All Forum Posts by: Michael Volek

Hey Mike,

I'm doing exactly this, because I live and work in the UAE, and because I'm paid by the UAE government (no W-2), I don't pay taxes in the USA, so it looks like I don't get paid period. Aren't banks awesome? So I'll use my current situation as the example.

I bought a house for 70k using owner financing, and I intend to flip this house. They were kind enough to let me put zero money down and do an interest only loan, meaning I pay nothing up front and I pay the interest, taxes, insurance, and utilities every month from the time I assume the property until I sell the property. This makes the holding costs lower.

I know the rehab cost will be about 30k. I also know from the comps that the ARV is around 150k. Like you, I brought in my close friends and family, those who have shown interest in real estate, and would like help getting a foot in the game. Since the deal is so nice, it was relatively easy to convince them to contribute for a return. I also told them that everything will be documented from the very beginning all the way to when the house is sold. Everything. This is my gift to them for trusting in me to invest their hard earned money.

For example, and this is just to illustrate the figures, let's say the profits are expected to be 30k. Let's also say I raised all 30k from friends and family, meaning I'm putting in zero dollars. One member, mom, contributed $3,000 to the rehab, which equals 10% of the total rehab cost, so she will receive 10% of the profits.

But wait, your time for facilitating this deal is worth something too. After all, a professional must be paid for his services. In my deal, for putting it all together, my fee is 25% of the profits before any other profits are paid. 25% of $30,000 profits equals $7,500. That money goes to me. The remaining $22,500 gets paid back to the investors. So mom, who contributed $3000 (10%) gets back her $3,000 plus 10% of the profits ($22,500), which is $2,250. That equals $5,250, which is a 75% return on investment (2250/3000 = 75%).

And you, just for facilitating the deal, make $7500.

I would recommend speaking with a real estate attorney, which you can find on BP like @Jynell Berkshire, to help you draft a contract that covers everything you need. I'm sure others will be willing to help you too. 

I know this isn't your exact scenario, but hope it helps get you closer to your goals. Good luck.

-Michael Volek

Ugh, I misspelled recommend in the title...haha

@Nathan Platter, thank you. I appreciate it.

Hello BP,

I'm seeking recommendations for a reputable General Contractor or Project Manager to manage a medium sized rehab in St Clair, Indianapolis. 

If you have anyone you know in Indianapolis that produces excellent quality and is looking to get started soon, please let me know and I'll be happy to share all the details. 

Thank you,

Michael Volek

Owner, MJV Homes, LLC

Executive Partner, TBG Financial, LLC

J Scott’s book on estimating rehab costs is likely to be a very useful resource, which you can find here on BP. To me it’s an invaluable resource. Hope this gets you closer to finding the answers you seek. Good luck.

Hey Zach why were you in Japan? Were you stationed there?

@Tony Wooldridge, hey I know you! I just read your blog posts a few days ago! I recognize the way you spell GR8!

I'll tell you exactly why I want to get into real estate, or to more accurately depict my agenda, why I want to THRIVE in real estate. It's simple; I want to thrive because I know I can. I have always believed I wasn't challenged enough growing up, and I had the same experience in the Air Force. This is a way for me to rise to the challenge and prove to myself I can do anything I set my mind to.

Since I wrote this post, I've had a few BP members reach out to me and give some pretty insightful advice. I have even been contacted by an investor in Dubai, who has not only shown me many things, but he has also become a good friend to me. 

I appreciate you reaching out to me as well, and I hope to see the exciting conclusion to your blog!

@Lumi Ispas I totally understand what you're saying about having limited time and being paid by commission. Asking if I would work without getting paid is sort of a loaded question. Yes I would, up until the point I wouldn't want to anymore, however, I understand the importance of building a relationship before jumping in bed with just anyone. It's why I was thrown for a loop when I got hit with contract without so much as a warning. I guess that stresses the importance of screening multiple realtors and agents. 

I will however take your solid advice. I will make it clear in the first email that I am looking to buy and I am ready to get started, so thank you for clearing that up for me. My emails usually start with something like, "I saw your profile and/or credentials on BP, or you were referred by so and so, and I'm interested in doing some business together. Can we talk sometime soon?" Obviously it's a little more professional than that. How would you respond?

@Charlotte Edwards, well that's.....different. Especially since doctors are, well, doctors. I think your husband is an admirable man, going against the status quo. I can relate to that.

I'll be the first to admit I've never done a flip before. I think there are a few ways to get one done, and the best way, in my humble opinion, is to partner up with someone who has done one before. (I'm positive you already know this, so forgive me for stating the obvious.) To me it makes the most sense. Expert guidance and splitting the risks, if there are any. Having your sister available would be a HUGE help, I'm sure, so I wonder if partnering with her is a possibility? If getting her attention is an issue, you can get a cattle prod off amazon, one little zap, and you have their undivided attention. Problem with contractors? Cattle prod. Falling asleep? Cattle prod. Okay enough of that.

I've looked into turnkeys before, and I'm a little biased. I want to be able to do it myself, not because I'm a control freak, but because I want to say I've personally done one before. Turnkey's (turnkies?) take away that fulfillment I seek in rehabbing, even though I know being overseas makes turnkey's make all the sense in the world. I am doing this for the money, yes, but I'm also doing it to prove to myself that I can. I will do some more research though. Maybe it is in fact the right way to go. Thanks for the advice and good luck in your future.

@Tyler Weaver, I love the advice. Actionable steps. I'm going to do every single one of these things. My biggest hurdle at the moment is simply being able to call back to the states. You see, the govt where I am banned international calls for whatever reason (ex: Skype to landline). My guess is so we are forced to purchase the expensive calling plans they offer. But hey, if that's what it takes, then that is what I must do. I won't be happy about it, but I can't let it stop me. I was just approached by an investor here in the UAE willing to show me the ropes! He runs the BP meetups in Dubai and wants to introduce me to the group, so I'm hoping everything will go well! In the meantime, I really appreciate the advice. I'm researching it all as we speak.