All Forum Posts by: Seth Hochberg

I have found that most people won't share their general contractor on a public forum, but they are willing to share once you develop a repertoire with them. Contractors might not be the most important part of your team, but they are usually the hardest part to find quality. Network with people in your area of interest (can be virtual!) and then ask around. 

You should be looking for a contractor that works primarily with investors. Investors don't need the fancy outfits, with a fancy website, that caters to primary-home-owners. Investors need someone who can work within a budget. There are three criteria: affordability, speed, and cost. You can choose two. 

But the most important thing (in my opinion) is if you can trust the contractor. It's tricky to work with someone new, as you want to foster trust, but you need to balance that with not being gullible and paying too much upfront. I find it best to network and find reputable names. When contractors have a good reputation, that's worth a lot to them, and it's much more likely they want to keep that good reputation (and not run off with your money and an unfinished job).

Betanya, welcome to BiggerPockets! What type of investing are you looking to do in Baltimore? 

Sent you a message with what I've been looking into. Hope it helps!

Right on Andrew. Welcome to BP. I also have a strong desire to give back in some way, particularly in Baltimore, where I spent my formative years. I think it's great you talk about this, especially since giving back doesn't seem to get talked about too much on BP.  Someone once advised me to think of what they say on an airplane, "Put your oxygen mask on before assisting others". Figure out your strategy and get some momentum, and then that'll put you in a stronger position to give back even more. 

Questions: Does the 10M belong to you? Does it belong to you father? Are you going into business with your father? 

There are many ways to tap into that equity, and there are many ways to generate cash flow. Off the top of my head, you can use a HELOC or a cash-out refinance to turn that equity into a loan. And once you have liquid capital, there are all sorts of ways to invest it. If you're excited about renovations, then consider a BRRRR which, if done well would allow you to recycle money to own several cash flowing properties. If you want something easier, with that type of capital, looking into turnkey multi-family homes is probably a solid bet. You would just buy however many MF's that cashflow with 20% down each. Strong cash flow, and you have what deters most people from that route (capital!).

You buy -> you renovate -> you refinance it -> You rent it out -> your tenant pays you rent -> that rent should more than cover your mortgage payments. If done right, you get all your money back and you have someone else paying your mortgage. That's the beauty of real estate.

The consensus seems to be that the market is very seller-friendly these days (with fierce competition to buy houses). But that alone doesn't seem to be a good excuse to wait. As long as you can run your numbers effectively, you should be able to determine the highest you can offer on any house. So you just keep offering that amount on every house (unless you know you don't have competition, because you found the property off-market, for instance). But the analysis is the exact same. What changed is that you'll likely get rejected for way more offers, and will take a longer time to find one, but that's better than just waiting around. 

The maxim goes, "Time IN the market always beats timing the market".

I would expect half that price from an investor-friendly contractor.

Unfortunately, reputable, quality contractors are hard to come by and likely won't be found on any public forum like this one. Your best bet is to network and reach out to many new investors in the area and ask for referrals. 

Also, quality contractors have lots of business, so you probably don't want to waste their time getting a bid before you're under contract on a property. Being able to accurately estimate the rehab cost is a huge skill that takes time and can be learned. Obviously, I'd recommend "The Book on Estimating Rehab Costs" by J Scott. I'd also recommend getting an agent that BRRRs themselves so they can help you estimate the rehab cost. Once you've estimated it yourself, you can use that number to decide how much to offer. Only after going under contract on a property, would it be best to reach out to a contractor. That way you don't burn any bridges by wasting the contractors time. I'm assuming you've read David Greene's BRRRR book, where he recommends getting multiple bids. That makes sense in theory, but there is not an unlimited supply of quality contractors.

Take this with a grain of salt, as I'm relatively new to real estate investing, but just my $0.02.

In some cities, you can get away with an all-in cost of under 50k, but the issue is that will almost always put you in the worst parts of the city. The second issue, is that the lower price point means your competition is way higher since that lower price point is accessible to more people. I think it's worth it to use a hard money loan to get in a higher "bracket", so you're not stuck in the cheapest/worst parts of a city. With the <50k homes, the numbers may work out great, but you're more likely to get a non-paying tenant. That would be the worst way to start your real estate journey.

For Baltimore, checkout the Facebook group Maryland Real Estate Investors Group as well as the Baltimore-specific version for contractor recommendations.  Actually, this advice probably applies to any market you're in.