All Forum Posts by: Walt Payne

@Account Closed 

Interest rates at 20%, you borrow 80% on $1,000,000 property. What do you do with the $800,000 to overcome the cost of $13,368.15 per month on that money. That is a realistic example that has already happened. Not to mention loan origination fees, and the cost of it sitting while you look for the super deal that will save you.

Oh, right, you use the $800,000 as a down payment on 4 more properties that can lose more money at 20% interest.

Leverage can be a good thing, when used wisely. Leverage is not ALWAYS profitable.

@Bob Bowling feels that even if you borrow money stupidly, you will get rich if you invest that borrowed money smartly? Interesting concept. It could work out that way, I guess. 

But my question is this ... if you would lose money borrowing on a property that makes less than the cost of money, wouldn't the assumption be that that was the best deal around at the time, or you would not have bought? So why would one borrow at an  interest rate higher than the return on that property, on the hope of a better deal being available? Not making sense to me either, Bob.

Electrical fires are not unusual in old sections of any city. There are reasons why electrical codes have evolved to where they are. Electrocution is unusual, but happens, fires are not frequent but often enough to justify doing it right. What number of deaths is an acceptable number? How well would your conscience deal with knowing you could have prevented a death, especially of a child?

BTW I understand electric. I have a degree in electronics engineering. I don't fear it, I respect the power, and danger involved when things are not done right.

@Aaron McGinnis  is right. Just because you were allowed to do something doesn't mean it is the best or suggested way. Even if it is legal in some places, it is not a good practice.

Many municipalities will force you to meet current electrical code when you get permits to do work on existing. Why? For exactly the reasons Aaron stated. Also, @Doug W.  are you aware that some of the newer tools, appliances and electronics will not work without a ground? Think the buyer will say sweet things about you when that happens?  

Another issue not mentioned by anyone. 1950 electrical specifications will leave way too few outlets, and way too many outlets per circuit. Not only dangerous in itself but requiring things like power splitters and extension cords in unsafe ways. And if you are updating enough to put an adequate number of outlets, why not do the job right? Like anything else, this is a part of pricing the job out from the beginning. Know what is needed before you buy.

They are integral to each other. However the importance of each in a process varies based on the experience and knowledge of the process by the person performing the action(s), along with the complexity of the process. 

They both matter, but the importance of each varies by circumstances.

If I am told to paint a wall using color x, I don't need a lot of planning. If I were asked to build a new house, I better have some pretty elaborate planning. But if I told my son to paint a wall, I would make sure certain steps are understood.

She is a PARENT with three kids. Regardless of gender. And she is not selling as part of a business, this is a situation thrust on her suddenly. Be real, people have a right to a life and not be harassed. Their priorities don't have to be yours!

 In that case a SECOND call explaining the deadline might have been in order if you didn't mention it the first time. But never more than that. Once you said that, any additional calls would be unwelcome and harassing. 

@Jason Farmer  

I think one of the problems is that there are no good resources about how to wholesale properly. This site has good resources for buy and hold in the free e-books. Flippers have a great resource in J. Scott's book, and his many responses here. But wholesalers have no such resources.  And to be honest there are a lot of bad wholesalers out there. And like you, the good ones made lots of bad mistakes getting where they are, so that even they were really bad at some point. 

To compound the problem, too many people use wholesaling as a springboard, with little or no knowledge, little or no money, no experience and unfortunately a lack of resources to learn from. And that is part of why the failure rate is so high.

It would be great to see some of the more experienced wholesalers put together a guide on essential knowledge for wholesalers. Or, in reality it would probably have to be several guides to do the job right.  Maybe a starting point would be a good list of resources for wholesaling as a sticky so it can be found easily.

I will say that something most wholesalers could use as a valuable resource is J. Scott's book. Knowing how to estimate the costs of repair is a shortcoming of many of the new wholesalers, and that is a great resource.

@Andres Goldstucker  I worked for a rehabber and kept in contact for quite a while after I left his employment, and I saw that flipping can work in any economy. To succeed you need to know your market, what neighborhoods or even markets will work, and what price ranges are selling. People still need a place to live. Our society has been very mobile for a lot of years, so they will need new places to move into as they change cities, change jobs, retire, etc. Besides that, you have to know what a real deal is, and buy it at a great price. And yes, that becomes tricky in a sliding or crashing market.

Also, in an unstable market it helps if you can flip in the price range that allows an exit strategy of hold and rent so you don't lose big on a crash.

So yes, flippers can make money in any economy. Is it easy? No. Is it risky? Yes. But flipping involves risk in the best of times. Experience and knowledge will help mitigate those risks, but they always exist.