All Forum Posts by: Dean I.

Disclaimer: I have my real estate license, but I am not an active real estate agent and I never have been.

First I want to share something I once read or heard (I honestly can't remember which or from where). Everyone has one competitive advantage over everyone else. This could be education, experience, connections, money or in this case a real estate license. This also means that more than likely, you have a competitive advantage over your competitors too. The problem is, most people just don't realize it or they don't use it to their advantage. Instead, it is a lot easier to complain about everyone else's advantages instead of developing your own.

1. I am not exactly sure what you are referring to, but I do agree that agents and brokers should be held to a higher degree of accountability. In fact, in NC agents are now required to be brokers so that they are personally liable for any mistakes they make. 

2. I'm not sure that I understand your logic here. It is not like the MLS is a monopoly, in fact, by definition it is the opposite of a monopoly. With that being said, good agents do a lot more than print a list from the MLS. I am sorry if you had a bad experience with agents in the past (I know I have), but the fact is there a lot of bad agents and very few good ones, which leads us to our next point.

3. I mostly have to disagree here. Would you rather pay 3 agents by the hour, just to find out they are terrible and unable to deliver or would you rather pay commission to the one agent who actually delivered. Commission forces people have to perform and do a good job. Those who do not, don't get paid and don't make it in this industry, which is a good thing. That being said, you are right, there can be a conflict of interest if the agent is only pushing certain properties that make them the most money. However, if you are a real estate investor, then this should not affect you since you should be doing your own homework and running your own numbers.

4. I'm sorry, but I'm just going to say it . . . this is just plain stupid. 

5. I am not sure how any of this makes sense. As long as the agent discloses that he or she is a real estate agent or broker, why would they need to hire another broker to do their job? Also, why should it be unlawful for a agent to purchase a property from a family member or friend? Do you think they are some how conspiring and hiding the fact that they are a real estate agent. Doesn't sound like they have much of a relationship if they don't at least know what the agent does for a living.

6. I don't know where the law falls on this one, but I can tell you this. In order to create those documents, you have to hire lawyers to draw up the documents and constantly update them as new laws are put into place or as new disclaimers need to be written. The last time I checked, a lawyer costs money and lots of it. If you think that you should be given something that someone else paid for, for free, then well that's a topic for another thread. Not sure exactly what you mean by the last sentence since there is no real context. 

Anyways, if you can't beat them, join them. Stop complaining about their advantages and start creating or finding your own. Nothing you mentioned here points to gross misconduct and misuse of a real estate license. 

@Karen Harris

You have a different situation than most. Most people who have a spouse that is "not on board" have spouses that don't support them at all (meaning that they absolutely disagree with what you are doing), which causes a major conflict in their marriage. In your case, your husband supports you, but he doesn't want to participate. There is absolutely nothing wrong with that. My wife supports me in all my business ventures to include REI, but she wants nothing to do with it. She doesn't want the stress of making decisions or the responsibilities that running a business has inherently has. She trusts me to do whatever it takes to pay the bills and she doesn't care to know the details. Don't get me wrong, she is a very intelligent woman who is quite capable, but she would much rather take care of the kids and be more involved in church and I support her in that.

But if you want to add some conflict to your marriage, then try to force your husband to participate in this new venture of yours. I am sure he will welcome the unnecessary stress and as he gets more involved he will probably learn to resent you and the decision to support you. 

Or you can just be happy that he does support you and maybe after seeing your success he MAY want to get involved, but don't expect it and don't push it. Besides, if he doesn't understand REI and has no desire to understand REI, do you really want him involved in making investment decisions? Not saying that he wont have any good input, but you simply don't know what you don't know.

I was a painting contractor in another life, so while I can't say much about plumbing I can say that if you have a good and ethical contractor, he will tell you if and when the plumbing may need to be replaced or upgraded. 

As for the drywall. In most cases, you can simply patch up the holes, calk in the cracks and skim a few walls to make them look new again (newish). If the walls are bowing, then there probably are other problems behind that wall. Once the prep work is done, you will want to use a low luster paint. 

Flat hides the most, but it also attracts dirt, so depending on how long it takes to sell the house, you may have hand prints everywhere that you will have to frequently touch up. Also, the house will look like crap just after a few months of someone living in there. Some investors don't care about that, but I do. 

Eggshell is typically the next lowest sheen available to most paint brands. It is relative cheap, hides some stuff, but still has enough sheen to highlight the imperfections. It is very washable though, so it is a good choice for rentals. 

What you probably want is a low luster or matte finish sheen, which is between flat and eggshell. It looks flat with a slight sheen, washable once cured and easy to touch up. You will spend a little more, but it will make the walls look a lot better. PNG and Benjamin Moore are good brands for this type of sheen. You can get the contractors grade and save a lot of money.

Trim is different though. You generally want to go with a higher sheen than what is on the walls (satin, semi-gloss, gloss), but just like the walls, the higher the sheen, the more it will show. Since you probably wont be replacing all the trim in the house, you will probably want to go with a Satin. It will hide a lot imperfections, but still make the trim pop and look clean. I would not any higher than semi-gloss. 

As for brick houses, they certainly can be cheaper when it comes to renovations since in many cases, all you have to do is pressure wash and fix a few boards or siding pieces on the soffit and facia.

With all that said, you probably want to find a contractor or two or three that are willing to look at some potential flips and give you some prices as well as some guidelines on estimating the renovation costs on other houses. Always estimate a little more than what they quote you because rarely does anything go as planned. 

I did know the GC (actually since I was a kid) so I definitely lucked out there. 

As for GCs not doing more with investors, I think it has to do with the pricing and with the investor. As my GC explained it to me, he is basically giving me wholesale pricing because he knows he will continue to get my business and because he knows that after doing a few flips, he will know exactly what I want and at what quality, which significantly increases his efficiency and profitability. That said, many GCs don't want to work for so little money (compared to working for the typical home owner) and many investors burn out their GCs by trying to get them to cut corners and do things cheaper, just so the investor can make more money. I get both sides, but I also think that the investor needs to respect the contractor and realize that they have to make a profit too. This is one of the reasons why I don't try and make the numbers work. I ask for a fair amount on the renovations and if the numbers work, great. If they don't, I move on.

That being said, I still think you should negotiate with GCs for better pricing with the promise of future business, but you have to also respect the GC and realize that he probably also has a family to feed too.

Oh, and this is coming from a former contractor . . . Not a GC, but a contractor none the less.

Hey guys, I wanted to chime in and give you guys my thoughts on advertising on Facebook. Firstly, I am currently not advertising on Facebook for my house flipping business, but I am doing it for other businesses with success. Here is what I learned

1. Advertising on Facebook is not free. The organic contact you will make with people through Facebook will not be enough to generate much results. Within a few minutes of your post hitting someones feed, it has already been buried by everyone else's post about their dog, new favorite meme, political rant, etc. Boosting your posts or running ads will continually put your post/ad on your target audiences feeds and greatly increase the chances of them seeing your ad. Of course, this all costs money. Lots of it.

3. Consistency is key. If you are not constantly pushing your ads and getting your name, logo, brand, product, etc in front of people, you will not see any lasting results. Just like with yellow letters or direct mail marketing, you have to touch your contacts several times before you start seeing any meaningful results.

4. It costs a lot of money. Granted, the cost of marketing on Facebook will depend on your area, your industry, target audience, quality of ads, etc, but in general, you are probably not going to get away with only spending $50 a month and actually see any real results. For one of my businesses, we spend around 2k a month for advertising. Luckily, that number has actually come down and business from Facebook has actually increase. This has to do with both consistency and learning what works and what does not work, which leads me to my next point.

5. Learn what works. At first, when I started advertising on Facebook, I got nothing. I gave it up for about a year and then tried it again. This time, I immediately dumped 2.5k a month into advertising and I did it consistently over the course of a few months. I boosted every ad (which was expensive) until I figured out which ads/posts worked and which ones did not. After I figured out what worked, I only boosted those ads and then I started making more ads like them. Once I fully committed to it (money and time), I immediately saw results and results have only gotten better with time.

Anyways, I don't know how this will work out for house flipping, but I wanted you guys to know my experience with advertising on Facebook in general, so that maybe you guys can do better than I did when I first started advertising on Facebook. Also, you guys will notice that most everything I mentioned above is pretty much true of all advertising and marketing.

If you have the time, some of you may be able to bring down advertising costs by being more involved in Facebook groups, but I would not get rid of advertising altogether. In fact, even if you are generating good leads from these groups, you should still advertise so that you can keep your funnel full.

@Vee Vu

Generally speaking, most hard money lenders will only lend to a LLC, even if they do use your personal credit and income to guarantee the loan.

For tax purposes, you should elect the LLC as and S-Corp if you plan on flipping a lot of houses or enough houses to generate a decent income. I am not a CPA, so I don't know what that magical number is.

As for getting approved, even though they will be lending to the LLC, you will have to be approved based on your personal income and available finances.

To clarify the LLC vs S-Corp: When most people talk about an S-Corp, they are usually referring to a LLC that has elected to be taxed like an S-Corporation. Basically a LLC is a type of business entity or structure used to separate you (liability) from the business and the the S-Corp election determines how you pay your taxes. There is a lot more to it than that, but for the sake of this conversation, I am keeping it simple.

I don't think you need a website unless you are advertising and or doing yellow letters and you need a place to gather information and show some credibility. There are plenty of investors out there who do all their flips via the MLS and Auctions and neither of those require a website.

@Stewart Vargas-Sosa

I can't 100% agree with this.

Yes, it can be harder to find funding for an LLC, depending on the type of funding you are trying to get and from where. You can start flipping houses in your name, but you open yourself up to personal liability that could otherwise be protected by a separate entity like an LLC. Also, if you try to get a conventional loan (that would you would normally use if it were your personal residence), then you need to know that there are certain restrictions when it comes to flipping houses.

As for the impediment because of the different fees associated with starting and maintaining an LLC, if you cannot get the funds for starting and maintaining an LLC, then you probably don't have the funds to flip houses.

Some options for lending are private money lenders, hard money lenders or smaller banks who are willing to give you a rehab or construction loan, which are similar to hard money loans but with better terms. As for getting approved, if your LLC does not have any long standing credit or history of successfully flipping houses, then you will have to personally guarantee the loan, which means that your ability to get funding will be based on your personal ability to pay. If you have other businesses like I do, then they may require that those businesses be guarantors in the case that you personally default.

@Donnell Durden

I comp is a market analysis of what that house should be worth according to how much similar houses in that specific area have sold for. More specifically, when calculating the value of the home in question, you are comparing things like the number of rooms and bathrooms, the amount of square feet, whether or not it has a garage as well as other features that affect the actual value of the home. Each of these features has a value. If your house is missing a feature, then the value of that house is adjusted down and vise versa. To get a good comp you should use at least 3-5 properties for comparison.

@Rafael Rascon

It depends on the numbers. I wouldn't offer anything until I know all the numbers. Maybe there is a very good reason that it is only 13k. Maybe the house just needs to be tore down. Are you ready for a project like that? Either way, don't try and make the numbers work. Figure out the numbers and if the numbers are telling you that you need to offer less, then offer less. If the numbers are telling you that you have room to offer more, then offer more if you think that there are other investors interested in the house or if there is already multiple offers. Just don't offer more then what the numbers are telling you.

Don't try and make the numbers work either. The numbers either work or they don't. If they work, make an offer. If they don't, move on.

Also keep in mind that just because the house is cheap, it does not mean that it is a deal worth pursuing. In fact, most of the deals I walked away from, were houses that were selling for bottom dollar. In the end the numbers either didn't work or they were in areas that were undesirable.

You have to be willing to walk away from deals that don't make sense. Don't get emotional or excited about a property simply because you want to jump in and get started. Be patient and wait for the right deal that makes sense.

Post your numbers once you get them so you can get some opinions before making an offer. Make sure you consider the financing fees, closing costs (both purchase and sale) and holding costs for the amount of time it will take to renovate and sell on the market. If you have access to the BP calculators, I would definitely use them.