right places. You would do whatever you had to, you wouldn’t care what it looked like and that’s who I needed looking after it, that’s who I still need. And in case you can’t tell anymore, you still lit up.

This is an example from a fictitious series on the framework in execution. Breaking it down into three parts it operates like this:

Enthuse, talk enthusiastically about what you’re learning and your deals. I transition many conversations I have around real estate, why? I love it. We pay attention to what we love. My attention and conviction in the deals I’m doing is very high. Enthusiasm coupled with conviction is a captivating duo. I’ve found that when I speak enthusiastically about my goals, dreams and what I’m working on people are naturally drawn to it because they see how much effort and care I’m putting fourth into it which naturally breeds curiosity. It matters less to me what topic you’re into, I just want to see that you’re enthusiastic about something so much so that you have a hard time holding back sharing.

Inform, when you share information and enthusiasm with others you open the door to growth. People will respond with interest, curiosity, skepticism, debate, gratitude and much more. This presents many learning opportunities. The key is that the conversation has started. It’s now up to you to keep it going. Always seek to be understood and to learn from the perspectives of others.

Educate, you always want to lead with value in mind and tailor your conversation to the individual’s situation. I ask a lot of questions about them to understand their goals and tailor my educational examples accordingly. If they are more experienced I talk more investment thesis, market research, financial modeling, and risk management strategies. You demonstrate your expertise by teaching them something new about real estate finance or local market conditions. This in turn builds credibility. That can also be done by showcasing your track record and knowledge. The more you can educate in a way that speaks to their interests, the more trust you are likely to build. This make it non salesy which everyone hates. Instead, your role becomes an educator which helps position you as a knowledgeable partner versus just another salesperson. When you take the time to thoughtfully teach, you let your expertise speak for itself.

Most people that end up becoming investors in deals I’m doing don’t open with that. Its likely not even on their radar. How it works is I enthusiastically inform them of what I’m doing and through sharing this information I educate them. If this sparks ideas and they want to get involved, we continue the conversation and if/when it makes sense for them to do so they make the choice to invest. This has helped me talk about what I love, learn more about it from a variety of perspectives and help me reinforce that knowledge through educating others. This framework has helped guide me though countless conversations and raise capital. By having genuine care, a vast knowledge base and good intentions at heart you come from a similar frame as Bobby Axelrod in that scene I shared at the beginning. Others whether they invest or not have always responded positively just like the investor did in that scene.

Closing thoughts:

I hold the belief that most people are very well intentioned. Whether or not your view is the same its difficult to argue that holding this belief would give someone a disadvantage which is one of the reasons I’ve adopted it. If you think people are always out to help you, you preprogram yourself to look at life through the lens of how you can help others and end up acting in accordance with that. If you believe that the world is out to get you, you enter the world with a negative viewpoint and often attract more challenges or get in your own way. It’s been helpful to me to think that since I think this is interesting and want to talk about it, others may find the same curiosity and desire to learn more. It’s not an end all be all, capital raising is far more complex than telling people you’re passionate about something. However, it’s a way I’ve found to start an organic conversation that sometimes leads to more.

With Discipline,

Josh

Hey @Jaudon Smith

As a rental property investor and fix and flipper with 5 active projects I’m glad to weigh in here.

In a seller's market, home sellers hold the advantage due to low inventory levels and high buyer demand. This results in higher pricing power for sellers. This type of market is characterized by bidding wars and properties selling above asking price as competition among buyers intensifies for the limited housing stock available. Sellers often receive multiple offers and can negotiate favorable terms in these conditions where demand exceeds supply for homes on the market. Aka when low supply meets high demand.

Typically, in a seller's market investing in rental properties makes more sense than flipping.

For starters, high home prices make flipping less profitable. With bidding wars and homes selling over asking price, your profit margins as a flipper shrink based on entering at a higher price. The high buy-in cost coupled with the work needed to rehab and flip cuts into returns.

Secondly, Rents rise in a seller's market. When there's low housing inventory and higher interest rates, rents increase as demand rises from those priced out of buying. Locking in a rental property gives you steady income that rises as rents climb.

Third, liquidity events. Refinancing captures price gains. If you buy a rental at current high prices, you can refinance later and pull cash out when prices increase more. This captures gains without having to sell.

Fourth, you get ongoing income over time. Long-term rental income can provide more stable returns over several years versus flipping for a one-time profit. Properties continue appreciating and producing income so as conditions change, you remain insulated.

Fifth, rentals give you tax benefits. Depreciation, mortgage interest, and expenses can be deducted on rentals reducing your taxable income from other sources. Flips don't get these same perks.

However, there are also benefits from the flip side,

In a seller’s market prices are at a peak. Flipping takes advantage of the high sales prices and maximizes profits. If you can turn the property quickly you can ride the wave and capitalize on the sales price at a higher valuation. Values may decline later making it better to sell now.

This is also helpful due to low inventory aids flips. With few houses on the market, flips can sell rapidly, minimizing holding time and costs. Rentals tie up capital long-term.

In these scenarios buyers are more flexible due to limited options and are more willing to pay top dollar even for updated older homes allowing for cost recovery on fixes.

Currently all the deals I’m doing are all-cash flips. All cash flips are attractive. All-cash, as-is offers stand out and are more likely to be accepted as competitive offers. You also incur less risk because of no debt and the process is more straightforward and faster to flip without any lenders involved.

You also have a higher profit potential per deal. The profit margin on one successful flip, for me, has always been greater than the annual rental income from a property. I have a very good process for land lording and most of my doors are managed by a property management company anyway, but I thought I would also note that a benefit for some is avoiding ongoing landlord duties. Flips require short-term work, which is often way more than the responsibility and overhead of long-term rentals. However, once the project is completed and sold you can have peace of mind knowing that you are absolved of responsibility.

In the deals I'm doing currently work best as flips but would also work if I BRRRR'd them into roughly a 12% interest rate environment assuming my ARV is accurate. Real estate markets are local so these are general rules. Even within each market every deal is a case-by-case basis. Analyzing each deal with as much data as possible and having multiple exit strategies on each deal has helped me have clarity and peace of mind when going into these investments.

I wrote an article I’ll link below as well on the different digital treasure maps I use to make data driven decisions.

https://www.biggerpockets.com/forums/12/topics/1141106-digit...

With Discipline,

Josh

Just like you wouldn’t go renovate a property without having the right tools, you wouldn’t buy an investment property without having the right data. These are the 5 research tools I use to make data-driven investment decisions. I call them digital treasure maps.

MLS Websites (Realtor.com, Zillow, Redfin):

These sites are your introduction to the market, loaded with property listings, photos, pricing history, and specs.

Scope out properties, compare similar ones, and size up pricing trends to get a good picture of the area. It's your one-stop shop for basic market value estimates and rental income projections.

Spot Crime:

Spot Crime dishes out neighborhood crime data helping you understand that area’s crime. It's your cheat sheet for neighborhood security and comes in clutch when underwriting vacancy loss and evections.

City Data:

City Data gives you a full picture of the city and neighborhood stats, from demographics to schools, crime rates to local economics.

Dive into your target city to gain insights on population, jobs, schools, and income levels. It's your backstage pass to community character.

County Auditor's Website

County auditors' sites reveal property tax info, assessments, and historical records. I’ve seen dozens of deals where taxes are listed incorrectly.

Search up “[Insert your county here] County Auditor” and punch in an address or parcel number for the lowdown on property tax records and assessed values. It's your wallet's best friend for verifying tax records.

Rentometer

Rentometer helps you gauge the rental rates of a given market, helping you nail the perfect rent rate for your property. Type in your property's address and watch it churn out comparable rental listings and rates. It's your secret sauce for setting the right rent and maximizing income.

Coupling a strong understanding of the local market with these tools is what I’ve found to be helpful when it comes to digging up details, forecasting returns, and making data-backed decisions.