All Forum Posts by: Van Blackman

Hi @MarieChele Porter!!

Great discussion topic! It's funny how people on the outside looking in are quick to dismiss real estate investing. You never know how they derived to that opinion, but I have a feeling that your friend probably has never purchased an investment home before. Those who actually are inside the game and have seen success will be quick to defend it!

REI is one of the best tools out there for anyone to create wealth for themselves. People who study personal wealth creation know that there are a few steps involved:

1. No matter what your income, pay yourself first

2. Live beneath your means, and save money for future investments

3. Use that saved money to purchase investments and make your money work for you

4. Repeat

That is a very brief, "in a nutshell" list of the process, but that is a summary of how to create wealth for a lot of people. The investments you purchase could be anything, but real estate is always a good solution. You can create more capital for yourself by flipping homes, and/or you can start purchasing rental properties to receive passive income. That's what it's all about! How can anyone argue with making an extra $1500 per month in their sleep?! I bought my friend who was skeptical about REI a Monopoly board game for his last birthday. I think he got the idea!

Good topic! And good luck to you!

@Account Closed,

Thank you for your reply! Unfortunately their business model relies solely on the acquisition of SFR real estate. That being said, I'll be sure to keep you and your team in mind in the event one of his partners are looking for multifamily. From time to time his partners ask about those.

Thanks again,

Van

Hello BP!

I work for a very large, national SFR buyer who's just moved to Chicago, IL to pursue up to 20+ deals per month. Are there any areas you would recommend getting started in? Where is there a lot of potential? What areas are newly up-and-coming? What are the most desirable areas for the end-buyer after our rehab is complete?

Thank you in advance.

@Adrian Reyes,

Hello sir! Believe it or not, this happens to a lot of newbie investors, so don't get discouraged!

First thing you want to do is get a handful more contractors out to the property to see if you can get that rehab estimate down. Contractors give you numbers a lot of the time based on how "full" they currently are. How many other deals are they working? 20? Or none? Obviously the person who isn't working on too many other projects right now will be more competitive to get your business because they want the job. You will be surprised to see how far apart your bids from different contractors will be. Be sure not to tell these guys your budget, or the fact that you have other contractors coming in near $100k. You want their true number.

Second, if you can find someone to do the work cheaper, go for it! You didn't reference any funding-shortage issues in your original post. Do you have enough capital to do this rehab yourself? My point is - no investor has a perfect resume. You're going to win some, and you're going to lose some. It's a part of the game! The key is to win more than you lose. 

It sounds like you're confident in the value. I would attempt to do the work if you can find a contractor willing to help you out for a decent price, unless you find another buyer to wholesale it to. Worst case scenario you do the deal yourself, make $10k, and gain A LOT of real life investing experience that you can use on your next deals. And if that fails, lease the property!

Again, I'm not 100% sure your financial situation, but obviously, if you have the capital, your options vary.

Good luck to you! 

@Account Closed! And good luck to you!

Best,

Van

Awesome job @Rodney Marcantel!

I love seeing other investors' success stories.

It's a great time to be in a great business. Great job!

Hi @Brandon Vannier!

Great question!

You should absolutely consider investing out of state, as there are so many markets located within the US with great deals for you to make money in. The key is, you really need to understand the market in which you are buying before you jump into a large purchase!

We are currently buying SFR's in 13 (soon to be 14) locations nationwide. Every time we open another market, it usually takes several weeks of actual ground work before we can actually get our first deal done. There are too many variables to consider, and every market is different.

Do you regularly visit a specific city outside of San Diego where there are potentially lucrative deals? Does it have to be out of state? What about another market close to San Diego but still in California, like for instance, Los Angeles or Anaheim? Pick a market that is easy to get to. You should really dive into it 100%. Don't take a real estate agent's word about everything. You really need to be doing a lot of work and due diligence to determine that any deal is the right deal for you. It's more difficult to do that if you're not fully entrenched in the marketplace.

Have you tried looking a little further north from SD?

Good luck to you!

Thanks,

Van

@Alejandro Flores, 

How you doing, sir?! Nice to see another fellow Houstonian doing his thing!

My organization is currently purchasing on average 25-30 distressed SFR's every month in Houston, all over the city. Ranging anywhere from Woodlands all the way down to Galveston. Let me tell you, I totally believe you when you say that it's hard to get a deal accepted at 70%, because those deals are VERY challenging to find in our market.

The reason that it is difficult is because there is SOOO much competition in Houston!! Everyone wants to be an investor, and if they're not, then they want to be a wholesaler! How many bandit signs do you see at every street light you stop at? I literally have to offer on 20 houses just to purchase 1 for my organization. That's a 5% conversion rate! Don't get discouraged if you lose out on A LOT of deals. Trust me, I get rejected all day long, that's the game. 

The 70% Rule is a rule of thumb that many investors use in other markets. It could be considered the worldwide standard that is preached in every RE investing book you've read, and it even may have been true in Houston many years ago, but is not the case today. If you want to have a shot at the wholesale game, I would run my numbers closer to 75%-78% just to even be considered as an option by most sellers. But, you're going to have to build your buyers list with investors that can actually buy those from you. At the end of the day, a wholesaler is only as good as his list of buyers.

The best of the best deals will not be found on the local MLS. You really need to dig. Speak with every neighbor, put a sticker or door-hanger on every distressed house, talk to everyone at the gas station when you're filling up your tank, send letters, throw signs.... the list is endless! But it's doable, I know.

And if you ever do come across the mythical 70% deal in or around Houston, please be sure to give ME a call! LOL. You would have people lining up at the door for that over here.

Hope this helps my friend! 

Good luck to you.

-Van

Hi @Sheldon Alex!

We're currently purchasing roughly 20-30 distressed SFR's in the Houston area right now, and I've certainly used Craigslist to facilitate the growth of our portfolio. Here are few answers that may help you get started:

• Always run comps and determine the value for a property you're inquiring about before you call the owner. You'll want to be able to speak intelligently about the property/subdivision with him or her. In my 2 years experience of purchasing homes, a lot of the times you'll be required to educate the people that you're negotiating with. You'll also want to let them know exactly why your offer is at whatever particular number you need it at. I'm not always the highest offer when mine gets accepted over another one. People will want to do business with you because you know what you're doing, they trust that you will actually close, and the like you. It's all about rapport!
• Any ad that says the property "needs TLC", is an "estate sale", mentions "fixer upper", or "handyman special" is a great place to start. But be careful, you'll need to revert to the previous bullet point and comp every potential deal you come across because, trust me, 90% of them will NOT be a deal.
• Ask the owner or agent about the condition of the house. Ask if there's any known mechanical or structural issues that they are aware of (such as roof, foundation, or HVAC). Ask why the seller is looking to sell (this is key!!). Ask if there is any room for negotiation. Truth is, there are quite a few questions you need to be asking, but a lot of it you will learn with experience.

Hopefully those answers will at least get you started! Other than that, I would recommend looking through other sources to find deals, as Craigslist may or may not be the number source in your market. Try mass marketing via letters, door hangers, door knocking, stickers, MLS, real estate agents and probate attorneys, the list is endless!

Hope this helps, and good luck!

-Van

@Denny R.,

Great question! Of course, it will be much easier if you have a support system in place for your investing endeavors, but it is not 100% necessary.

In my couple years experience, I've learned that the two major obstacles you'll most likely come across are: locating the deal for you, and finding a reliable contractor you can trust.

In terms of locating a deal, I would offer on everything under the sun. I think I'm at about a 7% conversion rate from offers vs. actual purchases. You need to be out there knocking on doors, talking to neighbors, sending letters and offering on all of your local MLS deals. You really don't need a realtor for this because a lot of them aren't 100% familiar with the investing game.

When it comes to finding a reliable source to perform your repairs, that will all be from word of mouth. Find other investors in your market who are actually doing deals and see if they would refer you to anyone they've used in the past. Always ask for references from these prospective contractors, and always have them show you photos or take you to a current project of theirs. I have a rule that we always follow: you need at least 3 contractor bids minimum for each deal you're looking to undertake. That will ensure that you're getting the lowest price, and expose you to multiple contractors at once. Don't always go with the lowest bid, though! Sometimes the higher bid's contractor is the real deal, and you can rest assured that your money, time, and deal are in good hands!

Hope that helps...

Good luck!