Am I Ready Or Am I Missing Something?
Hello everyone,
I believe that I am finally ready to begin investing now. I have narrowed my (So-Called)tactics down to Lease optons/Land Contracts and Prehabs. I have read anything I could get my hands on, on these subjects(probably read these at least 3 times!) The excitement is there. The motivation is there. I should have a site up and running by the first week in February. This will be my Virtual Storefront/Showcase/Office. I have been in the process of locating Motivated Sellers and Buyers that are unable to aquire homes through banks. I have been also trying to locate investors that I can quickly flip properties to taht need rehab. Once the website is up I will set up another land phone line for my new venture. Once I have the phone set up I will begin my advertising(i.e Bandit signs/biz cards/flyers/ ect) with that # to get sellers/buyers/investors to call me.
The problems are there are no REIC`s in my immediate area, but I think that solution is this Board because everyone is so helpful with questions. The other problem is I would have liked to have my good friend(with good credit) to become partners with me even though I know he is lazy and skeptical. I think its because of the fear of going at this alone as to why I think I need him.With or without him I will push forward.
In short(too late I know) my question is, have I missed anything that I need to do in order to get this ball rolling?Please let me know your comments would be greatly appreciated. Best Regards, Tom
null
Hi Tom,
Why not do your first lease/option with me? I already am the motivated buyer, I have the house that you could buy and lease/option to me. I have the money, I have the bad credit, I have the proof of income.You would get your lease/option money up front and you would make a few more bucks on the sale in a couple of years. This is my house that I lost due to divorce, so you know that I would take good care of it and be ready to purchase it in two to five years. Please consider it. Of course, I am in Illinois and you are in New York, but maybe you could be my long distance investor and I could be your Illinois scout for other bargains that may be of interest to you.
First let me say that if your friend is lazy then it may be best to not consider him as a partner. Business is the best way to destroy a friendship. If you are serious about Rehabs,etc., then I suggest you do it alone and stay in control.
Now to answer your question, "if you missed anything." I am in the same boat as you and soon will be ready to start myself. I narrowed it down to Rehab only. So I'll focus on answering your question with Rehab in mind even though you mentioned Lease options/Land Contracts also.
So, here we go...Do you have a "team" of people ready to call to do the rehab work? You don't want to get too involved doing the work yourself as your time is better spent finding the next property. So you want to hire people to do the work. Make sure you have a list of people to hire such as a painter, handyman, electrician, plumber, etc. I'm even including someone who can remove or trim trees. However, you don't want to hire a landscaper. No need for that kind of expense. Put the money into the house. The outside should just be cleaned up and look neat.
You also want more than one source for funds. In order to not miss out on a good opportunity (if one comes along while already working on another), I plan to have a few sources on hand.
Try doing a Google search for "Rehab loans" or for "Rehab Hard Money".
I'm still in the process of putting this "team" together before I start. Over a period of time, you will find various people who work well together (since you will probably have them all work at the same time to get the rehab done quick).
Good luck with your first endeavor.
Glenn
Yes, you are missing two or three things.
The main one is ACTION. No more delays start now. Your plan is sound. This is the same advice I'd give Glenn.
I would not start out with rehabs. There's more there than meets the novice's eye. Some of your subcontractors will recognize your inexperience and give you a financial lesson you don't need at the start of your career.
Lastly, your friend with the money,see if he want's to get a better return on his money than he's getting from the bank. His money would be secured by the real estate. This is only a business transacton. He doesn't participate. No partnership!!!
My first partner was a very good friend and just as lazy as yours. So that we both didn't go down in financial ruin, I had to do all the work and then split the profit with him 50/50. After that venture there were no more partners, but I still retain his friendship. Partners (especially lazy ones) are just too expensive.
Thanks Glen for your comments and suggestions. I appreciate any help that I can get. To answer your question, I do have a team of rehabbers ready to go but my interest is in prehabs. Meaning lining up members of these teams that want property;they tell me what they could afford, and i quickly jump out perferebly with a 5-10k profit. I feel more deals could be done thus creating a win/win/win situation. The seller wins,I win 5k-10k, the buyer( my rehabbers) win by getting a home to do with what they wish.
The Market is a little different up here than Long Island. Found a four family for 15k in an estate sale.Pretty nice. Lots of room to play at those prices.
As for my partner I was thinking 40% for me, 40% for him, and 20% for limited investor partnerships.You`re right, I don`t need a lazy partner, i just need to believe I can do it on my own.
Best Regards,
Tom
Thanks Sammy for the reply, My question to you would be if not rehabs(Prehabs in my case) what would you suggest?
Best Regards,
Tom
When I first started I ran solo, just bought junky houses, moved in, fixed them up. moved out sold them and did it over and over again.
Suddenly, I stopped, my bruised thumb healed up. I could hold a girls hand without her thinking it was the hoof of a goat and I stopped getting splinters, oh god that used to bother me. I was now ready for my next big step up the mountain. I would now buy houses in Beverly Hills, have them fixed up by all the little friends I had met while swinging a hammer all night. But alas, while I had money I did not have that kind of money. I needed more.
A friend of mine was loaded with money, something about gold going from $55 an oz to $800. He had sold everything he owned including I think the services of his best girl friend and he invested it in gold and took the ride all the way to the top. I think he got off at $720. Impressive.
Well of course I had read Clauswitz. Who said that the best staff officer in the world was the lazyest and the smartest.. Why? Because they will always find the shortest easy way to do anything.
So we became partners and bought a Spanish Monster just south of Sunset blvd and went to work.
Clauswitz was right, this guy was smart, he could figure more ways to get out of work then anybody I ever met.
He lasted the one house. Took his money and profit and split, he also took off with my girlfriend and my dog. The girlfriend I could understand, but the dog?
Go by yourself. There will be moments when you will hate yourself, but wot the hell nobody is perfect. Learn to live with yourself . Install the mirrows last. and enjoy.
Cheers Lucius
Tom, I agree with Sammy and Lucius that you should not have a partner.
Even though I am just starting out with Rehab, I have had an unrelated business for over 20 years and the one thing I've learned that's most important is to be careful when it comes to partnering. Too many things can go wrong. You want to remain in control. As Sammy says, ask your friend if he'd rather just have a great return on his money secured by Real Estate. Don't be afraid to pay a large rate on the loan because it's only for several months (if all goes well). And you won't have to consult him or her on things while doing the work (which can slow your progress).
Glenn
Hi Tom,
my one concern would be with your plan to get a quick 5k-10k and then get out. With a slim profit it's super critical that you accurately estimate the cost and time of repairs. If you're off by 3k or a month that's pretty much going to kill your profit.
Best of luck to ya!
Ryan J. Schnabel
Thanks everyone for being so supportive. I will take everyones advice about going solo on this venture.Also, I received a few emails about homes with 60-80% left on their original www.mortgages.Considering a wrap around mortgage for these homes. I have never done such a deal but the tactic seems to be able to get me in quickly and with very little down. Any other Suggestions?
Best Regards To All,
Tom
As a beginner you may want to start by assigning your contracts to other investors for a quick profit. My point is that why risk not being able to sell a house and eating up all your profit in carrying cost. By flipping your contracts if you did 2 houses per month and averaged $5,000.00 each = $10,000.00 per month. If you buy these 2 houses rehab+sale in 6 months at $30,000.00 profit each = $60,000.00 profit. Which could work out to the same profit as flipping 2 contracts per month.
I am close be beginning on my own with lease options as well. I've done rehabs, but want to move into pretty houses. I'm wondering what is the best way to get a buyers list. It would be nice to have some potential buyers before I start lease optioning.
What are your suggestions?
Jenmonkey,
I'm thinking that a good way to generate a buyers list, is to find someone willing to lease option their home, and offer to split the upfront deposit with them, in return for your handling the paperwork. Of course, they should also share in any marketing expenses. At that point you walk away and they complete the transaction, getting the spread and the backend. You have all calls generated from your marketing effort come to you, and you build your buyers list.
A buyers list?
Well, you could run an ad. "RENT TO OWN. Call xxx-xxx-xxxx." Now you got people calling. Take numbers and ask them what they're looking for & how much they have to put down. <---- Not my idea. I saw it in another post; liked it and just passed it on to you.
Thanks,
OnTheWater
i just want to throw my 2 pennies in. Rehabbing houses is not so hard if you need help rehabbing something gimme a holler i'll talk ya thru it.
[addsig]
Hi,
I sure could use some direction. I to have decided I'm interested in rehap and lease options, or would any of you like to tell me how you got your feet wet. Sure could use some pointers.
Hope to hear from any of you.....
Regards,
Carrie
No decision making partners for me anymore. My partner and I are still friends but we both know that the work performed was very much uneven. We still split the profit and it was a good learning experience but if you are self-motivated and can make good decisions, then you are already on your way to success!!!
Thanks Mike I appreciate the input.
Tom(NY)