Questions for HR on finding houses (long) - Posted by SteveA (FL)

Posted by scott on May 10, 2000 at 13:14:47:

thanks for your post what is the best way to get started with no money and bad credit

Questions for HR on finding houses (long) - Posted by SteveA (FL)

Posted by SteveA (FL) on May 05, 2000 at 10:05:01:

I need some of your words of wisdom…

Here’s where I am; Started reading up on CRE in Nov. w/CS course. That whet my appetite for more. Ended up deciding I wanted to do wholesale/retail flips for now and got hooked on Ron LeGrand (who popped his head into our monthyly REIA meeting last night, by the way). So to date, I have read/listened to CS (twice), Ron LeGrands book and tapes (twice), bought Scott Brittons rehab course (dissappointing), and heard Robyn Thompson speak 3 times, including a 2 day boot camp our club held.

My problem is that it seems the focus of this material is 60% selling after rehab, 30% reahab, but only 10% on HOW to find properties. I am having little luck in getting a deal. Now I’ve only made 2 offers to date, but I’ve only found 2 worth offering (I’ve found some others, but can’t get any response from the listed owner).

I live in NE Florida above Jacksonville in a county of about 30,000. I’m on a barrier island (resort) with a population of about 19,000) that is HUGE resort rental area and also has a historic district and an “exclusive” community, too, so the full range of property is here. Appreciation is at 15% or higher. I’ve run an ad in our weekly newspaper (no calls), worked with a good Realtor, and driven around a lot and sent about 75 postcards. I was trying to stay on island, but I think there are a lot of deals “out in the county” but I’m not used to dealing with these lower income areas and they make me nervous.

Am I missing something? I have a full-time JOB, so this is part time for me for now. On limited time, what’s the BEST ways to get the word out? Am I targeting the wrong houses? I’m looking at upper-lower income and lower-middle, somewhere in the $90K to $130K ARV range.

Thanks. I sincerely enjoy reading all of your posts.

Re: Questions for HR on finding houses (long) - Posted by Rob FL

Posted by Rob FL on May 06, 2000 at 18:17:14:

I assume you live up in the Amelia Island area, a resort town. Been through there once.

I addition to Hal’s advice (which is excellent I might add), part of the problem you may be facing is that your market is limited. Most of your market is probably big buck vacation rentals. You may want to increase your target market area unless that is what you are interested in investing in. I, personally, will work anything within 15-20 or so miles from my home. Sometimes further depending on the deal.

When I first started investing I thought I could work a smaller market (within about 2 or 3 miles of my home), but quickly found out that there weren’t enough deals in that small an area.

Best wishes.

Re: Questions for HR on finding houses (long) - Posted by HR

Posted by HR on May 05, 2000 at 23:09:04:

Steve,

I’m pleased to be to offer some words that may help; whether or not they are wisdom… well, that’s for you to decide.

As I have mentioned before, I post here to help other newbies. I am no guru and have only been investing for almost three years. In that time, I have done a number of profitable deals (and doozy mistakes). I share from that context. What I have to say comes to you from a brother recently on the journey; not an old pro with decades of experience. Having said that, here are some thoughts…

  1. REI is a Business.
    What is your current trade now, Steve? Plumber? Stock Broker? High School Teacher? Do you think it’s possible for a newbie to suddenly decide to enter your profession and quickly and easily be good at it? I doubt it, too.

Most folks can succeed in rei. It’s really not rocket science. Succeeding as a plumber, stock broker, or teacher ain’t that hard, either. It’s all a matter of having the knowledge and skills. So, the first difficult phase is just learning the biz (the knowledge and skills). So…

  1. Learn the biz.

You’ve joined your local investment group already; a great move! You’ve read stuff here, you evidently post, you’ve bought good courses, etc. YOU ARE DOING ALL THE RIGHT THINGS. This phase may take 6-12 months to complete. Next…

  1. Figure out what interests you.

What floats your boat? Lease options? Lonnie Deals? Rehabs? Choose what excites you, and plan on becoming an expert on it. While you read up before on rei in general, now start reading everything you can on your specialty area. Network with folks that do this. Figure out how to apply the theory to your market. That brings us to #4.

  1. You must analyze your market.

This is hard in the beginning, but gets ridiculously easy after awhile. The key question you are trying to answer is: what techniques of rei make sense given the opportunities of my market?

For example, here in New Orleans, the average age of our housing is probably 60 years old. Many are 80+ years old. We are an old housing city. Given this fact, rehabs make sense here. New construction, by contrast, does not. We are landlocked by the Mississippi, the Gulf of Mexico, a huge lake to the north, and marsh to the West. There is no more land. New construction here means tearing down blighted property and beginning again. New construction guys would starve here. We also don’t have mobile home parks in the city, my chosen area. If this interested me (and it doesn’t), I would be in deep Kimshe*.

Not all markets are equal. There are 1.5 million people that live in the surrounding area. We got plenty of competition and plenty of houses to fight over. Smaller markets present different challenges, I suspect. The point is: you MUST analyze your market to see what opportunities make sense (which means you should know a little about each major area of rei). Next – hopefully – what your market offers and what you want to do match. If they don’t, 1) assume you are wrong and reanalyze your market in greater detail; 2) move if you have to. Seriously. Doug Ottersberg from New Mexico was living in California I believe(?) at the time, wanted to do a mobile home park, searched his area, decided the deals were not possible for him there, so he moved to another state where it was possible to make it happen. (he’s the author of the mobile home parks as communities articles; a good guy).

That market of yours sounds highly specialized. I grew up in New England, not far from martha’s vineyard, and your area sounds similar to the vineyard. Good luck finding a rehab deal on the vineyard! It ain’t gonna happen; it’s not what the market offers. That market is great for seasonal rentals, and that may be the only thing that makes sense in your market.

If you don’t have the resources (ie. mega cash) to play off those opportunities, you need to find another market that offers what you like. I would starve in Martha’s vineyard waiting for a rehab. Futher up the shore in Massachusettes are some old fishing towns hit by hard times. One could get some great deals there. You get my point…

After you analyze your interests and your market, you need to analyze your life, especially your time and relationship committments. REI eats up time like nothing else, and it’s as powerful an addiction as any around (and you just think I’m kidding!!!). If you do have a fulltime job, with little free time – or only free time on weekends, or mornings, or Wednesdays from 8-8:15 am, etc. – then you need to figure out how you can work your developing rei biz (with the technique that interests you) into the opportunities of your market. THE DIFFICULTY (and sometimes it feels like an impossibility) OF THIS KILLS MOST NEWBIES FROM THE STARTING GATE. Most newbies seem to choose rei strategies that interest them but don’t harmonize well with their time and relationship committments or their market opportunities. All three must harmonize for the biz to have even a shot at getting off the ground (let alone being profitable!)

For example, rehabs are tough to do part-time, especially if you are managing a crew. Too many opportunities for abuse. Buying one rental property a year, though, with the goal of owning 15 all free and clear in 15 years, is not hard. Managing one rental property is easy; it’s a great part-time endeavor. So…

  1. Figure out your time and relationship commitments and create a plan to harmonize them with your rei interests and the opportunities of your market.

Wow; it’s taken me a long time to answer your post, hasn’t it, Steve? LOL. I wanted to share a context for answering the question though, because my advice may not work well for you. This process of thinking thru the questions and answers will lead you to an eventual answer and game plan, though.

In my limited experience, one way we have found our deals is by having access to the MLS from home. Doesn’t that make sense? I don’t trust realtors to give me accurate numbers (they are sales folks, after all). I want the control over that. So, my wife got her re license, and now we can cruise the MLS whenever we want.

I’m not saying the MLS holds the best or only deals. It does contain some deals, though – expireds, reos, etc. – and those are the one’s I have gone after and bought. You may want to do the same; I highly recommend it.

I also treat realtors with respect and curteosy; they appreciate that. Some tell me about deals, and I put money in their pocket. They dig that. Look to create win/win transactions, and folks will bring deals to you when they trust that you can take the deals down and put money in their pockets too in the process. I dig that.

Some folks do a lot of marketing. I’ve done none; just haven’t needed to. Clearly, the best thing I’ve done is 1) learned to make offers; 2) I make lots of offers; 3) I make low offers (with rational explanations about where I got the number from). You definately need to be making more offers. 10 a week becomes easy when you got access to the MLS from home.

Anyway, Steve, hope this helps. I think too many folks get drugged into the hype of rei without creating enough of a base of business or rei knowledge and skills. Without this, your efforts are doomed to fail, and even the most fervent will eventually give up.

The guys I know well, in my local market, who are the most successful are the tortoises of the race. They are not the smartest investors in town. Nor were they the richest when they started. Nor were they the best educated. They were just the most persistent. They certainly were not the most desperate (I love the "I just quit my job posts; notice how none of them ever post again. Hmmmm, I wonder if that means something…) They just figured out a way to do rei (usually by trial and error thru the years) using techniques that interested them, according to the context of their life, given the opportunities and limits of their market. And they just hung on thru all the brutal mistakes and market fluctuations. And now, the guys I know, they are so set, they never have to work again.

The desperate don’t get there; only the persistent do.

Anyway, these are just my 2 cents. I hope others share their ideas, too. Good luck!

HR

Re: Questions for HR on finding houses (long) - Posted by scott

Posted by scott on May 09, 2000 at 15:52:15:

how do you get mls form your home thanks

Many thanks - Posted by SteveA (FL)

Posted by SteveA (FL) on May 07, 2000 at 14:08:16:

Yes Rob, you are correct. I am in the Amelia Island area. There are bookoodles of rentals here, but there are two paper mills here so it still is partly a blue-collar town with lower priced housing, too.

HR- Thanks a ton for all the good advice. I am a Project Leader (comptuer programming) with a Fortune 500 Company in Jacksonville. While I do have a FT job, I don’t work long hours or weekends, so I have that time to devote to family and REI. Time hasn’t been an issue yet. I get to spend about 5-10 hours a week on REI.

I still think I’m going to target rehabs for now, but…still keep my eye open for any good deals that might come up on vacation rentals. One problem is the City is trying to pass an ordinance limiting short-term rentals. I haven’t kept up on the details, but I have read a little about it.

I started looking at a pre-foreclosure last week with anticipation of renting it but I talked myself out of it since I had established goals of doing rehabs. Turned out they wanted more than it was appraised for anyway.

By the way, my folks are from N.O. and one of my brothers lives in Mandeville. We used to go to N.O. twice a year when I was growing up. My Dad still own’s part of the house he grew up in on Bellecastle St. Brings back some memories. I have a lot of relatives in that town. As a matter of fact, I just finished off last night the loaf of French bread they brought me back a few weeks ago!

Thanks again for all the help. I’ll post when I get some activity. In the meantime, eat some mudbugs for me! (I hear they’re scarce this year?)

SA

Re: Questions for HR on finding houses (long) - Posted by HR

Posted by HR on May 09, 2000 at 22:44:39:

My wife is a realtor. The MLS can be downloaded into one’s computer from the mainframe. It’s easy. Only realtor’s can get the proprietary software, though. If you (or your spouse) is not a realtor, no go.

HR

Re: Questions for HR on finding houses (long) - Posted by Becky

Posted by Becky on May 10, 2000 at 17:20:49:

Sometimes if you have a good relationship with a realtor they will let you see the MLS.