All Forum Posts by: Kyle B.

Marketing to probates and estates have far and away been my best source of leads. I send these leads typed out letters. I've noticed very little competition for this in my area. I started out bidding on foreclosures but there is just too much competition with these. The "do it yourself" type rehabbers were always able to out bid me. 

In addition to the above suggestions, I would talk to the town's individual building inspectors (mechanical, plumbing, electric, etc.) and get their opinions on what contractors are active in the area, which ones tend to pass inspection without incident and which ones have caused them issues in the past.

And to follow up on Bill's comment. Not only ask for references, but see if there are current projects they are working on that you can view in person. And always have an extremely thorough contract that outlines exactly what is expected to be done, who is going to pay for certain materials, and when payments are to be made. I've ran into problems in the past with this and am never going to make that mistake again.

What were you doing before, and what do you do now (professionally)?

I was working in finance as an analyst at an investment bank. Had that job for about 3 1/2 years.

Is your passive or business income from real estate the same, greater, or lesser than when you were working a job?

My first full year out I more or less matched my prior business income. However, about half of that was from consulting work my former company hired me to do. The other half was from actual real estate transactions. This year (my 2nd full year), I would say matching or slightly higher income than my prior job is a realistic goal, although finding houses has been a challenge so who knows.

Do you "live the dream" and travel/vacation year round, do you focus on building your empire to ever greater heights, or do you pursue some other passion?

I'm mainly focused on my business, but work less hours than at my old job and take more vacations. That is mainly due to the fact that my old job was very demanding and required long hours... not because I'm traveling all the time. I do have one new hobby I recently started that would have been difficult to maintain at my prior job.

How long did it take you to build up a real estate portfolio sizable enough for you to "retire" on?

I'm way to young to have retirement on my radar. However, I'm focusing on making my flips much less labor intensive on my part. The first few ones pretty much demanded all my attention on a daily basis. Working on changing that going forward. Only been doing this 1.5 years now, so not thinking about retirement.

How much time does your real estate business consume per month?

I haven't gotten my businesses consistent yet (constant deal flow with flips, same routine throughout the week), so it really varies. So the last flip I worked on, I probably worked 50 to 60 hours per week. I had a 2 month gap where I didn't own anything and was just looking... my work week probably went down to 35 to 40 hours.

One thing I learned so far though is that how smart you work is much more important than how hard or long you work.

@Account Closed, nice, sounds like you getting some good prices and great service. I will definitely have to research some suppliers around my area for my next project.

For me it hasn't been a waste of time. I'm actively looking for off market properties to rehab. Any properties I come across that I don't want to make offers on, I will pass along to other investors I know may be interested. I've been able to successfully do this a few times and it takes very little effort to do so. 

Now if you were to do that as a full time job, there probably are better ways to utilize your time. Maybe use this strategy in the beginning to familiarize yourself with the market, but eventually you want to get these properties under contract. That is where the real money is made.

@Stephen S., books? I have no idea what you're talking about.

@Peter Sanchez, I had never touched a piece of trim in my life. Spent three hours learning how to install crown molding mainly through YouTube videos and ended up installing it in my entire condo. Needless to say, I went through a lot of caulk as well, but the end result turned out pretty nice. Used YouTube when installing my hardwood floors and bathroom tile as well. I agree, YouTube is awesome for things like this. It just makes me wonder how people ever learned new stuff before the internet.

@Account Closed, curious, what are you paying for your trim and doors through the supplier?  I pay $50 for a prehung hollow core door, about $1/ linear ft for baseboard, and $4 per 7' piece of casing. The trim is either primed MDF or pine which will get painted. If I can find a supplier even at this identical price that will deliver for free, I'd be all over that.

Picking up and loading all that material into my vehicle is a huge pain. I'd love to have a set up like you describe. 

I purchase most of the materials from the big box stores. Of the main three (HD, Lowes, Menards), I purchase most from Menards as I've found they are slightly cheaper with a number of items and have the most selection. Also, they have a lot of substantial rebates on various items, plus occasionally they will have their 11% rebate sale which is great.

For hardwood flooring, I use a website called Build Direct which offer fantastic pricing on flooring. I buy engineered hardwood for $2.60/sq ft and the product looks really nice. Big box stores will have similar products for twice the cost.

Also, for kitchen cabinets, I won't use big box, I have found a local cabinet company I like. You get way better customer service than you would at a place like HD (and when buying cabinets, that is where you need the good service, as opposed to just buying flooring, trim, etc where it's not that important). Typically these types of place will have a very affordable line of non-custom cabinetry that ships very quickly and is great for non-high end flips.

I am hoping to get a discussion started on the market dynamics for different areas around the country. I'm interested in getting other investors' thoughts on their specific market and how it differs from other areas. 

Reading through posts on BP, I hear anecdotes about people who are getting properties at great discounts while only requiring $10-$15k in repairs (basic kitchen/bath updates, new paint, etc.). The rational behind this transaction is that the seller wouldn't be able to sell their property (or would risk long days on market, selling at dramatic discount) without these updates being made. However in my market, this dynamic does not seem to be the case. What I mean is that very outdated homes have no problem selling if they are priced right. For example, if I update a 1,200 sq ft ranch home in a certain town I'm active in, it will sell for $175k. If I have a licensed contractor do a total cosmetic update, it would probably costs around $25k (new kitchen, baths, trim, paint, doors, floors, etc.). However, if that home were listed on the MLS, it could probably fetch around $135-$140k.

So the fact that my rehab of $25k is only adding $10-$15k in value to the house over what the rehab costs makes it difficult to negotiate these types of deals I described in the anecdote above. I guess I'm just curious to hear if other markets are similar to mine or if there are certain areas of the country (or possibly different price points of houses) where rehabbing a house adds significantly more value (for example, a $20k cosmetic rehab adds $50k in value to the property).

Hopefully we'll get some interesting feedback from this.

Kyle