All Forum Posts by: Van Blackman

@Jordan Lanum

Good question, sir!

I agree with @John Warren definitely don't use a "by-square-foot" number, and definitely do your best to actually learn rehab costs locally.

Here's an actionable suggestion: Next time you contract a house, invite all your buyers to see if they're interested in purchasing. Feel free to invite some contractors as well to give you a quote. I would suggest 3-4 contractors. There's plenty of them out there who do not charge for a quote.

Next, ask your investors and your contractors to see their line-item bids.

In other words, what is each budgeting for in x,y, and z on the rehab?

This is the funny part. You'll learn that people's rehab estimates are just as subjective as people's opinions of value. But normally, they all equal a similar amount after it's totaled.

If you do that on every deal you acquire, you'll learn a lot more, a lot faster.

Simply meet with people who are experts at rehabs, spend time with them, and eventually, their skill set will rub off on you.

Hope that helps!

@Corey Miller

I would highly recommend some of the south suburbs of Chicago as rental areas due to the low cost of entry, reasonable tax numbers, and high rental rates.

My company has closed on buy & hold properties in Lansing, Homewood, Country Club Hills, Midlothian, and Hickory Hills, just to name a few.

We were able to get into all of them for under $100,000 (most under $50,000 actually), and they all garner anywhere from $1300-$2,000 in rent per month, per unit.

Not sure about renting in the actual city of Chicago, even though I know a lot of investors who are successful with that. I agree with @Ibn Abney in that there's still a very large population and demand for housing here and in the surrounding suburbs.

@Jason Malabute

Sorry, sir. I'm a little disconnected with that market at the moment.

I've been buying in Chicago for the last year!

PM me if you're interested and I can redirect you to someone local who can help you in HOU.

Thank you sir!

Best,

Van

@Brandon S.

Good morning, sir!

When I left Houston a year ago, we were buying roughly 40 homes per month in that market. Many of these SFH properties were buy and hold. I can assure you, there are areas where you can buy low, add value, and rent out close to the 1% rule or higher, AND get a 10% cash on cash return.

Look into areas like Katy, TX. It's a great little suburb just west of Houston. We were buying homes there close to 100k, they needed 20-30k, were worth close to 150k, and rented for 1500 p/month or more all day long. Very desirable area.

Also look into Sugar Land, Missouri City, and even as far down as Pearland, Friendswood, etc.

Hope this helps!

@Bryce Sablotny

Good morning, sir! Hope you're well.

It say's the total cost of the project (price + closing costs + repairs) is $237,500 and your after rehab value is $220,000.

I definitely wouldn't recommend starting off with negative equity in your project.

You'll want to buy homes in the 105-115k range (or lower of course) for a deal like this one, if you can.

If it needs that kind of work, the deals you're looking for are out there. You may need to search a little harder for a little longer, but they're "find-able". We're buying homes all over Chicagoland right now. Trust me, they're there!

I'm not sure this is the best deal for you, or anyone, sir.

Just my two cents.

Hope this helps!!

@Connie Presley

Hello!!

Good stuff up there.

With me, especially because I've only accrued about 12 months experience in Chicago where we are buying right now, anytime I cannot identify true, apple-to-apples comparables, I might just pass on the deal altogether.

Especially in Chicago where you have several types of homes (bungalows, ranches, cape cods, georgians, etc.), you really cannot comp one with the other unless it's the same style.

Here are some general tips when comping homes:

Never cross any major highways, and try not to cross any major streets if you can. If you have to, draw a 0.5 mile radius from the subject property and go back no more than 6 months. If you're crossing major roads, though, you'll need to make sure that your comps are all zoned to the same elementary, middle, and high schools as yours. If they don't match, you'll need to do research to make sure yours is zoned to the better of the few. If not, don't use!!

Regarding size, personally, I only like to use a 300 SF sliding scale. Any more might be too much, but that could be a personal preference.

If your house is a 3/2 one-story ranch with no basement, than ALL your comps should be a 3/2 one-story ranches with no basement.

Regarding age of home, I really like to stay under 9-10 years at most if possible. 

In summary:

Don't try to fit a square peg into a round hole. If there aren't any TRUE comps in the area that you're looking to buy in, and you're not 100% familiar with the area, maybe it would be wise NOT TO BUY that property! Unless you know the neighborhood VERY well, I would stick to the guidelines above. Of course, everyone has their own individualistic way of comping, but I would consider the above tips reasonably safe.

Hope this helps!!

Hello @Ryan P. Kotschedoff,

Interesting question!

Nobody has a crystal ball, but I highly doubt there will be technology sufficient enough in the next 20-50 years to replace a real estate specialist completely. Of course, technology has been created, and will continue to be created, that will make home buyers' quest for property easier if they choose to go-it-alone, but the fact is, the technology that we have today provides insight that is far too generic to be considered "valuable" in my opinion.

It all comes down to 2 things for me:

1. Specific market & industry knowledge 

2. RELATIONSHIPS

There are too many variables to discuss in length here, but a website or application cannot know the ins and outs of every neighborhood like a real estate agent who's been beating the streets for 20 years can. 

Simultaneously, there's a reason why "rapport" is mentioned in every sales and negotiation book there is out there. People like to do business with people they "like" because it establishes a RELATIONSHIP. And, people want to do REPEAT business with people where there's an existing established relationship because of familiarity, trust, and comfortability. Good old fashioned face-to-face business will never go away. I actually find that the more technology-based business gets, my chances of success increases!! Who writes and sends personal hand-written thank you cards anymore when you can email, text, or message clients on any social media platform? NOT MANY! However, it goes a LONG way, believe me. And that's why we do it.

So, my personal suggestion for you, sir? Go with your passion, and don't worry about the profession going obsolete because it won't. If you like residential real estate, chase that dream, and become a person of value so that no website ever created could hold a candle to you!

Hope this helps!

Hi @Marvin Hernandez!

Good question!

Locating a new reliable contact in any business can be difficult to do, even if you're a seasoned professional. When it comes to the world of real estate, it is especially true because there's typically a large sum of money at stake, and you'll need to be careful with whom you select to do business with. There are plenty of reliable contractors out there. You'll just have to find them.

What you'll need to do is:

Treat finding a GC just like you would treat finding deals, finding available capital, and determining exit strategies for your projects. In other words, you need to meet with wholesalers/brokers, hard money and private lenders, AND contractors simultaneously to ensure your success. If you're meeting with 10 sourcing contacts and 10 funding contacts per week, you'll need to strive to meet 10 contractors per week as well. This seems to be ONE of the many things that newbies do not do enough: they underestimate the power of a SOLID contractor. Don't make the mistake of thinking the ENTIRE battle is won with locating the deal and securing financing. Even with a stellar deal and low financing rates, the wrong contractor can destroy profits (and vice versa). 

Here's what you need to look for:

Make sure to ask every GC you meet if they are licensed, insured, and bonded. If so, get their information. If not, move on. Ask for references of other investors they've done business with. Always get at least three minimum. Call their investor(s) and have a candid conversation on the GC's work and business practices. Tour some properties that the GC has completed work on, or is currently in the process of rehabbing at the moment. How's the quality of their work? How is their pricing? How is the rehab payment structured? It's a lot of work, but it's totally necessary if you're looking for a quality GC. 

Hope this helps!!

@Assaf Kehati

Hello sir!!

Great question. In my humble opinion, I always believe that the time to buy real estate is NOW.... so long as you have the capital, basic knowledge, and contacts/resources to do so. If you wait for the "perfect" market conditions, you'll be waiting forever.

Are you looking to buy and hold? Or fix and flip?

If you're looking to build a rental portfolio, I don't think there's ever a bad time to start. The sooner you start, the sooner you can get your mortgages paid off and collect more of your rent.

Either way, remember: 

Timing isn't AS IMPORTANT as LOCATION. Location is KING in real estate.

If you can get a good property in a GREAT area, no matter if you're looking to buy and hold, or fix and flip, you should be in good shape no matter what the market is doing.

Hope this helps!

@Traci Cameron

Great question! 

It is competitive right now in most major markets. Though I'm sure there are plenty of people out there willing to partner up, you'll still be at a competitive disadvantage if you don't have a lot of deals under your belt. 

Have you done any deals yet? If so, you can create a report full of case studies so your potential partners can see what kind of returns you've made for yourself historically. If they are high enough, I'm positive you can find someone that will help with capital. If you don't have much experience, however, this may prove to be a challenge for you.

Here are a couple things you can do to be competitive in case finding a financial partner is not feasible:

1. Source your own deals - eliminate the competition by being the ONLY person offering on the house. If you're relying too heavily on your local MLS for deals, it's going to be VERY difficult in a lot of markets to buy correctly because you will be competing with seasoned cash investors that are able to cut costs.

Relying on brokers is not the best bet either, as most of them are retail-focused that don't understand the economics of the investor game. 

You'll need to: drive for dollars, take note of every home that looks abandoned, or distressed, send them letters, knock on doors, become an ANIMAL on social media, get your name out there anyway possible, etc. Let everyone know what you do, and what you're looking for. 

After a few months, the off-market leads should start pouring in. I'm not going to lie, it's a GRIND. But one day, you'll wake up, and you'll no longer have to log onto the MLS to deal-hunt because you'll have a steady stream of incoming leads in your inbox already.

2. Get your Real Estate license - just do it. It will give you a little more credibility in the marketplace, and you'll have access to all the broker's info on the MLS that you can contact who DO specialize in the types of homes you're looking to purchase. Once you have their info, call them up, arrange a meeting and discuss how you can help one another. I get great off-market leads from brokers all the time because I've taught them what to look for and I've asked them to CALL ME FIRST, before it's listed ;)

In summary: source your own leads. It's going to take time, but it's probably the only way to stay competitive in a super saturated market if you don't have liquid capital and a successful track record.

Don't give up, though! Every time I enter a neighborhood I think to myself: "There are five off-market, unknown deals here!!" The fun part is finding them!

Hope this helps!