All Forum Posts by: Michael Kevorkian

Hi @Curtis Curley funny you should ask but yes I caught all kinds of hell for my last name. Mostly during my high school years when the guy was in the news all the time but occasionally someone still asks, "any relation". (The answer is no for all those who are curious). 

I had a fulltime job for the first 2 years I was in real estate and when the market went bust I actually considered driving a truck over the road to make ends meet until it came back. I was lucky, I had a rehab that I thought would sell for $295K at the time and if I didn't make it on that single deal I was goin' truckin' for a while. I wound up selling it for $245K but it literally saved my butt. I bought it for $140K and put just under $30K in it. I made enough on that one flip to carry me into the next phase of the business and my life and I haven't looked back since. We all have to do what we have to do to make it. I was lucky, determined and never once thought about giving up.

The way to make money in rehabs (my opinion only) is to find your niche. As Ron Legrand always said, "Don't try to turn a 3 house into a 10, turn it into a 7 or 8". I deal in two specific niches when it comes to rehabs. Light remodels (turning 3's into 7+'s) and gut rehabs where we carefully analyze the neighborhood and if demand is strong we bring "like new" construction to the marketplace at about 30% less than a true new construction of the same caliber would cost. We bring value into our process and projects and that has always done us very well.

The transition.... It was like a snowball to be honest with you. I started with one, got into two and we consistently do anywhere from 3-5 deals per month. That's an annual average so you know, some months are super busy and some not so much but it comes out to about 50-60 properties per year. 

My advice to you and anyone else, if you plan to do this on your own, remember you have two eyes, you can keep one on each property and that's about it. When you grow you have to manage the beast and that means more people and inevitable.... payroll or profit share. My average calculations are that for 2 people I have brought into the team, they produce as much as I did on my own. The 3rd person is where I start making money. Sounds funny but that's what the numbers show.

All the best @Curtis Curley 

Michael Kevorkian

Hi @Curtis Curley I really like your discipline and where you're heading mentally to get yourself financially free. I have to agree with @Nazz Wang on her post as you need either time or money to get into this business. Sometimes just a little of both, if you have the money to invest you can find companies that will get you in and out of deals (specifically flips) pretty fast so you can gauge the process better than buying and holding with a company or on your own which can tie up your capital for a longer period of time. 

I think the best thing to do would be to either be a hard money lender or equity partner with a rehabber/flipper whereby your money isn't tied up too long and you are pretty much hands off. You put up the funds, they do all the work and you get paid. Obviously equity position has more upside profit potential but usually not the monthly cashflow to go along with it. In other words, you wait until the property sells to get paid but the payoff is higher than hard money lending in most cases.

Regarding your comment on "a lot of risk" with flips.... What makes you say that? I do a lot of rehabs / flips as my "job" and have learned to mitigate the risks in this business as most experienced rehabbers will learn over the years. There is no risk free investment out there but also don't think that just because you hear things in idle conversation that it makes them true. If that were the case this blog might be called "thinnerpockets" or something like that. The truth is if you align yourself with the right people who have a proven system and business in place then you should do just fine. 

If you have any questions I'm always happy to answer them so please feel free to message me anytime. .

Thanks, 

Michael Kevorkian

@Patrick Yungck that's a loaded question man..... :-)

My favorite answer to most of life's pressing questions is, "It Depends".

What do you have the time or desire to do is the first thing you need to ask yourself before anyone else. If you want to park your money and get strong returns then buy a cash flow property in an area where you can get a great turnkey rental for that much or less. Get management in place and sit back and collect your checks. Done.

Do you want to be involved with shorter term investments? Start rehabbing, with that budget you may need additional funding from hard money or bank sources but you're probably not far off from where you need to be to get started on a project.

Are you an adrenaline junky? Start wholesaling with a fraction of that money but it will take a lot of effort to learn, implement and "do" that business. If you get with the right mentor you can be on your way to your first wholesale deal within 30-60 days easily.

You could scrap it all and just be a hard money lender too. Let someone else look high and low for the deals, bring them to you and you can fund their purchase and or rehab. Charge a hefty interest and points for the privilege of using your money and just make a living at that.

The list doesn't end there but it's enough to think about for one day isn't it?

I'll send you a private message with some more info about what we do but at the end of the day.... what is it YOU want to or have the time to do?

Have an amazing day!

@Reilly Kushnir great post. Remember one thing..... You can't close on the phone (or in an email, postcard, letter etc). In this beautiful age of technology so much is lost with the art of person to person contact. In my business I typically mail out between 6,000 and 10,000 pieces of mail per month. I do it with one goal in mind..... To make the phone ring. Why do I want to make the phone ring?............ To talk to them one on one. Why??? To build rapport and determine motivation (both level of motivation and motivating factor(s) for selling).

More important than the address right now is the phone number. Ask for it in an email that goes something like this, "Hi (name) I'm interested in the kijiji post about your property, here's my phone number, if you don't mind, I'd like to talk with you for a minute and get some more information about the property. If you want to email me your phone number that's fine too, I can call you right away. Thanks (Your Name)" Not salesy.... be personable and sincere in every bit of communication and people will open up to you a lot more and a lot quicker.

The address alone does you no good, talk to them for a while, an ideal phone call will last you about 15 minutes. That's rapport building at it's best! While you're on the phone you'll get the address, ask them why their moving (if they are in bad shape there's more motivation than just sick or tired or health reasons.... get to the REAL problem if there is one). Ask about price, will they sell on terms etc. on the call.

Next step is go to the property if you're local or ask them to email pictures if you are working remotely.

They most likely won't understand the concept of "putting it under contract" so just go through the process, explain you have partners/investors who have to approve the purchase and go from there. This way if and when you wholesale it, that conversation was already had with the seller.

I hope this helps, if you have any questions let me know.

Have a great day!

@Robert Cross, Michael Kevorkian here, welcome to the wonderful world of real estate! There are a ton of things you can do to get seller leads with little or no money. One of the things I always teach people to do when money is tight is to create a good joint venture with Realtors, contractors, title companies, attorneys etc.

For example if you approach a Realtor and explain what you are doing, tell them you will mail out let's say 1,000 pieces per month and from that you expect to get 30 calls, you may only get 1 deal out of it but you will still have 29 people who have called because they got your letter. You will qualify the leads, get names and addresses of of people who have responded to your mailing but who you can't do a deal with because they want too much money for an investor to buy the property. You will give the Realtor all of those leads for them to call on and try to get their listing. For the Realtor it's a really cheap cost per lead and for you..... your marketing is FREE.

That's just one of many strategies you can use. If you want me to send you my Real Estate Marketing Plan that you can use in your business everyday just send me your email and I'll send it over to you. It's a great tool for anyone to use so that you can really break down the marketing process.

Obviously there is Craigslist you can cold call and email, other for sale by owner sites and you can go out and door knock people in pre-foreclosure who have a sale date coming up within the next 30 days or so (think they're motivated)?

Statistics show that people who call you on an ad have an 80% chance of doing business with you in the next 18 months. That being said try finding a way you CAN get money together for marketing because those that do call, are motivated and followed up with properly have the highest likelihood of actually doing business with you.

Good luck and keep me posted!

@Tom Keith everything looks good to me on the surface my only concern is the rehab budget. It seems right for the work you are talking about doing but what if you run into the all too common "unseen issue(s)"? Just my words of caution..... Now talking about the numbers, seems like you're right on.

ARV: $135,000 X 70% - $10,000 rehab = MAO of $84,500 so it seems like you are well within the formula for your flip.

In my area I see a trend of 8% selling costs. 5% commission and an estimated 3% for closing costs like title insurance, attorney fees, tax pro-rations etc. If the deal goes as planned for you you should come out happy as a clam.

Buy: $77,000

Buy Costs: $2,940

Holding Cost Est. (3 months?): $3,549

Total 90 Day Cost: $83,489

Sell Price: $135,000

Selling Costs (@ 8%): $10,800

Net from sale: $124,200

Buy/Rehab/Hold Costs: $83,900

Est. of net profit: $40,300

I highly recommend you take a lot of before, during and after pictures to start building your portfolio. This way when you start gaining momentum and investor interest you will have a solid book of business you can show them. Most people can't see how to take something like the before images below to the after images. Trust me when I tell you, most people lack the vision which is the beauty of our business.

Best of luck Tom and let us know how it goes along the way.

Outstanding @Tom Keith !

Michael Kevorkian here.... Remember this feeling..... it is totally addicting and inspiring & will keep you motivated as time goes on. I can't wait to see and hear all the details.

Way to go!

@Steve Morris a lot of great comments here and I will tell you that even though I’m not a licensed contractor, I rehab and flip a lot of houses. Recently we have restructured my entire business model to the point where I am acting as a general contractor for my own projects.I have more horror stories than I have the time or patience to write about.Working with a general contractor seems to be the easy route and when you are connected with the right one it is definitely helpful and a relationship who want to nurture over time.

I had a couple of instances where I hired a general contractor, he hired sub-contractors and never paid them although he was paid for their work/contract work and the sub-contractors liened my properties.

Getting lien waivers from the general contractor is useless and worthless unless you have subsequent lien waivers from his or her sub-contractors as well.

I recently had a general contractor come out and look at a job for a gut rehab of a two unit building in Chicago. He gave me a price of $165,000 the next day.I called him back and said, “I asked you to remodel the place not build new” and he said….. over the phone….. “OK, how about $110,000”?Needless to say, I didn’t bother carrying on the conversation much further after that. I look at it like this, if you have that much room in it and this is our first set of negotiations, it’s probably not going to be a good fit.

What I’ve started doing in my company now is hire two project managers who handle between five and seven projects each instead of trying to get a general contractor to run the jobs.Effectively the project managers act as a general contractor, they call 3-5 companies/people from each trade to come bid on the job.We like to have all the contractors show up at the same time so that they know there is competition.

Typically we call five people and only three show up, we then tell the three that are there that we need their bid within 24 hours and from there we will usually only get one or two.

The point is that this is qualifying the contractor as to whether or not they are somebody that can work with us or not.If they don’t show up or don’t deliver the bid in time that is an early enough warning sign for me to say they are not going to perform the way I need them to when it comes to time frames and budgets.

It is a lot of legwork and a lot of phone calls but once you get the system down and some relationships built you won’t have to go through it for every trade.Licenses, insurance, being bonded and partial and full lien waivers are a must and we have found that this method actually works a lot better than using a GC because effectively all of the trades are self managed.

The electrician goes in, does his rough, takes his partial payment, signs the lien waiver and comes back later to do the finish and trim work and get a final payment.He is not trying to do the electric then go hang some drywall, build a deck and replace the roof on your property.

I’m not saying that every GC is like that however in my marketplace it is very common that the general contractor will use the license of a friend or coworker for a specific trade like plumbing or electric and then pay one of his guys $12.00 or $15.00 per hour to do the work.Theoretically he is making more money that way but in reality the entire job is slowed down drastically because you have an experienced “generalist” worker performing work that should be done by the licensed professionals.

Best of luck to you.

@Steve Morris

Hello Broderick and welcome.I will tell you being both a mentor and somebody’s student to this very day after 14 years in the real estate business, I highly recommend finding a coach/mentor help you along in your business.

You do need to consider that asking somebody for help and not being able to pay them for their time especially if there are good, is it a bit of a tall order.Mentors and coaches get those requests all the time, the big problem is that most people don’t follow through once they get started and the mentor is never able to really develop that student into potentially profitable business relationship which tends to be the students “empty promise” when they start out.

I would like to think that you are the exception to the rule and if you are interested in learning this business, I’m willing to extend you an offer and mentor you if you are truly committed.

I will have a couple of requests and need to get some information from you before we move along so send me a message and we can discuss the details further if you are really ready to make that jump in your life, listen and learn all about business from one guys perspective and see how things go over the course of the next few weeks.

I’ll wait to hear from you and if I don’t I wish you the best of luck in your career and your search.

@Account Closed this is interesting and when you look at it I think the common statement would be "It depends". In fact let me give you an even more vague comment and say it depends a lot and across all the issues/questions you put up here on this post.

Before I start allow me to introduce myself..... I'm not an attorney so I am obligated to suggest you seek the advice of legal counsel on this and that my opinion is just that, my opinion from past experience.

Whew! Now that we got that out of the way.....

1.) I would say yes the lender can foreclose. If a lender initiates a foreclosure and nothing is done to object then they go through the process and do their thing. Just like all the "fraudulent foreclosures" that were being challenged (after the fact), the robo signing, improper notices etc. If no one says anything most likely nothing will be done to stop their forward momentum. The courts or powers that be in the foreclosure arena are there to take a specific file from point A to Z and that's it. They assume everything has been done right unless otherwise informed.

2.) Yes and no. I believe the daughter would have to open a case or counter claim to do so. If she doesn't, nothing automatically "just happens" so much will depend on what, if anything, the daughter does or doesn't do.

3.) Going back to #1 above, if they don't succeed in the foreclosure for some reason then probably not. It's most likely going to be one or the other. Foreclosure or reinstatement of the loan/debtor. If it is the latter of the two then the issue kind of works itself out. From the sounds of it the lender made a loan to a person who didn't have the right (at that time) to sign loan documents for the collateral she used. It seems like a catch 22 for the lender really. They have a lien that probably isn't legal so if it goes unpaid and they can't foreclose.... they would only be able to pursue the daughter for the debt and MAYBE fraud (though it may have been unintentional fraud).

4.) See above.

So that's my 2 cents..... I hope it gave you some perspective on your situation at hand and some things to think about. I would say it is a solvable problem but a problem nonetheless but hey..... that's what we are all here for isn't? To be problem solvers.