Posted by Jay on February 25, 1999 at 01:39:08:
I was wondering the same thing.
To: Jackie In Dallas - Posted by Nick
Posted by Nick on February 23, 1999 at 08:49:39:
Hello Jackie;
I was wondering, if I paid you a fee, than would you
teach me how to flip properties.
But here is the prerequesite, we would have to acutally
flip an ACTUAL PROPERTY.
What do you think?
Re: To: Jackie In Dallas - Posted by Jackie in Dallas
Posted by Jackie in Dallas on February 23, 1999 at 09:46:07:
Hello Nick,
I’m NOT in the business of selling courses, conducting seminars, offering mentor service or trying to attract people to my web site by writing phony posts on Creative Real Estate Online - I’ll leave that up to the people like Kevin Myers.
Think about it – why in the world would I want to take my time showing YOU where the good deals are, revealing who my buyers are, and letting you keep the profit on a flip deal – when I can have it all for myself. It just doesn’t make sense.
If you are interested in learning how to get started in real estate I’ve written a few FREE How-To articles that you can find here on Creative Real Estate Online.
It’s amazing how much FREE information you can find on THIS web site!
Although I highly recommend flipping properties to rehab investors when you first start out - I rarely flip deals to other investors anymore. Instead I do MINOR prehab(as Joe Kaiser recommends) or NO rehab and sell to retail buyers. It’s a bit more involved and takes longer but you make more money per deal –
WITHOUT all the HASSLES and expense of rehabbing!
Also, Nick, it doesn’t matter how much you pay ANYONE, (Kevin Myers, claude Diamond, Ron LeGrand, Joe Kaiser, etc…) for their courses - there is no guarantee that the student has what it takes to be successful.
Positive Attitude plays an important part in success. And a negative attitude will KILL success faster than anything I know.
From the tone of your recent posts, you need to work on your attitude before you’ll find anyone willing to help you learn how to flip deals - ACTUAL deals!
Meanwhile - I’ll keep all my ACTUAL deals for myself - thank you!
Re: To: Jackie In Dallas - Posted by MilNC
Posted by MilNC on February 23, 1999 at 15:58:20:
I’m new and am not familiar with the term “prehab” nor of Joe
Kaiser’s recommendation for that, if you wouldn’t mind to explain…and if you are doing no rehab and not flipping, would your end buyer then be an owner/resident/handyman? I meant just generically, not to pry.
BTW, thanks for your posts and How To’s. They more easily summarize the overwhelming amt of info out there.
See you in Dallas!
Re: To: Jackie In Dallas - Posted by ChrisG
Posted by ChrisG on February 23, 1999 at 10:17:16:
Jackie,
I don’t want to start anything but what’s the deal between you and Kevin Myers? I remember a while back ago you where working on a flipping course is that the couse he now selling on his site? I’m curious because I remember Kevin used to be quite active on this board and the next thing I know he’s kicked off CREOnline.
The Prehab? - Posted by Joe Kaiser
Posted by Joe Kaiser on February 23, 1999 at 19:32:30:
Here you go . . .
The ?Prehab?
Maximizing Profit
Flipping properties to fix-up guys or retailing houses in better condition to people who are looking for a place to live is a solid plan that can generate an excellent, consistent income. If we?re smart, however, we can take that income to another level without getting involved in rehabbing properties. I hate renovating houses. In fact, I?ve got a two word formula for disaster . . . my rehab.
If you?ve never participated in a rehab or are like me and swear you never will again, you can understand my apprehensions. It?s too easy for a rehab to get away from you. You either do too much, spend too much, take too long, or get involved with subcontractors whose idea of ?on time? is anytime within a few weeks of when they said the job would be completed. And frankly, you haven?t lived until you?ve paid someone for materials and instead he decides he?d rather just keep the dough for himself and you never see him again . . . or even worse, pay for the work only to later discover that it all has to be redone because it wasn?t done properly the first time through. As for quality, that?s a whole other issue. Do you know I have painters who want to know ahead of time if the property being repainted is going to be sold or turned into a rental? If you screw up and say ?it?s a rental,? they paint doorknobs and that?s not good. Quality is subjective, but geez, I can?t tell you how many times I?ve been out with my Mikita sander and my spray-on ?texture? fixing drywall dings and dents that weren?t properly repaired the first time through (by the ?professionals?).
Now, I know there are fix up guys who can successfully run rehab crews and control everything that goes along with that, but I?m certainly not one of them. Frankly, I?m just not interested in rehabbing. Even though there is money to be made, it?s not the sort of work I?m looking forward to.
?Prehabbing,? though, is another matter altogether.
What?s prehabbing? Let me start by telling you that it?s not rehabbing at all . . . no hammers and nails involved, no kitchen counter tops or bathroom floors to play around with. Prehabbing involves simply knocking off the rough edges of the rehab job to allow our prospective purchasers a quick look at the property?s potential. If the property is buried in 3 feet of thicket, then sometimes even those home shoppers with ?vision? can?t comprehend what it might end up looking like.
Here?s an example. I used to restore little British sports cars. I?d buy them rough and fix them up to get them sold. Paydays were great and I?d get a nice check for my efforts, but I quickly realized that check wasn?t much more than repaying me for all my work and materials. To do the thing right took too much time and you just couldn?t sell for a price anywhere near the amount of effort it took. I had a friend though, who did make money buying and selling cars. He didn?t do much of anything to them, and repainting? Forget it. He?d pick out one spot on a fender, a spot maybe six inches wide, and he?d buff out a mirror like finish into it in less than ten minutes, tops. He didn?t sell restored cars, he?d sell fixer cars to people and explain their potential just by showing them ?the spot.? Once they?d seen themselves reflected back in that darn spot, they imagined what the car could end up looking like if they put a little work into it.
Now, his paydays were nothing like mine, but his fix-up investment was twelve cents worth of rubbing compound and five or ten minutes of elbow grease, and his profit was real.
We can do that same thing with houses. Prehabbing means we don?t even think about restoring. Instead, we just rub out some of the rougher spots and make the property?s potential shine through.
How?
By transforming ?empty and overgrown? houses into something that looks cared for and lived in, often in just a weekend.
A total rehab entails lots of work and of that work, only a few things really end up making you money. Did you know that I?ve never figured out a way to take a house that just needs a new roof and dramatically increase its value by putting on the new roof. Sure, the value goes up, but it goes up by just about the same amount the new roof cost me, so my profit ends up being about the same as that profit I used to earn fixing up cars . . . zip. A serviceable roof is expected whenever you sell a house, and replacing roofs doesn?t result in making profits. Needless to say, new roofs aren?t high on my prehab ?to-do? list. Same story for replacing fixtures and appliances, or windows or chimneys or foundations or any of that other rehab stuff.
What improvements do pay off?
By far, the number one profit generator is a straightforward CLEAN UP. It took me a long time to understand this. I, like most, assumed I?d have to ?fix-up? to make money. Turns out, the profit is not in the fix-up, it’s in the ?clean up.? So whenever I take on a new abandoned property, getting the place all cleaned up is essential to not only realizing its full profit potential, but also essential to getting it sold. The simple truth is a cleaned up property is going to attract more buyers and as a result, get moved more quickly. The results can be dramatic!
Cleaning up properties that need lots of repair work may seem backwards, especially if that repair work means it?s all going to get dirty again. Doesn?t matter, I clean it anyway. Clean up doesn?t normally mean I?ve got someone in there polishing the fixtures. Clean up is essentially two things that can be broken down into ?exterior? and ?interior.?
Exterior work includes all that overgrown stuff that initially led us to the property itself. That means we fire up the weedwhackers and lawn movers and get that overgrowth out of there. Around here, we ?bark? everything that isn?t lawn. That means we weedwhack all the flower beds or areas that weren?t grass and have all that vegetation hauled away to the dump. We spray a weedkiller over the little whacked off weed stems so they won?t grow back, and then we spread a truckload worth of beauty bark three inches deep. Know what? That?s often enough to transform the place!
Costs? A truckload of bark is a hundred fifty bucks (that?s not a pickup truck, that?s a twelve yard dumper). And the cost of that run to the dump is going to depend on how much stuff ended up being hauled away. Often, it?s a huge pile, and that?s typically somewhere around one or two hundred bucks for my trash hauler guy to come out and drag it all away. Figure another hundred bucks for a couple guys to weedwhack and spread the bark, and the weekend ends up costing somewhere around five hundred bucks.
Do you think we increased the value? You bet we did, but the big question is, did we increase the value by enough to actually make a profit. Again, in nearly every case, we transformed the appearance of that place and turned it from an eye sore into an eye catcher. This clean up weekend often results in a three, five, or even ten thousand dollar increase in the perceived value of the property. Even better, a property that simply would not have sold for anything, but at a ?fire sale? price suddenly becomes marketable.
Sure, we could have just flipped this thing to a fix-up investor at that fire sale price and made a few bucks if we bought it right, but why would we ever consider doing so when we know how easy it is for us to maximize our profits by taking care of the little things that generate the big returns? Had we just flipped ?as is,? our investor friend would have worked that prehab weekend and earned that quick profit for himself.
Inside, it?s more ?addition by subtraction.? Anything that subtracts from the property?s value, I want it out of there. Tops on my list of things to haul to the dump? Again, the previous owner?s junk. I want it bear to the walls and if that carpet stinks even just a little bit or is showing wear, I want it bare to the floors as well. Old drapes go right on the trash pile too. The idea here is to get rid of virtually everything that might somehow detract. Most people don?t really get off on having to go through the previous owner?s garbage, so get it all out of there. Sometimes they leave old furniture or shelves in the garage or some things that really aren?t halfway bad. Sometimes the stove and refrigerator are a little on the beat up and dirty side but are still serviceable.
Forget ?em . . . junk it all!
I?m also going to install mini-blinds whenever possible. They?re cheap, quick and easy to install, and they really dress up the place. Most importantly, you stick a plant on the window sill and close the blinds, all of a sudden that empty place looks lived in, and lived in beats the heck out of vacant.
Now that you?ve got it all cleaned out, there?s one last step . . . you?ve got to get it all cleaned up. But don?t go crazy here. I?m not talking pristine. Just get the jelly off the counter tops and vacuum the bugs out of the window channels. Shampoo the carpeting. Maybe spend a few hours tops getting the windows halfway cleaned and the garage swept out. You know the sort of things.
Ideally, we want to end up with a clean palette here. We want our prospective buyers to view this place and see gobs of potential, and we don?t want to spend more than a few days putting it into that kind of shape. When we?re through, we hope to end up with a nice little shell that?s ready for that new roof or new kitchen and bath or new foundation. This is where I generally step off and let the rehabbers come and take a look. Since the place is no longer an eye sore, I can even retail it to ?fixer? types who are looking for a home of their own and enjoy doing the ?rehab shuffle.? Had I not cleaned it up, they?d drive by, take one look, say ?oh yuck? and never even slow down. Not only has the value increased, but a place that simply could not be sold is now able to actually attract buyers.
It’s all in my Abandoned Properties course, if you’re into that sort of thing.
Joe
Re: To: Jackie In Dallas - Posted by Jackie in Dallas
Posted by Jackie in Dallas on February 23, 1999 at 18:19:25:
Yes, my goal is to sell to owner occupants that are looking for a “deal”. It’s a win-win for everyone.
The buyer gets a great deal on a house that they can put their blood, sweat, tears, money, heart and personal touch in to.
I sell the house fairly fast because I’m selling below market and I make more than I would if I just flipped it to an investor – often times 3 - 4 times more!
This will only work if the house is in good enough condition that my buyer can get traditional financing or if I’m providing owner financing.
If it’s a total dump I’m better off flipping for fast cash.
Re: To: Jackie In Dallas - Posted by Jackie in Dallas
Posted by Jackie in Dallas on February 23, 1999 at 18:09:52:
Chris,
There is no DEAL between me and Kevin.
There does seem to be an increase in post direct towards me that imply that I don’t do any “actual deals” or worse - posts like the one below by Nick, the one a few weeks ago titled Jackie Followers and numerous others that JP has taken down because they were way out of line.
It’s rather interesting that the majority of these posts mention that Kevin Myers offers more or better advice or that everyone on Creative Real Estate should check out his web site if they want “real motivation”.
Maybe it’s just a way to try and attract attention to his site…
Personally I think that it just doesn’t get any better than what’s offered on THIS site. From the ongoing education with the How-to articles, the newsgroup, the chat room and the caliber of courses that are offered - it’s ALL FIRST CLASS!!!
It’s my understanding that Kevin left Creative Real Estate because he wanted to keep all the profit from the books and courses he trys to sell - authors that sell their courses on this site must share a small percentage of the profit with the editors. It’s only fair considering the exposure this site brings.
He was not “kicked off” - he chose to leave and do his own thing.
Re: The Prehab? - Posted by Perry K. Harris
Posted by Perry K. Harris on February 26, 1999 at 11:04:57:
Kudos to Joe and this technique! It brings to mind a gem from Hollis Norton, RE investor and author of: How To Make It, When You’re Cash Poor. " Golfs clubs fit my hands, not hammers " Sure the paint brush, rake, and weed wacker get used, but what a clever short cut to the finish line.$$$$$$$$
Re: The Prehab? - Posted by Redline
Posted by Redline on February 24, 1999 at 15:20:12:
Joe, if we do a “PREHAB” ™ do we owe you any royalties?
Thanks for the great info,
RL
Re: The Prehab? - Posted by Nate
Posted by Nate on February 24, 1999 at 01:04:02:
Joe-
How does “prehabbing” fit into the flipping process? Do you ever have sellers question why you are doing things to the property when the deal hasn’t even closed yet? How would you do this in a situation where you really don’t want the seller to know you are going to be assigning the contract?
Re: The Prehab? - Posted by Jackie in Dallas
Posted by Jackie in Dallas on February 23, 1999 at 20:40:39:
Thanks for explaining it Joe!
PREHAB is the way to go. I’ve tried the rehab route - it was everything you described and more. Everybody is looking for a “deal” even retail buyers - it’s the best of both worlds.
I’m reminded of one of Ron LeGrands quotes,
“The less I do, the more I make”!
Re: To: Jackie In Dallas - Posted by rayrick
Posted by rayrick on February 24, 1999 at 10:21:50:
So Jackie, You are talking about houses here where you actually take title? These are NOT ones in which you’ve just tied up the place with a contract I take it.
-Ray