All Forum Posts by: Matt Carozza

@Matt Carozza

1. Don’t over leverage no matter what you read here. Foreclosure isn’t sexy. See the 1,000 “OMG I have a broken ____ (usually water heater or AC) at my rental and I can’t afford to get a new one!! What do i do?!” threads here that started after yet another acronym that would fit on an Instagram post got dressed up as a business plan.

2. Whatever you think you need in cash, double it. See the 1,000 “help I can’t refinance and tenant won’t pay rent!!” threads here that started in March.

3. RE-read 1&2.

@Matt Carozza there have been quite a few great responses provided already (and you can see the experienced members consistently saying the same things) but I wanted to add a few thoughts on focusing. 

Once you've found your "why" make sure you decide on a strategy that aligns with it and stick to it. It's too easy to get caught up in a million different strategies thinking you need to do all of them. Every week on BP you hear different investors talk about different strategies (all of which sound great) and the same is true when you attend local REI meetups. If you try to do too many things at once, you'll likely do none of them (successfully).

I made the mistake of trying to do too much at once and it caused me to plateau in my business for some time. Don't make the same mistake. 

Decide what you're going to do, pursue that aggressively and don't move on until you've mastered that avenue.

-Dan 

1. Take the time to learn the area of investing you will focus on. Ask lots of questions and never stop asking questions even when you know a lot more. Getting educated is critical. Most people can not afford to learn from their mistakes in real estate. Find someone who has successfully done what you want to do the way you want to do it and follow their map.

2. Read every word of every document you sign every time. Do not get lazy or in a hurry or sub one to pressure or feel stupid or embarrassed. Do not assume anything, especially that lawyers and Realtors know what they are doing and got it right. Everyone makes mistakes and everyone thinks they know things and they are wrong. Documents should be close enough to regular English to understand. If not ask questions and do not sign until you get the answers. Verbal agreements are meaningless. If it is not in the contract it is not real. Have signed agreements with all contractors too or at least a “paper trail” of emails and or text messages that record the intent of the agreement. This is not fun but is a discipline to master if you want long term success. Lawsuits are no fun and drain your bank account and you happiness.

3. Start by building a team. Do not try to build you team as you go, deals move too quickly to be finding vendors on the fly. Be honest with everyone about who you are, your resources, and your goals. Be genuine. Be professional even when others are not. Stay calm , always. Pay your vendors for the work they have done and pay promptly so you will be at the top of their list if you need help. Once the price is negotiated and agreed to don’t try to go back and renegotiate unless something changes in the deal. A change in your personal finances is NOT a reason for a vendor to reduce their price. Most do not work on large margins. A win lose deal, even if you are the winner this time, is not a sustainable business strategy.

@Matt Carozza 1. Location, location, location. You invest in the location. A house is a box. Doesn't have to be prime although that is optimal, just don't buy a crap location and expect optimal results. (see 3.)7

2. Prices are sticky on the way down. Don't count on a 2008-2011repeat. Staying on the sidelines waiting for a correction/down cycle may cost 3.5% per year inflation..10% in 3 years. Except maybe today with the pandemic, patience might pay off in a few months.

3. Real estate is easier to get into than out of. Be prepared to hold if planning to sell and/or be able to take a loss when selling or renting. Don't risk your family's well being, only take risks you can afford. Don't bet the farm. (eg. using a heloc on family home for investing unless well able to cover it or prepared to lose both...very stressful and traumatic for most but some people might handle it well.)

4. Houses are like a bus, there is always another one coming around the corner...read that one here on bp and find it very helpful. People move, die, divorce, outgrow, etc., so it is true. Don't let emotions, fear of losing out, influence a business decision.

@Matt Carozza Thanks for posting this one. I just moved to Richmond and right now working on building a team and networking as much as I can, it's great hearing everyone's responses. As a fellow newbie, I'm finding out that it's important to 1) narrow your focus on strategy to eliminate shiny object syndrome, 2) network a ton to learn from and help others as much as possible, and then 3) lock down your team. Hope to run into you at the meetups. Feel free to PM me any time if you wanna grab coffee (or a beer) and talk real estate  

@Matt Carozza build a good team in all aspects of your strategy (GC, Lender, Private Lender, Tax, Insurance, Manager, etc)! Richmond is an awesome place to invest, especially using the BRRRR method. Lots of great private lenders too.

@Matt Carozza Awesome. So what strategy/ies are you considering or implementing at this time?

And if I could of given a 4th tip it would be this:

Buy the most desirable assets possible: this will command top rent/rates, attract high quality customers, increase length of stay thus lowering turnover costs if a LTR (the #1 cash-flow killer), give you the greatest likelihood of holding longterm and/or selling whenever you want/need. Asset selection is absolutely critical. Desirable = Demand.

Thought I would throw in a bonus tip.

@Matt Carozza

1) educate, educate, educate and never stop educating yourself.

2) after adequate education, decide on the investing strategy you want to pursue. This is critical.

3) ask *everyone* you personally know if they know a RE investor. If so, ask them to connect you. You will likely find at least one person you can get solid advice from and this could naturally turn into a mentoring situation since you were connected by a mutual contact.

@Matt Carozza re: #2. Cash is great, if it's your own and you can spare it, but for fix and flip I would rather have my cash making money the whole time in index funds and just use verified line of credit or hard money since I don't mind the holding costs for allowing my own cash to work while I am flipping.