This is what he emailed me:
I don't know your current financial situation. So I think it's up to you, if you flip first or buy and hold first. If you have enough funds, you could 2 at a time. Flip one and hold one. Just don't spread yourself too thin financially! It would probably be best if we talked on the phone about it. Keep in mind too, that I can get you into a buy and hold property, with outstanding cash flow, for under $50,000. So I don't know if that helps you decide what to do. The flips would be higher priced. We would want to flip in a city where the property will move quickly.
As far as rehab costs, I rely on my contractor to calculate all of that. I'm fairly good at estimating the cost, but he always comes in to give me a "final" cost. He's not the cheapest guy on the block, but you get what you pay for. He's very honest, works hard and gets the jobs done right and on time. It actually took me 3 years to find a good contractor that didn't "screw" me or do lousy work! I would bet you could walk into a house and give an approximate cost. But that's what I have Rick for. He's the pro.
As far as the split on a flip, the 50% is paid on the back end, after the house sells. It wouldn't be fair or ethical, to ask for it upfront. If you think about it, by me getting paid on the back end, I have skin in the game too. I want to be able to put as much money in my pocket as I can, as well as yours, so that's also my incentive to find a good house to flip.
As far as a buy & hold property, you actually make out better financially than on a flip. We'll still put you through the entire training program, as if you're flipping a house. But we make our money through the sale of the property to you. So if the house sells to you for say, $70,000, I'd would most likely take a commission of no more than $5,000 at the closing table. The price you pay for the house, would already have my fee built in. I can't take much more than $5k, otherwise the house won't cash flow very well! There is also a $1500 fee to "micro manage" the rehab. I like to be there to make sure things are going smoothly. The benefit of having Rick (the owner of the rehab company), as my contractor, is that I can trust him. But I still want to know everything that goes on and make sure the work is done correctly. I don't want your tenant complaining that things are breaking down! But Rick has certified inspectors check everything out, to make sure the "equipment" will last, or he'll replace it.
So we can go either way. It just depends upon your financial situation and what your goals are. I can help you with that, if you'd like someone to make a suggestion on how to do this. Having specific goals are important.
I also have a "quiz" that I'd like you to take. It's not real long, but it allows us to assess where you're at in the real estate business. It also helps us develop a specific training program that will help get you into the business a lot quicker than on your own. That's the whole purpose of the program. We want you to learn as much as possible and as quickly as possible. For example, if you already know how to calculate ARV ( after repair value), we'll still discuss it, but we won't spend a lot of time on it. If you're not sure how to negotiate a deal or how to find one, we'll spend a lot of time in that area. This way, you become well versed in that particular area. So let me now where you'd like to go from here. We do need to talk about your finances and make sure you're comfortable with what you spend. So give me a call when you have time to talk. It's usually best if you text me about 30 minutes before you're ready to call and then I'll try to make sure I'm available and I'll text you back.
I hope I answered your questions and I look forward to working together!
Thanks,
Scott I asked him over the phone why would he split the profit when he can collect the whole 100% besides the fact that he cares about "giving back"? He explained that he has partners working with him, therefore he has some free time. Also, he offers to answer the questions newbies have about REI. So, he gets overwhelmed and doesn't get paid. So, that's another reason he came up with program so he can get rewarded/ paid for the effort. I know it's up to me what I'll decide to do, but from all the googling, interviewing him, and no money upfront, he sounds legit to me. I just wasn't sure if his fees are fair. We will meet with him face to face and he will show me some rehabbed properties he did and familiarize me with his progrom even more. Basically it's hard to find the mentor willing to help (if there is one out there). So guess we have to start somewhere. I'll keep you posted. Thanks to All!
