All Forum Posts by: Shawn Parsh

Noah,

Congratulations on your first flip. I see no issue with using your own cash to buy properties, I do the same thing quite often. If I have the cash available I see no reason to go to someone else to get it. I would echo that you hire people to work on your projects that have their own businesses not hire employees. Also make sure you work with your insurance advisor to ensure you have the right coverage. I would not own one investment property without it being within a business structure like an LLC. Get with your asset protection attorney and CPA to find out what structure makes the most sense for you and your particular situation.

A long time ago someone asked me what I could hire someone for to tear out old cabinets, carpet, drywall, and other task. They continued to ask what I could hire someone for to paint, install a vanity, install lights and so on. After giving them the cost for each they told me that every time I do one of those things I am working for that amount. This got me thinking....

I, like you it sounds, have the skill set to do many of the repairs myself. This can be a good or a bad thing. If you really enjoy doing those things than so be it keep doing them. If on the other hand you do them to save money then maybe take a closer look at your options. What I determined a long time ago is that I need to focus my attention on what matters the most for my real estate investing business and that is finding and negotiating the deals. Yes I may make less on each project by hiring out the work, but I will do a lot more deals and thus likely make more money overall. 

I do not hire general contractors that oversee my projects. I hire the specific contractors I need to do each thing I need done. I find, for me, I save a lot of money by doing it that way. My, and yours as well, knowledge of how things should be done, what they should cost, and how long they should take is very valuable. I have had a lot of contractors over the years try to blow smoke up my rear thinking I didn't know what needed to be done and how much it was really going to cost. This is where your experience doing the rehab yourself will pay off. Now that you have that knowledge you can use it to hire and oversee those that do the work. Anyway, just something to think about.

At the end of the day you are personally responsible for the success or failure of your business so you need to decide how you want to run it. There are many ways to be successful in real estate. You only need to find one that works for you to be profitable. Good luck. 

Kellie,

I had the same question not too long ago. I was looking for something that would allow me to take a picture of a receipt and categorize it in the right bucket under the right property. In the mean time I'm using Excel and may also have to look into Quick Books. 

Stanley,

I would take up the offer to attend and get involved in local real estate investing clubs. You can learn a lot from other Active investors. I would also suggest that you start to build a team of advisors that can assist you. For example, I would make sure that I had a CPA with a lot of experience working with real estate investors. Ideally, a CPA that personally invest in real estate. Ensure you fully understand the tax consequences between LTR, STR, and flipping properties. You can make money at all of them but you want to go into your real estate investing Business fully understanding the impact of each strategy.

Some of the other people I would want on my team are contractors, insurance advisors, bankers, loan officers, asset protection attorney, business structure attorney, home inspectors, a closing attorney, and title company. As you build your team you can add and remove people as you get to know their skill set and your experience and investments change. Good luck. 

Joe,

Regardless of the location the information you will need to focus on is the same. If you do not have a team I would start building one. A good real estate agent that works in your market should be able to help identify desirable neighborhoods, as well as realistic prices. If you haven't already joined the local real estate investing club I would recommend that as well. I would also continually watch the market in your target area to get a better feel for what is selling, what features are important, and how long houses are sitting on the market. 

Once you find the area/neighborhoods that are in demand I would focus my search for distressed properties there. Then its a matter of determining what repairs need to be made, what they will cost, who will do them, and how long they will take. Then you need a no BS estimate of what the properties after repair value will be.

For me after I get those numbers then I decide how much I can pay for the property to make the profit I want. Make sure you build in enough profit that WHEN things pop up that you were not planning for you still have enough wiggle room to still make a decent amount of money. Good luck. 

Patricia,

  Do you have a team in place in Baltimore that can help advise you? For example, do you have a quality real estate agent that knows that market well? I'm in TN so I do not know that market at all, but from my perspective I would want to know what areas are in demand. Is there a demand for housing in the area? Are there more buyers than houses available in the neighborhoods you're considering? I would also want to know if there is a demand for rentals in the area, what the vacancy rate is and average rental cost. 

As a general rule I like to buy the worst house in an area and make it one of the best. If you rehab a house in one of the neighborhoods you're considering will it be surrounded by other abandoned distressed properties or are these abandoned properties located in decent neighborhoods that people will want to live? 

I would work with/or establish a team that knows that market well so that I could make a good business decision. What will it cost to buy the property, how much will it cost to rehab (to include how long it will take), and what will it realistically sell for?  Anyway, those are my initial thoughts. 

Jim,

You need to get with a qualified CPA to go over the tax rules, hopefully, someone on BP will chime in as well. Do you have experience investing out of state? Do you currently have rentals? I am not a big fan of investing out of state, but I know a lot of people here on BP seem to pull it off with no issue. Once you go next week you should have a better idea of what someone would need to do to update and rehab the property. 

For your trip next week I would try to meet with a few well recommended and qualified real estate agents to get their estimates on the homes current as is value. Don't think that you will not be able to sell it based on its current condition. I buy houses in bad shape all the time as do many here on BP. It is possible that you would clear more money if you rehabbed the property and then listed it, however, that is not a guarantee. Do you have friends/family in that area that could oversee any work you had done? Do you know trustworthy contractors that could complete the required work?

Depending on your skill set and time would you be able to go and knock out what is needed in a couple weeks? I'm not sure if you have a day job, but it may be worth taking some vacation time to make some improvements on the property to increase its value before you sell. If what you can do raises the value by several thousand it may be worth the trip. 

Austin

Are you still in the military, what branch do or did you serve? I would join the local real estate club. Where are you living now, do you own or rent? Not knowing your details you may want to look at a lease option on a cosmetically distressed property. Then live in it while you rehab it to raise the value.

Thomas,

I see this thread is dated, but I just wanted to echo Stuart's thoughts that every "budgetary item" is different. I have never nor will ever use a price per square foot calculation to determine rehab cost. I decide what needs to be done and then figure the costs to do so per category. I have done enough properties over the last twenty plus years that I can get pretty close on cost estimates before I even talk to my team. 

For people newer to the rehab process I always suggest getting written bids from the contractors you are going to use for each step in the process. Then total them up and add ten percent or so for a little wiggle room. When I'm in doubt of a potential cost I get the written bid before I even make an offer or while I'm still in my inspection period. That way if something big pops up I can renegotiate or back out. 

Another thing to watch out for is to make sure you have built in a large enough profit margin. If you are only planning on clearing 10,000 or 20,000 on a deal a large portion of that profit can be eaten up by unforeseen expenses. If you negotiate deals that have a 50,000 or more profit margin you have more room for surprises. 

Andrew,

I appreciate the input. I was thinking the same thing that I could try STR and if for some reason I don't like it or the money doesn't look good I could switch to a LTR. I have no need to have an additional place for family and friends to use. I live in the same area and have plenty of room at my place. Thanks again for your thoughts.

Sarah,

Thanks for the input. Almost all of the properties I buy I rehab so they are all in great shape. They all would cash flow as long term rentals I was just considering STR as a way to make more. Thanks again.