All Forum Posts by: David Sohn

@Vincent Roberts - welcome.  Such a great opportunity to learn and invest intelligently at such a young age.  Some great advice here already -- listen to the podcasts, read as much as you can on the forums, blogs and the books you can get from the site and just take it all in!

You see to have a great attitude and open mind -- best of luck!

Looks like a great agenda Mike!  Very sorry to say @David Corey and I cannot make this!  Hope to connect at the next one.

Hi Daniel - I know someone who lives / works in property management in that area.  Have not worked with him personally so I cannot speak to his business or experience but met him at a real estate class and would be happy to pass along his info for you to connect and see if it's a fit for you.

PM me for details.

Best

David

@Patrick Wheeler - very interested to hear what you find out locally.  

Have you looked into RealtyShares or any of the crowd funded sites?

I should have said first 4 deals together! :)

I'm definitely no lawyer Mike but just from way you describe it, feels like you could be best served creating a new 3rd entity and do a joint venture together as equity partners in that new company.

Hey @Valerie King - if you self manage -- then YES definitely keep everything documented (leases, receipts, etc).  If you hire property management, they should do most (if not all) of that for you.

Recording income/expenses -- you could certainly use excel or google spreadsheets...find a good template (check the BP FilePlace there's some good stuff there).  As your business grows you'll probably want to look into some accounting software (quickbooks, etc) to help as well (and certainly think about hiring an accountant!).

Your budgeting should be very similar to many of the numbers you initially run for when you purchased the property...Rents minus vacancies minus Operating expenses minus Cap Ex.  Think about what big capital expenses you might have coming up in next 6-12-18 months to plan for (replacing furnaces, water heaters, roof, appliances, etc, etc) and start putting that in there so you can plan further out for those things and build up a cash reserve fund to pay for them so you dont get blind sided with a huge bill you weren't planning/budgeting for.

Just a few ideas...hope it helps and good luck!

Hey @Ceasar Rosas - if you are going to be flipping houses in different markets at different price points you might want to use a % for your return.  This will enable you to know what you'll make (% wise) so you will be more consistent.  The actual dollar amount for profit will vary because the home prices are different but it won't matter because you'll be using a consistent formula.  IF you use a $$ amount you could get yourself into trouble if you go up-market.

Making ~20k on a 100k house (20%) is much different than making ~20k on a 500k house (only 4%!!).

If you're going to stay in a consistent market with similar priced homes, then consider using a minimum number you'd like to make in profit (like 20k+ in your example). Still good to understand the % ROI as well but you can be more confident in just a number if you stay in a similarly priced market most of the time.

But if you fluctuate markets definitely use a minimum % return you want to have each time.  I'd shoot for at least north of 12% and hopefully closer to 15-20%.

Good luck.

Mike - I'd suggest thinking about starting small with your contractor(s) with the intent to grow together.  But maybe see how the first 1,2,3 projects go first before entering into a longer term contract.  You'll learn what works what doesn't and both be prepared to make adjustments.

We partner w/ two separate GCs (two separate geos).  We found best way to motivate is to have both get a % of profit from the project - which is their incentive to finish the job as quickly and as cost effective as possible since they now have skin in the game.  There's always room for improvement, but works well!

My .02 on the best way(s) to protect yourself:

1) make sure you have a great insurance policy (or policies)..talk to a pro on that one.  This alone is worth its weight in gold!

2) Make sure your GC is licensed (if needed by your state) and insured -- if he/she is hiring subs make sure you understand who's responsible for ensuring the subs are licensed/insured as well.

3) Think about if you enter into a contract with a GC if you are going to own this business together or both as separate entities forming a 3rd new entity...definitely worth thinking about the corporate structure here to protect yourself.  Could be worth discussion w/ a lawyer.

Hey @Deonte Singleton  - Definitely check out the chapter in the ultimate beginner's guide on financing -- some good ideas on how to get started with minimal funds.

https://www.biggerpockets.com/real-estate-investin...

Good luck!

My 2 cents.  It just never hurts to have them -- it's short money and helps you up your game.  Shows people you are serious and have taken enough time to consider that.