All Forum Posts by: Rick Strobel

Getting close to doing my first flip. I think it would be cool to document my progress - firstly for myself and secondarily it might be useful. I'd probably mimic 123flip.com. I really like that site.

I'm not sure how it would be useful to my business though. Thinking out loud: I presume it could help if I'm marketing to find houses to buy. Potential sellers could see what I'm doing and maybe be attracted to me because of that. Maybe neighbors of crappy houses will like what I do for property values and give me leads.

But, I wonder about sharing too much information. J Scott gives all kinds of financial details. Great for us investors who want to learn. But does it help him in his market? Other investors know his profits. Sellers may not like seeing his success?

In the past I've never been one to boast about a big sale in the technology field, especially before the deal was closed and the check had cleared. Even then I like to try to stay humble and keep to myself.

But (again), I like the idea of running a simple blog with pics and videos and details about my projects. I've got what I think is a pretty catchy domain name idea too, and I just registered it to be sure :)

So, how do you all decide how to balance those thoughts?

So I went by the house today and had a look around. Nothing too earth shattering. But it got interesting after I left. I stopped by and said hi to my old neighbor.

He's the mayor of the subdivision now. Knows about rehab deals that have been done, knew the numbers, etc. Sounded pretty good. He also knows about what houses are vacant or are going vacant. Apparently he gets some kind of notices on homes that are falling behind or running into trouble. He's well aware of what's going on there. And he offered to get me information about possible deals.

So that's a pretty exciting development.

Back to the auction house: there was a couple of signs taped to the windows. One was a notice stating that the house had been re-keyed and secured, and if you needed assistance with the property of interested in purchasing it to call. The agent's name and phone number was on there. There was no sign in the yard. The house is empty.

Now, I've actually got a question: Should I call the agent directly or get my agent to call him?

Background: I have a relationship with an agent who's helped me with the purchase and sales of my personal residences. Have known her for years. She's nearing retirement. She's not super busy and helps a little with her husband's (non-real estate) business. She also doesn't specialize in investment property, more of a general retail buyer and seller's agent. In other words she's probably not the best agent for me long term as an investor. But she's the only agent I have a relationship with now.

But, she does know me well and know how I think and how to work with me. So there may be an advantage there.

I think it's bad etiquette to call a selling agent directly, begin getting information from him, then later bringing in an agent to represent yourself.

Anyway, lots of considerations there. What do you think? Should I call the selling agent directly or get my agent involved?

Steve Wilcox - I'd add to your win - win: the neighbors. You help the neighbors by improving the quality and values of the neighborhood by converting a home that was a dog and an eyesore to a beacon of quality.

I don't know where to start, so I'll try to start from the beginning. :D I've been self-employed in the technology field for about 10 years. I'm reaching middle age. My plan when I struck out on my own a decade ago was to invest in real estate by doing flips in addition to my tech consulting. Well the tech business has kept me hopping and the dream of getting into real estate dragged on.

This year I've been getting serious about getting started. My rough plan is to get my license and begin really studying the market. Thought I'd chew through all the data the MLS has to offer, really study the market, look for deals, etc.

Well, the other day I wondered when I'd start seeing deals. I've owned three different houses so far, meaning I've bought and sold two of them and purchased a 3rd. They're all in the same zipcode more or less. In all that time I've never seen the kind of deals you need to be successful in this business - but I was never really looking for them.

So today I was thinking about whether it would make sense to concentrate on my old neighborhood, where I bought my first house, as a target area. Had a chance to drive through and I noticed one house that had some kind of signs on the windows. It looked vacant. At dinner I was playing with the Zillow app on my iPhone and learned that it was being auctioned by auction.com next week!

Well, I guess I'm starting to see deals :D

I'd like to pursue this. I know there's probably about a 2% chance or less that I'll actually end up buying this property. But, I think this will be a good learning experience.

What this deal has going for it:

• I know this neighborhood. I lived there for 5 years as a homeowner. The houses are cookie-cutter so I already have a pretty good feel for how to renovate one and what it might cost.
• The property values should be pretty predictable. Again, all the houses are essentially the same. Some may have a small addition or have the one-car garage converted to living space. They're all 3BR 2BA brick ranches on decent sized lots.
• I think the price and location are excellent - so much so that I bought my first house there. Neighborhood is in the nicer area of town but one of the lower price points.
• Close to where I live now.

What's wrong with this deal:

• I'm not ready yet.
• Don't have financing in place. Listing says no financing, cash only.
• Not confident that a good price can be paid given the likely public knowledge of the sale.

The first two downsides can be overcome. Sometimes opportunity doesn't always sit around waiting for you to be ready. I've been studying this business on and off for 10+ years, so maybe I'm more ready than I think. Regarding financing: I know a lot of people from my existing business, many of them may have the means to invest. I'm confident that either through them or other sources I could come up with the money needed. As they say, if you find the deal the money will find you.

Anyway, I'd like to pursue this like I'm going to try to buy it. It keeps me active and alert and re-energizes me at a time when I need it anyway. So, what the hell. This is where the real learning takes place!

Here's some info from the auction.com listing:

• All buyers who register after 5:00 AM PDT (the Saturday after the auction begins) will need to contact a bidder qualification representative for approval. They may be reached at 800-269-0361.
• Property is being offered as is, where is
• Buyer is responsible for all costs associated with purchase
• Buyer's Broker/Agent Commission available. Please contact agent for more information
• Buyer will receive a Special Warranty Deed
• Earnest Money Deposit to be 5% of Total Purchase Price or $2,500, whichever is greater
• A Buyer's Premium equal to the greater of 5% of the Winning Bid Amount or $2,500 will be added to all Winning Bid Amounts to determine the Total Purchase Price

I'll probably go by the house tomorrow and look around the outside. May also call the agent I've worked with in the past and get some comps and advice.

Probably the most important tidbit:

"Financing Information: Not Available. Cash Purchase Only."

I suppose that means I'm going to need to bring someone in on the deal who can write a check for the full amount?

Way too early to talk numbers, but I'd guess that if that house were in excellent condition it'd bring about $130,000. The house last sold in 2005 for $113,000. Borrower is in default as of 2012 for $125,000. I guess the chances of them accepting $75,000 is pretty remote. But they won't accept it if you don't offer it.

OK, thanks for reading this far :D I'd love to open up the discussion. Any and all comments welcome. Thanks!

I drive a 2001 Honda Accord EX-L with 182,000 miles. Paid $16,000 for it in 2003. It runs great but has a few little visual flaws here and there. Thinking about upgrading later in the year or early next year.

I've had it for 10 years and really just want something a little newer and nicer. My last car was a 1989 Accord LXi hatchback. Bought that new and drove it for 14 years until I got the current car.

Don't plan on spending a ton, probably get a 2008 or 2009 Accord or other sedan again.

Also, plan to buy it through my S Corp for better tax advantages. Started a thread about those issues here:
http://www.biggerpockets.com/forums/51-tax-legal-issues-contracts-self-directed-ira/topics/93038-one-man-s-corp-buying-a-car-questions-and-concerns

I'm self-employed and have been doing business as an S-Corp for many years. Currently drive a 12 year old car that I own personally. Thinking about buying a newer car.

I'd like to have my company buy it. That way all the payments, gas, insurance, maintenance would be a company expense. My current business is computer support - I drive around to small businesses and homes and help people with their technology. I'm also planning to start investing in real estate and flipping soon. I think what I do would qualify me for a company vehicle.

Is this a good idea?

A few thoughts and concerns.
1) Insurance. My agent says I can own the car in my S-Corp but still have it on my wife and mine's policy.
2) Title. I suppose the car would be titled to my corporation
3) Payments. I'll probably borrow money to pay for it. As a stand-alone entity my one man S-Corp probably wouldn't qualify for a loan or one with good terms. Do I get financing as the S-Corp and guarantee it personally? Do I finance it personally and just pay it from my business account?

Any other things I should know?

As a business it seems that investing in real estate is about as safe as you can get. To understand what I mean let me tell you where I'm coming from.

I work in IT and have for the last 25 years. I'm self-employed and service small business and residential clients for the past 9 years. It's a good job but it's not a business. If I'm not working I'm not making money. That's OK for now but I want to grow into other businesses that are in the cash flow quadrant.

I'm not interested in expanding my IT business as that would entail hiring other technicians and overhead. The other problem with expanding is the changing nature of technology and the market for products and services. Look at how much things have changed since the first iPhone five years ago. In the 4th quarter of 2012 there were more tablets sold than desktop computers, for example.

Real Estate, on the other hand, seems constant. There will always be demand for housing. There may be some fluctuations but not complete obsolescence like in other fields.

My plan is to begin by rehabbing and flipping properties for initial cash flow then begin buying and holding for long term passive cash flow. I've been very interested in flipping for many years but stayed on the sidelines. Now I'm in a position to slowly get started. Also, I'm looking more toward retirement down the road.

And owning real estate in retirement seems like the best bet out there. Especially when I see what happened to others in the last few years who had most of their money in stocks and bonds.

I'm less excited about buying and holding. My interest has always been in flipping. But, buying and holding, in combination with flipping, seems like a great long term wealth building strategy that is pretty immune to problems that other kinds of businesses and investments face.

Feedback?

I'm concerned it might be difficult to find a broker. In the past others have discouraged me by mentioning broker's aren't going to be interested in someone who's not going at it 110% (i.e. a part timer, investor wannabe).

My first step in getting started is getting the license and then spending lots of time on the MLS. I really want to spend some quality time there and then learning more about my market for a while before I start actually investing or flipping.

Any suggestions on how to approach brokers and what types of brokers to look for? Obviously not the big brand names like Semonin around here or ReMax, etc. Right?

I see that you're in Kentucky too. What online course did you take?