Re: Take a Long hard look in the MIRROR - Posted by Texas DragonFly
Posted by Texas DragonFly on February 11, 2006 at 20:50:38:
PJ,
I’d love to hear how you got started, especially having been in business for 1.5 years. Are you in a large city? No Loan, no hammer, no credit? Your story I’d like to hear!
Texas Dragonfly
Re: Dear Too: - Posted by Too
Posted by Too on February 11, 2006 at 12:02:51:
Hi David,
I know you know what you’re talking about. As I said I’ve been here for over five years. I appreciate your input.
Would you give me YOUR take on rental property? Things do change. I hear turnover is a lot higher in my area than it used to be. It’s been my experience that tenants move about every 18 months. I’m not chicken little but things have changed since 911. What’s your crystal ball say for the long term holder of RE?
I can see getting into some higher end stuff WHEN funds permit. Rents here are low compared to what one can buy for so buying and selling the higher end is really the only other option. It’s a difficult market here.
I agree.
It is for me. I’m simply embarassed that I can’t make a decent living with it after that much time and effort. Had I sucked it up and bought rentals I might be somewhere (BK or making a living?). I went with the build a cash reserve theory and here I am five years later.
Thank-you!
If at first you don’t succeed… - Posted by Bill H
Posted by Bill H on February 11, 2006 at 14:48:55:
Then, perhaps skydiving is not for you.
Re: I’m in the same boat, BUT… - Posted by Too embarassed
Posted by Too embarassed on February 11, 2006 at 09:39:06:
Newbie, I appreciate your encouragement. Until you’ve done some deals though and actually been in the trenches and tried to make a living at it, it’s going to be hard for you to give any more than encouragement. KNOW your market and don’t believe everything you read.
Re: Real estate didn’t work for me - Posted by I second the idea
Posted by I second the idea on February 11, 2006 at 15:31:51:
I have heard some people are doing quite well by getting a subdeveloper to give them a discount on some new construction houses. If you can get them at a 15% discount, you should not have a hard time getting a 85% loan. For a quick 10% you could sell them at a 5% discount if the subdevelopement is doing well. I second the thought about becoming a member of a REI Club. Just the networking opportunites would be worth the membership fees. Some of these should lead to deals.
Re: . No one is making a fortune in re? huh? - Posted by EquityHunter
Posted by EquityHunter on February 16, 2006 at 06:31:36:
Obviously you didn’t make anything in ATL that’s why you moved to FL.
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Re: Sorry, Difference of Opinion… - Posted by Frank Chin
Posted by Frank Chin on February 14, 2006 at 08:25:48:
Ed:
You made some good points here. BUT
Having met you, and hear you speak at two CREOnline conventions, I find you thoroughly entertaining. Add that to good business sense, and we got someone who can do well, anywhere, in good markets or bad. The point being, not anyone can be a “Ed Garcia”.
In the last convention, I was at a session where you spoke, and you had students discuss your course, particularly about the use of the “working line of credit”. I recall one fella, short and fat, speaking with an accent, commenting afterwards that he’ll have a hard time doing deals as he even has trouble getting himself hired at a “seven 11”.
Having said that though, he said he had no choice but to do RE a he can’t get himself employed.
Having tried hands getting to the “real” deals, at least around here, in NYC, where it exists, but hard to find, it’s usually snapped up by investors, ALL CASH. These deals are exactly the type of deal that your “working line of credit” is aimed at, isnt’t it??
But, it seems that even you, and banks for that matter, would only consider “experienced” investors for these lines, a novice starting out would have a hard time competing against the experienced, for the GOOD deals.
I did run across one fella, whom I partnered with, and actually gone thru one deal. He put a team together, where he’s got RE lawyers referring deals to him, and he’s got investors with CASH to tie up the deals. But, it took him TWO or more years to get it together.
When I met him, I already owned several rentals, and in the “high inflation” era of the early 80’s, I already earned 10K/year on each property in appreciation. In addition, rents went up 50% between 1981 to 1986, so a property that just broke even in 1981 cash flowed nicely by 1986. Add that to the reduction of interst rates on 18%, to 13% in the same period, we went from nothing to nearly $1,000 per month in cash flow in a few short years, on each property.
The point here being, I would’ve missed out the whole early 80’s had I insisted on good cash flow from day one, and poohed poohed appreciation.
While I made money with rentals, this guy putting his team together made very little putting his team together. One reason being, perhaps, I noticed he’s not as dynamic as an Ed Garcia.
I also understand Crassus’ point about doing deals and being “employed”. Had a friend who inherited a little over $1,000,000 from an uncle who passed away. As he had the cash, he looked for deals where he can tie something up ALL CASH and flip.
He called me one day ranting. Had a deal where he could’ve picked up a property for a little over 50% FMV. Seller want to wrap the deal up on a Thursday. He asked for a day off, but the boss said there’s a meeting on that Thursday.
So he rescheduled for Saturday, and by then, it was sold to someone for even LESS. A little upset, he asked the seller “why”?? Seller explained he needed the money BAD on Thursday, not Saturday.
In fact, I did a deal with a seller where I was able to advance him a few thousand cash quickly, at least quicker than the next guy. Long story, but he owed the local “loan sharks” some money. He’s looking at a few deals, but if he didn’t pay by a certain date, they promise him his legs would be broken. I was able to work things out to keep him in one piece.
I got myself a good deal, and he was able to WALK to the closing.
Frank Chin
Re: Sorry, Difference of Opinion… - Posted by Crassus
Posted by Crassus on February 13, 2006 at 18:18:09:
Ed,
On average, how many hours per week does a rookie need to find deals in an average market-not too hot or cold? I’m someone who’s purchased a lot of investment RE in CA and other states the last 4 yrs but its all been, until recently, basically chasing appreciation. I’m not well-versed in the science and art of finding deals and implementing them.
I’m not asking because I’m lazy but because I work 10 to 12, sometimes 14 hrs a day and don’t know if I have the time or extra energy for this kind of investing. For me, the beauty of the last few years has been that all I had to do was buy a rental property or pre-construction and the price skyrocketed, all with minimal involvement on my part.
I realize it’s not going to be nearly as easy to find such appreciation in the near-future, so I’m exploring other strategies.
I have the reserves to hold break-even rental property and I have a sizeable amount of equity in my RE portfolio. What would be the advantage of your method of investing, which believe me I acknowledge to be the superior but also most time consuming and difficult, over the far easier way of finding a slow or just starting to improve market, buying at a minimal or break-even cash flow and just riding the appreciation trend, however small it may be?
Poseur Alert… - Posted by Nike
Posted by Nike on February 12, 2006 at 22:23:09:
C’mon–scrounge up a few more dull cliches and you’d have enough material for Part 3.
I particularly like your tip regarding not putting your eggs in one basket—pure genius.
There are no huge discounts - Posted by Sam
Posted by Sam on February 12, 2006 at 06:06:30:
It certainly easier said than done. You can’t get properties at a huge discount anymore. The influx of investors and wannabes killed that. Sellers know that there are so many sucker investors out there that they get more for the property than they ever expected. It’s pitiful really.
For example I looked at a 3BR 1BA home in a suburb last week that’s down to $114k now, was at $139 (crazy) originally. It’s been on the market over a year with no offers the agent said. Well I gave a offer of $75k and got the old song and dance about how much they needed. Heck it maximum ARV is about $129k all fixed up and it needed $30k in repair. This is typical of what you see
If I was younger I’d go to college and get an advanced degree in a field that’s prosperous and in demand and live the good life that way. In the end it’s easier than buying into all the REI hoopla and finding out that your still making blue collar income if lucky. Respond as you will but I speak the truth.
Re: Don’t worry, you’ll get a 2nd chance … - Posted by Robert Campbell
Posted by Robert Campbell on February 11, 2006 at 23:38:28:
Too much work. I like strategic contrary investing - like Warren Buffett advocates - as opposed to grinding it out on the street everyday.
If that’s what you like doing - go ahead. I like the buy low, ride the trend until it ends, and sell (or exchange) high.
Keep in mind its easier to “buy properties at huge discounts” at the bottom of the market cycle.
For some reason, I doubt I will convince you of sensibility of this approach - but I thought I would respond to you.
Best wishes,
Robert Campbell
Parking in the driveway because the garage is full - Posted by Bill H
Posted by Bill H on February 11, 2006 at 20:41:58:
Hi John:
Good post. I also know another guy that the last time I saw or talked with him he was 45 years old and still in college…a professional student…had degrees in just about all categories and still going to school…probably never will get a job or amount to a hill of beans …but…he will be well educated.
“Nothing in the world can take place of persistence.
Talent will not; nothing is more common than unsuccessful men with talent.
Genius will not; unrewarded genius is almost a proverb.
Education will not; the world is full of educated derelicts.
Persistence and determination alone are omnipotent.” Calvin Coolidge
Good luck,
Bill H
Re: The ultimate hammer guys - Posted by John Behle
Posted by John Behle on February 11, 2006 at 18:37:19:
It is the ultimate monopoly. The average real estate agent does know more than the average seller and they have a very effective marketing network with the MLS, etc.
But, all day long they do horrible injustices to their clients because they have only one solution for every problem. When down times come though, only those who have other tools in their box survive. The entry into becoming a real estate agent is too easy and education requirements too low.
In their eyes, when they do become creative, it is by holding an open house and serving food or throwing in a TV with a home sale. Most are very poorly trained in finance, etc. and could never offer a seller any other options. I had one ask me at a sales meeting one day “thanks, John, that has been very informative, I just have one question what’s a Trust Deed?” That may be as bad as the real estate lawfirm I was in one day and as I and one of the attorneys were walking back to his office, a colleage asked him “Hey Russ, what’s Fannie Mae?” And those were the real estate specialists.
I remember as a new agent, a mortgage loan office invited me out to a “study group” they had. She said, and by the way, you’re giving the lesson. It’s on “Wraparound loans”. I’m shocked to remember that I had to look it up. To think I did not learn that in real estate school still amazes me.
But, their focus from an education point of view is not on how to serve the client. It is on how to not get sued. It’s all about knowing the state laws and avoiding liability. So, both their education and attitude is focused far away from the concept of serving their clients - in any other way than getting a listing and selling the property.
Not to say there are not some amazing real estate agents out there. Many of them. It’s just the general level of education and professionalism required of them is pretty low.
So, they control it because they always have, but the marketing is key. As a real estate broker myself, I have listed properties many times with other agents. If someone has more contacts, exposure and marketing in an area, that is powerful. If I have a property to sell and want to sell it quickly, I choose the right agent. Most of the time it is sold and closed withing a couple weeks.
Re: Real estate didn’t work for me - Posted by Ed Garcia
Posted by Ed Garcia on February 11, 2006 at 21:42:12:
Too,
It looks to me as though your post has created a bit of attention.
I think that it shows you that we can all relate. At one time or another, we?ve all gone through what you?re going through.
There was no wrong answer to my question. It was a matter of you looking from within.
If you truly wanted to do REI you could. The question is always about how bad do you want it?
You say we?ve talked in the past. I hope I was a positive influence on you. If you should want to pursue REI and have some doubt or need some help in doing a deal, you have my number.
Ed Garcia
Re: Take a Long hard look in the MIRROR - Posted by PJ
Posted by PJ on February 14, 2006 at 23:44:08:
Texas,
I’m in the biggest city in Georgia.
I do 95% wholesale flips to rehab buyers.
I find the deals, they do the work.
We both profit.
Requires no loan, no hammer, no credit.
Pretty simple really…
Re: Dear Too: - Posted by David Krulac
Posted by David Krulac on February 11, 2006 at 23:42:44:
REPLY: I don’t have a crystal ball and am skeptical of people who definitively state the future. For me turnover is a fact of life but is about the same as previously. Some properties are more conducsive to rentals than others. Sometimes I’m surprised. had a house 5 miles from town in a nice semi-rural setting. Newer house less than 20 years old. had a hard time finding tenants, several prospects said it was too far away from stores and shopping. Obviously not for everyone. Later sold the place very quickly. Renters had objections that buyers did not. A property that is desirable will rent more quickly than a property that is less than desirable. People like good schools, so you should buy good houses in good areas with good schools. I wouldn’t buy anything that’s not positive cash flow. In general newer houses are in better condition and need less done to them. I’ve done total gut job rehabs, but I prefer carpet and paint jobs. Bad roofs don’t scare me, I have a roofer who has done a bunch of houses for me. Most times I don’t even meet him at the job. One phone call and he bids the job, the second phone call telling him to do the work, he does it I pay him. Pretty simple. In the overall scheme of things you don’t need 100 houses. John Schaub says he needs 10-20 well located paid off houses.
REPLY: Markets are different, know your market and you’ll do ok. Know what prices are, know which properties are neglected or vacant. Know which owners are in financial need. Know what rents are. And get to the property before its on the market.
I agree.
It is for me. I’m simply embarassed that I can’t make a decent living with it after that much time and effort. Had I sucked it up and bought rentals I might be somewhere (BK or making a living?). I went with the build a cash reserve theory and here I am five years later.
REPLY: its not for everybody. there are tons of different niches. One investor I know exclusively seeks out potential super gas station/store sites. He tries to get the site locked up with an option before the big companies get there. Then he sells or leases to a big company. He doesn’t get many deals but when he does its usually a monster deal, often generating an income stream for 20 or 30 years NNN.
But there are a bunch of other ways to make a living than re. Bill Gates, Sam Walton and Warren Buffett didn’t make their money in real estate, they made it in computer software, retailing and stock picking. And each of them made a bunch more money than all the real estate investors I know.
As am atter of fact… - Posted by michaela-FL
Posted by michaela-FL on February 21, 2006 at 14:05:44:
the deals I did in Atlanta last year gave me about
$ 1,300,000 in profit and equity.
Michaela
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