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Real Estate Investment as a Career


Lightning
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Contrary to a lot of belief, you dont need a lot of money to invest in the residential real estate market and now is a great time to do so. They are right that is SW Florida, there is a gold mine in commerical property, but that you will need some cash. There is a prediction going around that because of all the funny loans written by banks in the last couple of years, foreclosures are going to be somewhere in the neighborhood of 1 trillion this year and 1.8 trillion across the country for 2008. What you are going to need is a good credit score and some common sense. Depending on the area that you live in, going to public foreclosure sales can be a great way to pick up properties, but please do your research first as many times I see them sell for more then they should because people get bid happy. We are currently working the short sale market to death down here and picking up properties for anywhere from 50 to 70 cents on the dollar, some are great for a quick flip and some are well worth renting and waiting for the market to rebound a little more. Most people dont realize exactly how much banks hate taking proerties back and what they are willing to sell them for to get them off of their books. Check with local property management companies to see what you can expect to make in rent for property in your area and talk to some local lenders or mortgage brokers about doing unseasoned refi's on properties. I was able to recently pick up a waterfront home for about 55/on the dollar and refi to take 20 out in equity which will allow me plenty of time to sell the house at wholesale and look at about 30-35% profit. But please always do your due diligence and dont jump into ANYTHING without knowing every aspect of what your doing and what could go wrong!

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I know this might sound like a dumb question, but how do you exactly do the DD? Say there is a property I like. I was planning on stopping by and asking the owners to show me the place, or drop off a note saying "I would like to check your place out, here is my email/#" But I have 0 idea as to what to look for in a property... all I remember is that you have to check the windows and the roof. So do I hire someone to do it for me?

 

How do I figure out what I can flip it for? Do I look at the other houses in the neighbourhood? Do I look at how much people make? What do I compare it to?

 

My parents house is down 70k from last summer.. this is going to be an interesting sell. They want to keep it now and wait for the rebound.. people are saying within a year but WHO KNOWS?! and how the hell can you predict that?

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Had a few buddies over my house the other night and we got to talking about real estate investment, specifically "fixer-uppers", handy-man-specials, foreclosures, and desperate or motivated sellers. A friend of mine (actually the guy who sold me my own house) got into a beautiful house in a brand new neighborhood near me back in January, thanks to a seller going through a divorce that HAD to sell. He ended up getting a house worth about 420k (current selling/market value) for 382k. In less then 2 months, he finished the basement himself (working iwth friends and some know-how), put up some crown molding and new paint around the first floor, installed a small shed at the back of the yard, did about 2-3k worth of landscaping out front (new front hedges, ceder mulch, some retaining wall block, etc.), and severely cleaned up the garage. With those relatively easy upgrades and some weekends of hard elbow grease, his house is now one of the nicest in the development, and in less than 6 months and 10k dollars in upgrades he could now EASILY sell it for 450-460.

It got me thinking as we discussed, does anyone actually do this for a career on here (or know anyone who does)? What would be the minimums youd need to get started? (equity in your own home to use as down payments on a second property, an investor to fund the projects, hefty savings account, etc.).

I have SEVERAL out of work friends with construction know-how (guys who are jack of all trades with this kind of thing!) who would be MORE than happy to work with me or for me if I could get the projects funded. Obviously there is some risk as with any other investment, but Im just wondering who here actually does this...Does anyone you know make a career simply out of buying and selling houses all year? (aka "Flipping properties") :)

All thoughts/input appreciated as always guys!

 

hi " lighting"

i too am going to invest in real estate and fliping as well. im also just starting out now, i have a friend who also does this and made millions off of it. i plan to have at least 1 or 2 properties in the next 6 months. so this is going to be a very serious business for me to get in. i see that you live in nj ?. im in maryland. we should get toghether something to pursue this. you know to get ideas about pros and cons. if anyone else is seriously interested i would invite all who who might want to talk as well.

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I know this might sound like a dumb question, but how do you exactly do the DD? Say there is a property I like. I was planning on stopping by and asking the owners to show me the place, or drop off a note saying "I would like to check your place out, here is my email/#" But I have 0 idea as to what to look for in a property... all I remember is that you have to check the windows and the roof. So do I hire someone to do it for me?

 

How do I figure out what I can flip it for? Do I look at the other houses in the neighbourhood? Do I look at how much people make? What do I compare it to?

 

My parents house is down 70k from last summer.. this is going to be an interesting sell. They want to keep it now and wait for the rebound.. people are saying within a year but WHO KNOWS?! and how the hell can you predict that?

 

 

When doing the DD, especially if you dont know what your doing, its best to get a property inspector to take a look at the house. I dont know how it is elsewhere but here in Florida there is no training and anyone can call themselves an inspector so look for someone who is certified by the national association of certified home inspectors. It will cost you about $100-150 but can save you a fortune if they find anything wrong. You can also talk to the sellers and get them to pay for a home warrenty. Its also only a couple hundred bucks and you can probably even get one of the real estate agents to cough up for it for fear of losing their commission.

 

Flipping a property is going to require a lot more then just looking at other homes in the area. The point of making this a great deal for someone like yourself is to pick the property up for below market value and sell it at closer to or market value. Usually you would look to pick these properties up from desperate sellers (going into foreclosure, loss of job, moving) or property that is in need of repair. Keep in mind that the areas that are having housing slow downs are the areas that experienced a rapid growth over the past couple of years. Its not that people are not buying or not looking to buy, they are just afraid to buy this week and have the property worth $10,000 next month. I live in the Fort Myers area of SW Florida and can tell you that even in our area (which is experiencing one of the worst markets in terms of correction and sales in the whole country) houses are starting to move and even the media is admitting it might be the end of the bubble. When you decide to flip that house you need to be below market value to attract the serious buyers and not get stuck holding the property for too long, costing yourself valuable time and money. This is why foreclosures are so popular right now. All of the investors who bought in the past couple of years owe more then what the properties are worth so the chances of picking something up with a ton of equity in it are slim but there are a lot of people who are in dire straights right now. I know a lawn service man who works where I live who built 5 spec homes and now has about $12,000/month in mortgage payments to make while working a $7/hour job. I dont see that happening. But, talk to the bank who hates to have to take that house back and get them to sell it at a loss (believe me its not as hard as you would think) and either find an investor to buy it or wholesale it out yourself. Talk to a realtor to see what property values are and what things are ACTUALLY selling for in the area.

 

As far as your parents they are wise not to sell right now if they dont need to, I know people down a lot more then $70,000, but if you do figure out when the market comes back and get that 400 foot yacht.....pick me up would ya!

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  • 6 years later...

Resurrection!

 

I'm kicking around the idea of going into real estate. I have a family friend who's been doing it for years and I'm sure would help guide me along, but I thought I would throw this out there to you guys and see if anyone has any gritty advice. If it helps, I live in a very fast growing suburb of Indianapolis and know this area like the back of my hand (lived here my whole life).

 

 

 

 

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it could be quite lucrative :icon_mrgreen:

 

All I've seen and heard is you tearing down perfectly good homes and then go on about beams or seamless doors! :lol2:

 

I'm in a position to work essentially for free and learn whatever I need, gain experience, make contacts. And I found it interesting how this thread was all pre-2008. It felt eerie.

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All I've seen and heard is you tearing down perfectly good homes and then go on about beams or seamless doors! :lol2:

 

 

:lol2:

 

so what have you learned from it?

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What I find interesting is that there appears to be two groups of real estate investors/developers out there:

 

Those who know how to model cash flows in Excel, and are familiar with ARGUS....and those who never used such programs or even know what they are.

 

And both can be successful. :icon_mrgreen:

 

Ultimately, the art (how do I get loans/partners/community approval?) is harder than the science (NOI, cap rates, IRR, etc.) but I don't know how one could dominate in this field without a decent knowledge of the latter?

 

Obviously I'm talking about regular Joes who weren't born into millions of dollars -- anyone with tons of capital can dominate, nothing special about that.

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No idea what ARGUS is.

 

There are few ingredients you need in order to be successful or do well out of it.

 

You have to have the ability to see gold in a pile of dirt, you have to know what to buy, where to buy it, how much to pay for it, what to do with it, etc. etc. etc.

 

Capital won't save your ass nor make you successful unless you know what to do with it, unless you have vision, have no fear, are an extremely good negotiator, have a tone of patience, you are resilient, have a never take no for an answer attitude, do not crack under pressure and work your ass off day and night.

 

You really have to be cut out for it.

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:lol2:

 

so what have you learned from it?

 

Most everything is shit!

 

No idea what ARGUS is.

 

There are few ingredients you need in order to be successful or do well out of it.

 

You have to have the ability to see gold in a pile of dirt, you have to know what to buy, where to buy it, how much to pay for it, what to do with it, etc. etc. etc.

 

Capital won't save your ass nor make you successful unless you know what to do with it, unless you have vision, have no fear, are an extremely good negotiator, have a tone of patience, you are resilient, have a never take no for an answer attitude, do not crack under pressure and work your ass off day and night.

 

You really have to be cut out for it.

 

All those requirements sound like me and are things I strive for. I'm the kind of sick person who actually LIKES talking to car salesmen and watching the chaos that normally ensues around most transactions/negotiations.

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All those requirements sound like me and are things I strive for. I'm the kind of sick person who actually LIKES talking to car salesmen and watching the chaos that normally ensues around most transactions/negotiations.

 

Come try to build something in LA county and get back to me on that.

 

I'm a nobody compared to the other RE guys here, hell I have whole properties that are probably valued less than the roof on the Fortis-Dome. (yes Fortis, I've officially dubbed your new house a stadium)

 

But in my small potatoes world the biggest problem I see with new people jumping into it is being wildly under capitalized. Small things and mostly time can chew up a lot of cash.

 

And remember, the $$$ is always made when you buy, not when you sell. If you have to wait for a rising economy and inflated prices to make money, you're upside down from the start.

 

All that being said, I would love to get a few lessons from the successful bunch here. I've done pretty well buying in the past few years (CA market is doing well now), but it's just numbers on paper at this point. And i'm not sure what I want to do with it, hold long term, sell and cash out, etc.

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Come try to build something in LA county and get back to me on that.

 

I'm a nobody compared to the other RE guys here, hell I have whole properties that are probably valued less than the roof on the Fortis-Dome. (yes Fortis, I've officially dubbed your new house a stadium)

 

But in my small potatoes world the biggest problem I see with new people jumping into it is being wildly under capitalized. Small things and mostly time can chew up a lot of cash.

 

And remember, the $$$ is always made when you buy, not when you sell. If you have to wait for a rising economy and inflated prices to make money, you're upside down from the start.

 

All that being said, I would love to get a few lessons from the successful bunch here. I've done pretty well buying in the past few years (CA market is doing well now), but it's just numbers on paper at this point. And i'm not sure what I want to do with it, hold long term, sell and cash out, etc.

 

And I'm not sure I want to stay in Indiana my whole life. SoCal so far wins me over for my favorite spot - but everything I've heard is that the place is full of real estate agents and actors. Everyone's doing it sorta thing. But then again there's no shortage of stupid people out there. Some just have more cash than others.

 

I'm all ears, guys. I'm working on a few personal startup ideas at the moment, working a dead-end job and have a college degree. I'm willing to work for nothing and just learn a craft - but it better be challenging and thus rewarding in due time.

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