All Forum Posts by: Shawn Parsh

Jerell,

There are many ways to structure a deal. If your co-worker is open to discussing the issue you should write down your questions and then ask to set up a time when you can have an uninterrupted conversation. 

  From my perspective I like as little debt as possible. I focus on distressed properties and then complete the rehab to quickly raise the properties value. Then rent or sell. I have bought properties by signing a lease option where I took control over the property, made the needed repairs, and then got it financed to cover my cost and what I owed. I've done some with owner financing, I have taken personal loans, and I have paid cash for the property. The method all depends on your personal situation and the needs of the seller.

On a side note I have never paid an additional fee for a loan because the property was not done. Of course I rarely use loans and have never used hard money. I have on the other hand penalized a contractor a certain amount a day or week for them not being done by the agreed date. 

Jennifer,

Just to make sure I'm following you, this is just a template you are using as a guide to decide on offers and what properties to pursue, correct? With out a specific property to assess it is difficult to run numbers, but if my first sentence is on track I get the intent. From my perspective I would plan for more than 4 months for rehab and sale of the property. Depending on what needs to be rehabbed the timeframe will change, but I would allow for more time on the market just to be safe. Additionally, I would not get into any fix and flip when the numbers show if all goes as planned I will only clear about 25,000. 

I know everyone has their own requirements, but for me I would like to see a higher planned return. When a property is actually identified I would run the actual numbers for the rehab. A general guideline of a certain amount per square foot might be nice for planning, but I would never use that number when I have a potential property identified. Depending on the price point of the property and the market you are in the cost for certain things can change. For example, it cost a lot more to install quartz countertop then laminate. Good luck. 

Rehann,

I agree with Jacob, I would lean on team members that know the markets you're looking at well. Going to the area is a great step, but you will still need members on your team that live and work in your target market. I prefer to invest locally to where I live as it eliminates a lot of potential challenges and I know the market well. Good luck. 

Todd,

  I would agree with the others this is a question for your Real Estate Attorney, CPA, and if you have one asset protection attorney. You have these and other team members on your team for exactly these types of questions. I will echo that make sure you need or want to partner on a deal before you move forward. I have seen people in the past partner on deals when they really could have completed the project on their own and made more money. Having said that, I completely understand the value of having others to help build your business. Especially, if this other couple are people you know well and like. If you go the partner route just ensure there are clear expectations and you all agree on the exit plan options.

Jacob,

 From my perspective I would use a letter. To be honest I do not send out a lot of letters and do not mass send things out so maybe I'm the wrong person to listen to. Occasionally, I see a property that I'm interested in and I will send the owner of record a personal letter introducing myself and what I do and express my interest in their property. I have had some decent luck by doing so. 

If I was going to start mailing out more I think I would create individual letters to each person and would never use a "mailer template". Most templates I have seen over the years appear to be just that and do not express personal interest in the property. I know personal letters would take more time and cost more money, but I would rather send out less of higher quality then more at lower quality.

Having said all of that I would recommend that you tell everyone you interact with that you are a real estate investor and tell them what kind of properties you buy. I have had more success in finding off market properties from people who know me than any other method. The more your name gets out the easier it will get. I also pay a 1,000 finders fee for any unlisted property that someone tells me about that I buy. After you pay out a few of those checks you will have a group of people looking for houses for you that you only have to pay when they are successful. Of course mine is just one opinion so we will see what the rest of the group thinks. Good luck. 

I am with Jacob on this one I would need to know the numbers to make a decision. From my perspective, with the information I have, I would keep renting it like Matthew said. Someone would have a hard time convincing me that paying to tear it down and build something new would make sense. From my perspective I would collect rent as long as I can and when that doesn't make sense anymore I would sooner sell it then pay to tear it down. 

Even if you have to sell it at a discounted price because of the condition you will still get something. You can always find another piece of property to build another building. Especially if you think you would have to pay for another well. You never know what that will cost until they do it. 

Duane,

I personally do not like to finance an entire deal, for that matter I like to have a very low debt ratio. I know you can buy properties faster by leveraging money from others, but I think it increases the risk. I know others will likely beat me up over the way I do things, but for me if you have experience buying and rehabbing properties then I would do that to generate the money you need to do bigger deals. 

Maybe you fix and flip a couple to generate the cash you need or cash out refinance from the properties you hold. I would still encourage you to keep your debt level low even when using a cash out refinance. I know a lot of people have been successful using a lot of debt to build their portfolio it's just not the way I do things. Everyone has to decide their own path. Good luck. 

Eric,

You have been given solid advice already, but I thought I would add my input. First I would say to start building your team. Find a good qualified realtor that knows the area well that is willing to not only work with you, but teach some of the business from their perspective. I would also definitely join a local real estate club as was suggested. You can learn a lot from fellow investors in your market, but make sure you listen to those that are actually investing in real estate not just talking about investing in real estate. You will also need a good real estate attorney that can advise you on deals, a good CPA that knows the details about investment real estate, insurance agent, and contractors who can provide you bids on work that needs to be done on the properties you look at. 

There are other members you will want on your team, but those will get you started. You need to do your research to see what is selling in your target market, for how much, with what features. Also research what properties are renting for in your market. Whenever I buy a property I always have at least two exit plans.

I know that was wordy when I could have simply said, I have never seen a market where a fix and flip would not work. I think if you buy a property for the right amount, make the right repairs, and sell it for the right price it will work. Obviously, some areas are better then others, but its a numbers game.

Determine how much the remodel will cost to include holding cost and get a good estimate of what the property will sell for and then figure if that leaves you enough profit to make it worth your effort. Make sure you leave a buffer in your budget because sometimes unexpected expenses come up. Good luck. 

Timmy,

I agree with Bruce. I would find out what you will be required to do to meet the current standards and then figure the numbers. Sometimes a property is a great prospect by layout to add space or do a certain renovation, but when you run the numbers the project just doesn't make financial sense. Unless it is a property you intend to live at and are not looking for a return, then base your decision on what the numbers tell you. Don't forget to include the holding cost for how long it will take to complete the project. Good luck. 

Ashley,

  Congratulations on the new position I hope you love it. You can get deals from realtors, but from my experience not enough to stay in business. If the realtors you are speaking with know of any off market deals that fit what you are looking for they probably already have multiple investors they can refer them to. Over time you can develop a relationship with a realtor which might up your position in the pecking order. 

What has worked for me over the years is to tell everyone I interact with that I buy houses and what type of house I'm looking for. Everyone knows somebody and I get the best results by people I already interact with. I also pay a 1,000 finders fee for any unlisted property that someone tells me about that I buy. After you pay out a few thousand dollars you will have a crew of people working to find you deals that you only have to pay if they are successful. 

I also make sure I make my desire to buy properties known to those working in the city offices, utility companies, code enforcement officers, police officers, and others who are in positions to hear about potential properties. I'm not sure what type of property you're looking for, but I focus on distressed properties which are usually easy for me to see. I've stopped at houses and started conversations with neighbors of houses that are in disrepair and have bought more than a couple by doing so. 

I would also join whatever local real estate investors club is in your area. It's a good place to meet other investors and you may find out about potential properties there as well. 

From my perspective I find the best deals by my personal interaction with others. Get involved in whatever organizations interest you in your target market and let people know what you do. Don't just focus on talking to people that might have a house for sale right now, but instead tell everyone that you interact with what you are looking for so when they come across a property that matches your criteria they will think of you. I wish you luck, and don't hesitate to reach out if I can be of any assistance.