All Forum Posts by: William C.

I think you missed my point. What I was trying to say was, my guess is based on your OP, and the few follow up posts you have made, you are not the owner of the 70 STR's. It seems to me you work to a company or a person with many STR's, you know the business, and you were coming here for more information on STR arbitrage. Otherwise you'd just continue to buy properties like you did the 70 times prior..... I could be wrong. If you are the owner of those 70 properties, then you would in fact be the EXPERT as mentioned before by someone who knows what they are talking about.

With that said, I was comparing the "newbies" that come here through a google search, looking to get rich quick. The STR arbitrage, and no money no experience add no value "wholesalers" fall into the same bucket. People think you can get in to real estate will little money out of pocket, I don't think they understand when you are not investing money, than you are investing your time and knowledge. If your new, you have little knowledge. So you have time. Spend it doing. Talk to a landlord. Rent a property. Arbitrage it. You won't find the get rich quick guide here.

My guess would be she is just an employee for a larger company that owns 70 units. She completes the tasks her boss gave her and goes home at night. There is no risk. No purchasing of property. No legal. I would also guess people are clicking on some internet marketers video out there claiming they can make 1000s of dollars with no knowledge or risk. All you need to do it to be able to sign a 1 year lease!! Its way more complicated than that. As someone in the business over 10 years, I was overwhelmed by the moving parts in a STR Abitrage scheme. This isn't something you can learn overnight thanks to a $49 ebook.

The short term rental abitrage folks should get to know the no money no experience bandit sign "Wholesalers" looking to make 10k checks next week.  They are both looking for the same unicorn.

Making money in real estate take either money, or massive effort over long periods of time.  Which one are you doing?

The goal when completing a BRRRR is to recoup the cash you had to outlay to purchase and renovate the property. Yes, you will be borrowing more money, which will reduce your cash flow. But if all of your working capital is stuck in a property, how do you grow? The BRRRR allows you to get your capital out, to reinvest. If you are looking to maximize cashflow, you should just pay cash for everything. Simple, right? Not exactly. Your goal should not be to BRRRR properties because thats what all the cool kids are doing on BP, you should follow a stratey that works for you. Some people dont need to BRRRR. They just purchase everything all cash. Thats not my model. I have 0$ of my own money invested in the $1.1 million in real estate we own. It was all purchased with other peoples money, then we BRRRR, and pay them back, keep the house, equity and cash flow.

@J Scott our wheelhouse is 150-200k purchase price. 50-100k renovation. 300-400k sales price. We don't deviate. Basically we are trying to go from 4 a year to about 10. Doesn't seem all that crazy. The margins vary. Some are $100k. Some are $60k. We are moving on more of the $60k deal rather than hold out for $100k deals. Obviously actual margins vary deal to deal but we tend to end up within 2% of Reno budget and 5% of ARV.

Market would have to drop about 30% to start losing money. Also, we are in these for no more than 90 days. We have a pretty good handle on the market. If we see signs of a crash or even a shift we can adjust. Most importantly, any property we touch could always become a rental, we underwrite ever deal in the event we need to hold.

 I would do what makes YOU happy...   I know what I would do with it.  But it took me 10 years of blood sweat and tears to be able to do that.   Where are you going to bring value to the transaction?  Are you going to be the investor?  Or are you also going to bring the deal to the table?  Will you also swing the hammer?   I hate to say it, but "it depends", Im not sure where you should invest your money.

For anyone getting into real estate in any capacity, you should follow these steps though.

Step one.  Figure out where you can bring value to the transaction.

Step two. Figure out who can complete the remaining steps to the transaction.  Either hire them, or partner with them.

Step three.  Repeat adding value to new transactions daily.

Step four. Profit.

@Russell Brazil I am.  Whats up?

I agree with your statement that if you only have 20k, you should not invest in real estate.  "Investing" though, is only one peice of the puzzle.  Investing, is the act of placing your money into a property or deal.  I would be willing to bet 90% of readers, if not more on BP, are interesting in becoming real estate entrepreneurs.  We need to clarify the difference.  It is confusing to lump all real estate people into one bucket called investors.  I am as far as you can get from an investor.  Yet Iv transacted over $20 million in real estate.  I simply have never invested a single dollar of my money into any of the deals.  

The amount of money in your bank account has no bearing on whether or not you should persue a career or even a side gig in this business.  Just be self aware regarding what you will be bringing to the table.  If its not the money, thats fine, your just are not an investor, your whatever it is you want to be.

Just a quick back story I am a real estate agent/market knowledge guy teamed up with a GC/construction expert.  We make a great pair.  I handle all things " re deal" related.  He handles all things property improvement.  Up until recently, we have had limited resources in terms of financing for projects.  We could essentially do only one deal at a time.  Given this limitation, we would spend months scouring the market, walking properties, and running numbers in search of that home run that would net us $100K+, and make all this work worth our effort.  We were passing on projects everyday that would have easily netted 50-60k.  I had finally had enough.  We started to lower the bar a bit.  I can hear the gasps now.  Yes, we actually purposely started perusing deals that had softer profits than we previously required.  We are only "actively" working on a project for about 4-6 weeks out of the roughly 12-16 weeks it takes to purchase, renovate, and sell a propery.  That meant out of those 12 weeks there could be 8 we were not actively working on a property.  We needed to fill the dead weeks with work. Rather than need to make $100k on each deal, we might be willing to do a deal that would net $60k, it takes us 5 weeks to renovate, and we move onto the next one as we try to sell the newly renovated deal.  By lowering our required profit, and bringing on other investors to allow us to carry more than one property, We can now flip 3 properties in 4 months, rather than 1 property every 3 months.   We are generating 180k in profits over 3 projects, rather than 100k over 1.  Im not a math wiz, but those numbers tell me it was a good move.  What do you think?

What does the BP community think about this shift?  If finding deals is the one thing holding you back from growing, maybe you need the rethink what the definition of a deal actually is.

My partners and I are wrapping up another project and it’s time to scale our business and form the proper Corperate structure to fit our business model. We are looking to hire a CPA with experience with flipping and buy and hold single family and small multi family. We understand a good CPA will be worth their weight in gold if we are able to execute on our plan for 2020. We are facing a relatively large windfall of cash and we’d just like to be smart about how we receive it and deploy it.

The most glaring question we have right now is, how does a business owner take revenue and use it to invest in tools, office equipment, future inventory etc, most effectively. Any insight would be greatly appreciated.

I appreciate all the responses. I was afraid that would be the answer. It's just a sobering reminder why rentals are so much better than flips. We just BRRRR'd a house and created $80k in equity that a bank gave us a HELOC on. Not a taxable event. But when we sell this flip and create $100k in profit, we'll be paying Uncle Sam his unfair share. Might be the last one we do to be honest when rentals create the same amount of cash, with a bonus residual cash flow to boot.