All Forum Posts by: Shiloh Lundahl

@Yoni Ramras What are the ways you are finding properties?  Because my time to find properties is very limited do to traveling back and forth from Gilbert, Arizona, to Burbank, California, and having a full therapy practice, I have to rely on others to help me find properties.  I partnered up with a good buddy of mine who is a realtor @Jason Moss who has experience with real estate investing. We find properties through 3 main sources 1) wholesalers, 2) Realtor.com/Zillow.com/MLS, 3) leads from partner's marketing. I am on 5 or 6 wholesaler lists and I have gotten to know the wholesalers through talking with them on the phone and buying properties from them. When we get a list sent out I will give it a quick look over to see if any of the properties fall within our buying criteria and whichever ones do, I then send them over to my partner who will comp out the properties and will make the offers. I also spend the first 30 minutes of the day looking at realtor.com and zillow.com to see what the new properties that hit the market and then I send him the listings that I think looked like there is some spread and he makes offers that make sense with our numbers on the properties that make sense. He also finds deals through some leads he pays for.

Once we get a property under contract and our contractor has given us his bid (usually within 3-4 days to stay within the inspection period), we then contact one of our hard money lenders who will usually fund 80-100% depending on the purchase price (one of our hard money lenders will lend up to 100% on the lower end deals because of our relationship we have with him that has been built over time).  When we close on the property my partner puts his commission back in the deal to help fund the rehab, closing costs, holding costs, etc.  This is his contribution to the partnership.  I will put up the money for the rehab or find the money from an investor.  Then, after the property is rehabbed and sold, we split the profits 50/50.  

Creating a system makes it so that making offers everyday is fairly easy.  I spend about 1-2 hours a day either looking at listings, looking through emails from wholesalers, and talking with my realtor partner, contractors, or office assistant by phone.

I hope this post is more helpful than it is long.  Good luck to you and as Rocky says in Rocky 6 "when life knocks you down, you got to get up and keep moving forward." He said something like like... its been awhile.

I agree with @Carlos Rovira. Have you tried going directly to the seller's realtor. I found a property in Apache Junction, Arizona, that was an REO and I contacted the seller's agent directly and told him that I wanted the house and asked him how much I needed to offer on the house. The house was listed at 124k and it needed a lot of work. He said that if I was at 138k that I would probably get the house. I did my numbers off the 138k price and it still worked so I offered that on the house. That house turned out to be my second highest profit on a flip for 2016.

By the way, I get how frustrating it can be to make 15 offers and not get any properties under contract. I went through that a lot last year.  This year though I have changed my strategy.  Rather than getting frustrated, this year I am playing the numbers game by making more offers to get more deals.  We make about 2 offers a day (10 or so a week) and we have been getting a lot more accepted.  Once they are accepted, my business partner or I will take one of our contractors out to the property so see how much work it needs.  If I needs more than we thought and more than the numbers can bear, then we either lower our offer or we cancel the contract.  So far this year we have probably made 40-50 offers, bought 2 buy and holds and we are going to close on a flip next week, and we have cancelled 5 or 6 contracts.  Still most of our offers get rejected because we make offers where we can make 20k (10k for my wife and I and 10k for my partner) on a flip, or cash flow at least $100 per property after we get it financed with a local bank and partner with an investor to get the majority of our cash out.

I'm not sure how the Phoenix, Arizona market compares to Miami, Florida, but there is a lot of competition out here as well.  So I encourage you to not get discouraged but instead to play the numbers game.

Welcome to BP and to Arizona.  Arizona is a great state with great people and lots of opportunities.  I have been investing in Arizona since 2010 but more actively since the end of 2014.  

I have been trying to find multifamily units in Arizona for a while but I have had a hard time finding many where the cashflow covers all of the costs.  Has anyone else found multiunit properties in Maricopa County that have good cash flow in the last few years?  If so, in what city and how did you find them?

This is a great question.  Personally, I think the answer lies in the game of Monopoly.  There is a very simple formula to winning the game of Monopoly that helps someone win almost every time.  As you go around the board you buy properties you land on.  You use these properties to trade in order to acquire the light blue properties and the orange properties.  Then you build on the light blue properties because they are cheep to build houses on and you put hotels on them as soon as possible.  You use the cash flow from those properties to build on the orange properties.  Once you have hotels on the orange properties you will usually win the game.  Acquiring the railroads are also great for cash flow, but usually not necessary to win the game.

In other words, buying the lower end properties (as long as they are not so undesirable like Mediterranean and Baltic Avenues that no one wants to live there) will give you knowledge and experience in managing properties and they can start creating cash flow for you right away.  Then, as you become more skilled as an investor and landlord, you will start recognizing properties that can cash flow better that may be at a higher price bracket and the transition will probably be more smooth.  

I think one important principle in investing is movement.  Waiting until you have enough money to purchase a larger priced property might become a deterrent to jumping into the investing game.  Things always come up and our interests tend to change over time and waiting may get in the way of doing.  Also, another thing to consider is that we all make mistakes in investing.  So it might be better to make some mistakes on lower-end properties where the price tags for those mistakes are usually lower rather than making mistakes on the higher end properties where the price tags for those mistakes can be a lot higher.  

Good luck to you and let us know how it goes.

 It's easy to make money when you have a good deal and you have decent knowledge of what you're doing when investing in real estate.  But I am interested in knowing what other investors have done to turn a profit after they entered into a bad deal.  in other words, how have you turned your mistakes into money?

Hi Tyler,

I had a rental out there for 5 years.  It ended up being a very profitable investment, but I bought it is 2010 when the market was really depressed out there.  When the market improved I sold it to my renters at a discount and it worked out pretty well for everyone.  Why are you looking into San Tan Valley specifically instead of Mesa, AJ, Coolidge, Florence, or Casa Grande?

I agree with what @Doug McVinua said.  I live in Gilbert, AZ and I think it is a great place to live but it is one of the only city in the East Valley that I haven't invested in because of the prices of the homes and the demand is so high that I have had a hard time finding a deal there.  There are deals to be made in the surrounding areas though.  I have picked up 3 buy and hold deals in the past month that I am going to lease with a 5-year option to buy.  After doing the numbers that seems to be my best strategy at the moment.  

If you are looking to move to Gilbert, one investment option might be getting a house with a casita (that is what they call guest houses in Arizona).  That way you can rent out the casita or even do an AirBNB or VRBO to help pay for your mortgage payment.

Even though the Arizona market is getting flooded by investors right now, there are still deals to be made, they are just harder to find and the spreads don't seem to be as wide as they used to be.  

We have a team that is still finding deals to fix and flip for profit around in the East Valley.  

What brings you out to Arizona?

I also work full time so I had to build a team of people I trust in order to do real estate. Networking with other investors can be a good place to find a good GC (on BiggerPockets or at a local REIA). Having a contract with the GC can also be good. One that includes the bid and timeline. On my team, if one of the subs didn't get something done, and it needs to be done by a certain time, my GC is at the property doing it himself. Whenever there is a change order (something that wasn't originally spelled out in the original bid) have the GC update the bid and timeline. You will want to get a GC that can walk properties when you are in the inspection period so that you can back out of the purchase contract or adjust it according to what you didn't know was wrong with the property. In the contract you can include bonuses for completion done before the deadline and reductions for each day it is not complete after the deadline. It is also good to get multiple bids until you find a couple of contractors that you like and trust.

As for finding a good realtor. This is one of the keys to my business. You don't have to work with just one realtor. You can have several that you work with. Each realtor can be an avenue to finding deals. With that being said, I partner up with my realtor and he has become one of my best friends over the past 2 years. I have reached out to several wholesalers in my area and I get 5-15 emails a day from them marketing their deals. Some deals work for me, most don't. I send the deals that look good to my realtor who will find the ARV for the property (I also spend about 20-30 minutes each morning looking on Realtor.com or Zillow.com for any new properties that have been on the market for 1 day so that I can be the first to make offers on them).

Have your realtor find the accurate ARV. If it is a flip deal, we times the ARV by .93 (this takes away the closing costs, 3% to the buyers realtor, 3% for concessions or BINSR items, and 1% to the title company - by the way, you should find a title company that gives discounts to investors). Then we subtract estimated holding costs for 6 months which can be between $1500 and 3k or 4k depending upon the property taxes, insurance, utilities, HOA, and other holding costs. Then we minus the hard money costs (origination fee, any points, and percentage rate for 6 months). Then we minus the estimated rehab costs and the purchase price and closing costs when we buy the property. This will give you the total profit. Than, rather than taking a commission, we split the deal 50/50. If that number is lower than you would like it to be than you will probably want to offer a lower amount. Once the purchase price is found, the realtor has his assistant create the offer and she sends me an email to sign it. We usually offer on 1-2 properties a day and get 1-2 properties a month. In other words, we look at about 100 "deals" plus scroll through the new listings that come up on the market, make about 20-40 offers, and get 1-2 properties a month.

Another team member you want to have a relationship with is a hard money lender who can fund your properties in a week or less.  Since time is money, the quicker you can close on a deal, the more advantage you may have over another buyer.

Because I work full time, and I travel back and forth from Arizona to California each week, I can't get to the properties and oversee them.  My realtor partner does that as he is out and about doing showings for his clients.  I also have my contractor send me pictures of the properties each week to oversee the construction.  

You may want to be more part of the renovation at first so that you gain experience.  But once you create a system that works for you, then you can dedicate most of your time in real estate on the most profitable parts for you and you can delegate the rest.  Once your business gets busy enough, hiring a part-time assistant will be the best move you make.

Hope this was more helpful than it was long-winded.

Good Luck.

Hello @Hakeem Valles.  I want to echo the welcome by other BP members and the complements on taking control of your finances as a professional athlete.  About 7 years ago or so I read an article called "How (and Why) Athletes Go Broke by Pablo S. Torre where he goes into detail about the mismanagement of money by athletes until all their money is gone.  I had the kids at the group home I worked at read this article to help them increase their financial education.  So congrats to you on starting this exciting journey.

There are many investors in Arizona who have had success with rental properties in the Phoenix Valley. Depending upon how involved you want to be in the process, whether you want to buy turn key properties (ones that are already fixed up and ready for renters), or buy fixer uppers and get involved in the whole process, or partner up with investors who coordinate the deals and then manage the properties, will help guide you in networking with the investors who can help my meet your goals.

My wife and I have mostly done flips in the East Valley for the past 2 years but now we are starting to get buy and hold properties for cash flow.  Let us know if we can be of help to you in your journey.

Good luck.

Justin,

I don't think you are conservative on your numbers.  I look at about 50 properties a day and make one or two offers a day and I pick up one or two properties a month.  I get "deals" sent to me from wholesalers.  Most aren't what I would call deals, but maybe they are for someone else.  I also look at Realtor.com and Zillow.com which just so happens to be where I found my best deals in 2016.  What I learned from my mistakes in 2015 and 2016 is to do it right by the numbers.  If it doesn't pencil out from the beginning I don't try to push it anymore.  I am in it for the long hall which will be short lived if I don't buy right according to my numbers.

What are your real estate plans for 2017.  Let me know here or in a PM.  I am also from Gilbert and we might be able to do some deals together.