All Forum Posts by: Bryan Casteel

Dave, you have the right attitude and your are taking action. You will make it just fine. Work hard at it and don't give up when it seems like nothing is working. Keep going at it constantly and eventually the floodgates will open. The more you do it the easier it gets.

Saga,

For sure the hardest deal is the first one. A very comforting thought is that a good deal comes along all of the time. There is always a day when a good deal comes into the market. The trick is to be active in the market so that you can spot the deal and take action. The more experienced people with bigger pockets will grab some from you, but just hang in there and I promise you will get one and it will feel good.

Originally posted by "BlueStarHomesInc.":

Everything is a neutral event, it becomes what we attach to it.

Right on Jared. This is a saying in marketing, but it applies to everything. In your business, there is no good and bad, there is only feedback. Once you realize that every "bad" or "good" thing that happens to you is your own doing, then you can grow and be successful.

Dave,

Good to have your here. This is a great resource to help you get started. Stay involved and ask questions.

What is the extent of your parent's investing. It sounds like they are on the landlording side of the business. I am sure you will find a good deal of information about landlording here as well.

As far as flipping houses go, it is a good way to get started. You will get chunks of cash to keep you going but no cash flow for long-term security. It is all a process that you need to study in order to gain true wealth this way.

Chris,

Welcome to BiggerPockets and we look forward to you contribution.

I am not a tax expert and I would never consult any free source of information for tax, legal or accounting advice. From your explanation, your experience with non-profit organizations is more experience than 99.9% of all of the people on this board. These boards are best used for the nuts and bolts of real estate investing and they are very good at that. Hire a lawyer to answer your questions.

I have seen several non-profits around Cincinnati who purchase and rehab homes, but, as far as I know, the entire profit and loss of each project is contained within the organization and the profits are used to further their main cause. If you are looking to personally profit (other than a salary) from your own not-for-profit company, then, as all cash said, you will most likely be on the wrong side of the law.

As far as LLC's are concerned, that is a great way to invest. They are a nice "bucket" to put your income and expense numbers into and a good way to limit your liability personally. Since you already have one set up, all you have to do is modify your operating agreement to reflect a new direction of real estate investing. When you purchase or sell homes with the LLC, the title company or lawyer doing the closing will need to have a copy of your operating agreement and tax ID for the closing file.

Welcome Indy. It is good to have more Midwest investors here.

I thought you only needed $31K to save the house from foreclosure. Then you would have to make payments on the loan. If you spent $40K on removing the house and other design expenses for the land, your cost per acre would be $46K [($560K + $40K) / 13 acres]. Is it a good deal to have the land for $46K per acre? If you divided it into 10 one acre lots (the other 3 acres would go to roads and dead space) and spent the money on the designs, roads, etc. could you sell the lots for enough to make at least 30% profit? This way you would do the land development and allow the builders to build and sell the houses?

You have to talk with a smaller developer. The one you talked to is only used to dealing with 50 acres and up. They usually get excited when there is over 100 acres.

My partner and I developed this way of thinking after doing a couple deals that just weren't worth it. After you spend $50K and many, many months on a rehab, a $15K profit just isn't enough. It is very common that I look at deals these days and just say "There are easier ways to make money". I would never have done that at first because it is just awesome to find a deal in the first place. Once you get a few done it starts to make more sense.

I generally make an offer on any property that I take the time to see. For my business a good deal is on that I can purchase at a price that will net me a profit at least equal to the amount of work needed to put the property back into shape. I don't do any job that I don't think I can make at least $20K on unless it is just so darn easy that it will flip super fast.

For Example:
House needs $25K worth of work so I need at least $25K to $30K profit
House needs $12K worth of work so I need at least $20K to $25K profit
House needs $45K worth of work so I need OVER $50K in profit

The reason I do it this way is because bigger jobs inherantly have more risk and therefore I need more reward. It is amazing how a $40K fixup job can turn into a $60K fixup job before you know it. I need to build in the cushion to handle unexpected expenses.

Another way to figure a good deal is how good are the terms on a deal. I will take a lower profit if the seller will finance me on the purchase. My risk is lower because I am not out the cash on the purchase as well as the fixup costs.

Can the existing house be saved? It sounds like a huge home that would have some value in it. One option would be to find a money partner to help with the funds to get this property before the auction on the 21st. You could propose to fix the property and subdivide off a good portion of the land for future development. If you could fix the property and resell it for at least all of the costs into the deal then you could have the rest of the land for free to then talk to developers about putting up some more homes or whatever. Is that possible?