All Forum Posts by: Steve Edwards

1. How do I ensure a contractor doesnt go over budget or time? It seems like this is a recurring gag and is almost considered unavoidable amongst some homeowners. If I want to flip, this is the last thing I want. This would be a nightmare since it would cut into both costs and profits. How do I protect myself from this? 

2. Ive decided to jump in and do a flip. I wanna be smart, but the more I read the more I realize there is to read. And I will continue, but I dont wanna keep sitting around not acting. But I also cant afford to lose money. So I was originally thinking about wholesaling to start but after listening to some podcasts it seems like that is really difficult to do since it involves much precision (one of the casts recommended it for the experts). Ive been looking at Handy Man specials. Here is what I have figured the right approach is. Please correct where I am wrong or overlooking something.

1. Check roof, termites, mold, heating system... Overestimate all costs. Underestimate sales price. See if the difference yields a profit,

2. Get under contract at agreed price

3. Get hard money lenders willing to lend me the money (perhaps this is #2? Not sure how long that process takes.)

4. Meet with contractors, get quotes and choose the best suited (do I need a permit in all states to do work? If so, where do I get one, how long does it take? I'm unsure if you need a permit for all work, or just building of a new structure, i.e. I dont need one to improve a garage, but I do need one to add on to one or to rebuild one in its place).

5. Finalize deal

6. Have the work done.

7. Towards the end, start advertising for sale on the market 

Thanks!

My area is too expensive to get started in. City and suburbs both. The rural areas don't have much rental or sales action going on. This is my biggest hurdle. I just don't know where to look and thats why I havent gotten started. My area puts me at a disadvantage. For people who buy outside their immediate area, how do you find deals? Where do you look and what do you look for?  

Is there a way to get a mentor to work with me through finding my first deal, (ie help me find a property, not make mistakes and be able to answer questions) so I really learn first hand how to do it (for all aspects, from flipping, to rental properties to wholesaling)? I think this would be the best way to learn- I don't mean classes taught by successful investors, I mean involved guidance. Is this a service that exists? Kinda like interning or shadowing, ideally to help really get the hang of it without making a ton of costly errors. Cuz this is definitely a game where a sight oversight (whoops, termites) could be devastating and its intimidating. 

Thanks!

Thank you both tons for the response.

Troy, I have 3 quick follow up questions, if you wouldn't mind: 

1. In the examples you offer, Im unclear as to why my ARV would be so low. For example, if Im purchasing for 80k, rehabbing for another 80k, and the ARV is 240, then, even assuming I sold it under market value, wouldn't it be more than 24k? Ideally it would be 80k ROI, but even half of that would yield more than 24, Same for the example with the 40k purchase, 40k rehab and ARV of 120k which would leave a 40k net in value. Or do you mean 10% using it as a rental prop? I know this is my lack of understanding, so I'm trying to understand better.

2. Wouldn't termites show up when you have the property assessed before purchase? I have read that termites are one of the worst issues to deal with, so how do I avoid buying such a property? Do I need specific pest control checks beforehand? I would imagine professionals assessing a property would be trained in identifying termites given the impact an infestation has on value. 

3. When you mention using comps as a guide, and following improvements on similar properties like a map (ie if others took out the kitchen wall on a similar property, I do the same etc), is there an online site or database where I can get such info? I cant afford purchasing in my neighborhood so I wouldn't be privy to casual neighborhood discussions wherever I buy.

Again, thanks a ton!!

I want to find my first property to flip. since Im new, I want it to be a cheaper property so I minimize the risk and learn in the process.

1. I have been looking at hud homes and comparing the sales histories. Sometimes a see a sale that will drastically increase in price (ie 50k,2005--- 55k, 2007--- 125k, 2009--- 50k, 2011...) and other times there will be a progression (50k, 2007-- 60k, 2009---73k, 2011-- 110k, 2012--- 125k,2013--- 60k, 2014--- 40k, 2015). I don't know how to interpret this. What does this usually mean? Why the drastic changes? Should I be concerned?

2. What do you think about very cheap homes that are typically either in the ghetto (15-20k)? I imagine its not worth it, but just wanted others' thoughts.

3. There are homes that are in safe neighborhoods (green areas on Trulia) yet seem to either have a history of being sold underpriced or have a frequent selling history, often at a loss. How do I interpret this?

4. This will be my first property. I cannot buy in my city cuz its too expensive (NYC, so Im venturing into foreign territory). A lot of stories start off with "well I knew someone...". But since I dont have any experience with home repair and I dont know how to study a foreign market aside from looking through the Trulias and Zillows online, how else can I make sure I dont get something for a loss?  

5. Is there a way to get a HUD home assessed before putting in a bid? HUD used to have as is values but i dont see that anymore.

Thanks a ton for any questions you can help with!

How do I determine whether I will find a buyer in a market? It seems like rural markets are cheaper to start off in, but there isn't always much flow in population. Cities are too expensive for me to get involved in. So Im trying to figure out a good area to canvas. Is there a place where I can see recent sales in an area? And a place to see what percentage rent and what the average rent is?

FHA loans require 3-5% down if that helps. Most banks, as far as I know, won't entertain someone who doesn't have about 20% to throw in. Thats not to say its an rule, per se. But certainly a standard.

I am new to this, but i have a hypothetical id like opinions on. It is feasible to use hard money to fully finance a cheap rental property (maybe 50k), then take a full mortgage out on that prop (50k) to use as the foundation for paying back the lender (lets say putting 35k aside and six months of savings or rent to pay back the lender on time) while using a portion to put as a downpayment (lets say 15k) for a similar property.

What are the considerations one should reflect upon in a case like this? I know its probably preferrable to use savings as a down payment but lets assume someone didnt want wait a few years to put away 30k or whatever. 

And in a case like this, perhaps flipping would be best but i feel like that requires precision as far as market and contracting is concerned.

Thoughts and advice would be much appreciated!

Thanks!

Thanks to you both. I've never considered the wholesaler approach. I will start listening to the podcasts! I really want to get started this year. Preferably by summer. I'm afraid of flipping because if I fix up a property and cant sell it, then whatever profit I'd have made gets eaten up in mortgage. But I def want to get involved in this full time so I can leave my job. So I'm happy to be here, and thank you again for the advice! I'll trust in the podcasts.

Hello everyone. Im looking to get into real estate investment this year and wanted others advice. 

1. Which would be the better start, flipping or rental prop? I dont have handyman experience.

2. Ive read that, due to debt ratios, that its difficult to purchase many investment props cuz banks get nervous. Any way around that?

3. Any best places to buy rentals you guys would suggest? Im in the New England area and the big cities are far too expensive for me to start with.

4. Any books on tips or tricks you guys would recommend? I believe real estate investment is awesome and wish i learned of it sooner. But i know there are lots of advantages not everyone knows about, like first time homebuyer programs, fha loans etc that allow less money down etc. Stuff that maybe isnt common known or generally understood.

Thanks a ton for any help!