All Forum Posts by: Rich S.

@Dan Vleck ... do you have pretty straightforward numbers on these homes?  Are you buy at $50,000, little to no rehab and renting for $600-$700 or is it all over the map?  My biggest challenge seems to be finding deals that cash flow enough to justify the cash they tie up.

I think the general consensus... do what works for you, always do your due diligence and make an informed decision.  To the folks who are arguing they think this means tenants are irresponsible with their money... I know folks rent for many reasons, but if all of your tenants were being as responsible as possible with their money, would they be renting from you instead of buying their own home/place to live, gaining equity in their place of residence, etc??

Good day BP.  As many have said, it is AMAZING the amount of information on these forums.  I am interested in fix and flips as well as rentals for long term cash flow.  One of the things I see debated a lot on BP is the idea of the $50,000 house.  You have the "Can't make money long term with $50K house" crowd, along with the "I make $5,000-$20,000 a month cash flow, on $50K houses" and everything in between.  My question/thought is simple:

Isn't there a DISTINCT difference in the stigma of the $50,000 house depending on WHERE it is?  Going back to the adage of LOCATION, LOCATION, LOCATION...

For example, I'm from MN... I could buy a $50,000 or less house in Minneapolis to rent and cash flow.  If it is in Minneapolis, it will have a MUCH different set of variables than if it was, say in Springfield, MN.  One is completely urban, while the other is rural/small town.  I see the term "war zones" which I assume are places of high crime/safety concerns mentioned when talking of these houses.  Maybe that would be the case in Minneapolis, but I can't imagine it being the case in Springfield... meaning an URBAN $50,000 house will have much different variables than a RURAL/SMALL TOWN $50,000 house.

Simply put, it sure seems to me the debate is often times the people debating against investing in such deals think of URBAN issues, while there are many folks having success in RURAL/SMALL TOWN.  There are many having success in urban situations as well, I'm sure, as someone has to own these homes.

Final question... if looking at these bottom of the pole deals(I mean cheap in the marketplace, not bad deals)... to help new folks get into the game with little money, does it make sense to invest in RURAL bottom of the market homes vs. URBAN bottom of the market homes?  Are the RURAL issues easier to manage?  I understand you have less access to tenants as less people live there.  Just a thought I keep coming back to when folks are debating this issue.

Biggest fear.... being on this site 10 years from now, realizing I have done nothing in real estate... watching the "leap of faith" folks, talk about how much their business has grown over time...long time lurker... kicked lots of tires... trying to get over the hump and flip that first property... feel the next step is "just do it already".... 

Just an idea.... but something to consider is vacation rental through the summer months, but possibly a 9 month rental the rest of the time or corporate rental if there is a large company that brings people in from a distance on a regular basis.  When I think about the 9 month route... I think about a family who is forced to move right before school starts to get their kids started and buying a house just takes too long... or a teacher or school personnel who was newly hired, wanting to rent to get the lay of the area before buying... 

One thing to keep in mind(which I am sure you have) is that many of the northern MN cabins are not year round... so may only be able to rent during summer months because they aren't insulated, set up for winter, etc.. 

I think the key point to take from all of this, is everyone's idea of a "good deal" or the "right deal" is different.  I think the biggest take aways.... #1- You have to either figure out what is acceptable for you and your market OR find a new market and #2- If you really want all variables accounted for in some formula, you have to find a quotient for time and risk.  A wholesaler getting a property under contract from the seller and then 3 days later finding the buyer for $10,000 more is a much different scenario than a rehabber buying a home, investing the rehab costs, all the carrying costs and then having realtor fees and closing costs... The key is to find the system/formula/method, whatever you want to call it, that works for you in your market and repeat it.

I think the answers speak volumes to the question... different for everyone and every market.  For folks starting out... a $10K profit over 9 months might be a good deal and the only option, but experienced guys/gals who can afford to move up a tier or two, expect much more return.  In my opinion, the key to finding your place in real estate investing is deciding "What is your time worth?"   If you value an hour of your time at $100/hour vs. $1,000/hour, what deals work for you will be very different.  The experienced folks, have done the heavy lifting, squeezing, sweat equity for a few bucks and hour and have gotten to a place where they just don't want/have to do that anymore.  Don't let that discourage you.... everyone's path is different.... the key is to FIND a PATH that works, repeat it and work to improve/change it as markets change.

As investors, everyone is running the numbers.... and if the numbers don't work for the realtor, than so be it... however, if you have to do the legwork(you mentioned spending time each day analyzing deals and he's not doing that work for you) and he's not willing to bite it for one deal to keep the relationship, his representation is going to burn you more often than not in my opinion.  

Find a realtor who's sees their best interest in hustling for you.... best of both worlds.  

Some realtors work their tail off to help first homebuyers in order to gain their trust and represent them again in 5-7 years... but not biting one bullet for someone that will do 5 a year, plus(as most investors grow, deals are more) just seems interesting, but not rare from what I hear... 

Everyone has to look out for their business, a Realtor really has his own business where money is driven by the work put in.... so if it doesn't work, it doesn't work... there are lots of realtors, find one that will grind it out for you... 

So far the final push:

*Convincing the spouse

*tired of watching stagnant money not make money

*Fear of not providing for family

*Proving someone wrong

*Tired of TALKING and not doing

*Next step in educating was acting

*Purchasing new home and deciding to keep old

I always find it fascinating how so many different things get people to the same decision... I'm in the "tired of talking and not doing" category at this point! 

@Andrew Johnson  Thanks for the reply.  Just to be clear... I really do like my 9-5pm.... I just love the power of being able to do whatever with my time even more which is my goal for real estate... I understand it is hard work, don't get me wrong, I just like the power of choice...  the $$$ to fund/rehab a deal is my hurdle...  but a phone call away for the right deal

And @Andrew Johnson  You never did say what got you over the edge?