All Forum Posts by: Jeff G.

I see your point. You're saying the secret to success is the "ooh, shiny" effect that some people get, leading them to pay a premium for the product. That's something I hadn't considered. 

I'm still going to try to find a real estate related path that works. Not "make it work" and lose my shirt. If I can't move forward, I can't move forward. I genuinely appreciate your candor, thanks.

I'll absolutely dig into non-real estate alternatives. I've thought about automating a laundromat for example.

@Nicholas L.

Yes, sure.

I lost my job (IT) a few months back and I have no idea how long I'm going to be unemployed due insanity in the job market. Economically, I can cover a decent portion of my expenses with my rental income but not all of it. I have enough saved up to start flipping AND still have enough savings to live off for a year, probably more if I'm frugal. This isn't a desperation move, I'm not drowning. I just don't want to sit here and spin my wheels in the mud and wait and wait for fate; I'd rather actively do something.

My soon to be business partner has worked for remodeling companies and knows a lot of the players in her area and nearby. She knows a decent chunk of the rehab process, but not every nook and cranny. Some of that is because she has focused on only certain kinds of renovations where with a flip it's (potentially) everything. But I think her knowledge set is mostly transferable. Crucially, she is very good at keeping a renovation on budget and has a better head for numbers than I do. Every renovation I've had in my buy and hold real estate so far has gone significantly over budget. She's going to save me a lot of aggravation.

To your point about division of labor, we are working on a detailed plan where she does nearly all of the heavy lifting and I supply the money. That said, I'm going a bit stir crazy here, so I'm voluntarily taking on some tasks for my own sanity. I am operating under the assumption that all profits will get reinvested back into the business for the first two years. I don't want to use leverage or credit until I have proven to myself we can operate without it if we have to.

To your point about inexpensive properties. You're right, we'll have to find properties that have the right things wrong with them and are close to the limits of what my budget will tolerate. I'm avoiding CT because the taxes are insanely high here. We might have the highest property tax in the nation and that's just for starters. They tax everything here.

Right now we're trying to identify a market and figure out how to get and field leads. She, having a day job, can't take random calls all day. Logistically, she can carve out time for calls with contractors and other vendors as well as do property inspections. She just can't be tied down taking every random call that comes in that might be a lead. Normally that would mean I would take incoming sales calls as I'm unemployed and have sufficient free time. Unfortunately, that's not possible: I'm partially deaf. So, we're trying to figure out how to handle leads. Most likely we'll start on the MLS.

You gave a detailed response and I'm trying to cover every point you raised, but I feel like I'm missing something in my reply but I'm not seeing it. Please speak up if I missed something.

For lead generation I'll most likely network with wholesalers who know what they're doing. I'm reaching out to brokers trying to get access to someone's pocket listings, wholesaler or not. 

I'm not opposed to paying for some direct marketing if I have to and funneling it to a real estate agent who can take the leads and give us first dibs on anything that comes through. Is that sort of setup a thing?

Thoughts?

I've been a landlord for a few years now. I feel like I've stagnated. I want to grow my net worth actively, rather than passively wait for the proverbial rising tide. Inflation always seems to out pace the rising tide. I am giving serious thought to flipping with an old high school friend of mine. I live in CT, she lives in MI. Because homes are much less expensive in the Midwest, we're most likely going to flip in MI. I'll be providing the funding ($200-$250k) and she knows a large network of contractors through personal connections and is willing to do most of the leg work.

Understanding the market for fix and flip strikes me as a much more complex beast than identifying a rental market. What tools do we need to fully analyze a market for potential flips? We are oscillating between flipping in an area that seems to be increasingly popular for vacation homes and just picking an area that seems to be gentrifying on the periphery of Metro Detroit. 

I don't want to guess. 

I want to make data driven decisions about the market. And then about a potential flip itself. As a new soon to be flipper, how do I do that? How do I get good at it? What separates the proverbial rock stars who can do it well and not fool themselves from the groupies who just think they can? 

This isn't 2008, the market is weird. I can in fact flip the wrong house lose my shirt if I'm not careful. I want to do this right from the start. Any help would be appreciated. Thanks!

@Drew Sygit, thank you for the excellent reply!

Do you have some tool for determining the median credit score for a given neighborhood? I think there is a way to do it by zip code but that's not really granular enough. Right now I use school ranking as a means of inferring neighborhood quality. It's not perfect, but it helps. I'd like more tools in my toolbox though.

Quote from @Nathan Gesner:

Unkempt lawns, trashy or broken down vehicles, mattresses and trash on empty lots, boarded up houses, bars on windows, dealers and hookers on the corners, the lack of stores or gas stations, occupied properties are dilapidated, etc.

Or when Google maps shows stuff like this:

If those are drug zombies, as they appear to be, that's an "F" class neighborhood where nobody pays rent and structure burnouts are common. If you intended me to take something else from that picture, such as an unfortunate motor vehicle accident, let me know.

I invest out of state in C-class neighborhoods in the Midwest. One of my units MAY be in an area that is going down hill, but I could absolutely be wrong. From several states away, how can I be sure? I'd hate for a temporary dip in the quality of the tenant pool to be giving my landlord "spidey sense" false alarms on account of taking an extra month or two to fill a unit. I'm happy to rent in a C-class area, even though it can take some work to stabilize a property. I don't really want to invest in a D-class area.

Tangentially, what are some of your "it's time to sell this property" red lines when it comes to the changing economic conditions of an area?

Quote from @Brendan Taylor:

Yep. Been here before with Akron code and got a complete run around. Basically, I was lied to but of course this all happened over a phone call. Cost me a few thousand. 

Get EVERYTHING in writing. Do not communicate in any form other than email.

How long did it take you to resolve things? This has been an issue for over a year. I've done my part. Akron is just dragging its feet. I'm not sure what their problem is. The issues, such as they were, have been fixed.

@Jonathan Greene, that sucks. I'm sorry you went through that. I'd be pretty irritated over the loss of 6k, 4 months of stopped work and the corresponding holding costs.

Do you invest in OH, or somewhere else?

Yeah, I get it. I can't compel competence that does not exist.

@Jonathan Greene, can you tell me one of the more notable times this happened and how it finally resolved? Did you ever have to get a lawyer involved or did it not go that far?