Flipper – The MyHouseDeals.com Blog

Billy Johns is a real estate investor from Jacksonville, FL

Billy Johns has been involved in real estate investing for over 21 years.  He and his business partner buy over 150 houses per year and they collect rent on 100 units and 75 mortgages each month.  Billy has also originated over 1,000 mortgages and bought and sold over 500 mortgages during his career.  In addition, Billy has developed land, built new houses, modular homes, commercial strip centers, mobile homes and land packages and has owned 5 mobile home parks.  Billy has a passion for getting the deal done and truly is the king of negotiation.

I interviewed Billy for The Vault, and he shared some great information with me.  Here are some of the highlights from that interview in the form of 6 useful tips for landlords…

1. Visit the Real Estate Investing Clubs in your area – I recommend going to real estate investing clubs.  Most real estate clubs give you a tremendous push of knowledge since they are bringing in speakers and materials and you have a lot of different people there.  Some are landlords, some are private investors, some are passive investors, some do just commercial, and some do just condos.  You have a wide range of people there that you can gather knowledge from and I highly recommend that.

2. Be thorough. Run a background check – The best way to screen potential tenants is to do a background check.  In our area, we can get it all from one service; we can see what their credit is and their background, see if they had any felonies or anything like that.  However, in some rural areas you can’t get all this information in one place, so in that case I would recommend going to the local law enforcement.  Usually they’ll run a check on that person for you.

3. Never negotiate the deposit – Make sure your tenants pay their full security deposit up front.  If you’re going to give them any discount, give them a discount on the rent.  There’s not a place in this country that I know of that you can evict someone on non-payment of deposit, but you can evict a tenant just about everywhere on non-payment of rent.  So if I gave you an extra 30 days to pay half your rent instead of half your deposit and you didn’t pay it, I can evict you.  If you pay me the rent in those 30 days but the deposit is still due, I can’t evict you and I’m still missing money.

4. Plan rent increases carefully – Whether or not you want to increase rent each year or leave it the same is really going to depend on your market.  There’s no right or wrong answer or magical answer to that.  If you are going to raise the rent, you should try to increase it a little each year instead of waiting and making a huge increase a few years down the road.  It’s harder for your tenants to swallow, and you will probably lose good tenants because of the sticker shock.  It’s not that they can’t afford it, but it will make them start looking for a different place to live.  You don’t want to lose a great tenant just because you timed your rent increase wrong.

5. Protect your assets – An individual land trust per property is the best entity to hold rental properties in.  In regards to a beneficiary, you’ll have to get into tax structure and stuff like that.  However, we always like beneficiaries of our individual land trusts to be an LLC.

6. Be passionate! – The first step to having your own rental property empire is to go buy your first house!  Of course, you should also enjoy what you’re doing and have a passion for it.  If you don’t enjoy real estate with a passion, you won’t make it to owning 100 properties, I can assure you.  Start out buying them one at a time, stick to your criteria for each property, and make smart decisions.  Also, if you’re going to grow large, it really helps to have someone to work with.  You can always bounce stuff off of each other.  As the old saying goes, two heads are better than one!

Until next time,

Doug

When it comes to investing advice, there is not a more trusted source than Warren Buffet. Click the picture below to get the latest investing tips from the world’s richest man. He talks about buying stocks and businesses, but his advice applies perfectly to real estate investing…

Buffet’s Tips for New Investors

Until next time!

Doug

Have you registered for our live training and networking event in Houston yet? It happens tomorrow — that’s Thursday, Feb 25 — so be sure to register now by clicking here.

This event will already be jam-packed with content from Jim Goodchild and Brant Phillips. They’re speaking on “The near-term and long-term outlook for the Houston and National housing markets“ and “The Lazy Man’s Real Estate Investing System.”

But in addition to the training sessions, we are going to deliver on what everyone at the last event listed as their favorite thing – Networking! And we’re taking things to the next level by not only bringing back the Speed Networking session, but also adding time for informal (but powerful!) networking through the evening.

And in addition… Trade Show!

Vendors will be setup in booths that you can visit and exchange information. Best of all, they’ll have special deals for you that you won’t see available anywhere else. We are still reaching out to businesses that we think you would enjoy networking with, but so far we have amassed an amazing list of companies.

To attend the event and network with some of the most active real estate investors in Houston, you MUST register. We only have so much space, so register now to claim your chair. Once you register, you’ll get info on the exact location of the hotel. Register for free now!…

http://www.myhousedeals.com/HoustonLive

See you soon!

Doug

Stephen Rivers

Doug: Stephen Rivers has purchased 12 properties since he began investing, and 8 of those have been wholesale deals from MyHouseDeals.com. He has sold 4 of those properties so far. Stephen could you give us a little bit of information about your background in real estate investing. What kind of experience do you have?

Stephen: I started as a Realtor and got my license when I was 18. Then I was always interested in investing and a partner of mine that was a long time friend, I recently sat across the desk from him and told him, “Joe I want to learn how to invest. Find me some properties.” So I began to look for some properties and I ran into myhousedeals.com. I showed him what I was looking at, he had the money, he showed me how to rehab homes, what to look out for and basically showed me the ropes.

Doug: Now from these 8 wholesale deals that you bought, you said that you sold 4 of them so far. About how much have you made per property that you’ve sold?

Stephen: On average $25,000.

Doug: What about the 4 that you still own? Do you plan to sell or lease them? And what kind of profit do you expect to make?

Stephen: We plan to sell those. The profit should be about the same amount, $20,000 to $25,000.

Doug: How would you say that myhousedeals.com has helped you get going with your real estate investing?

Stephen: Wow. It has really helped me because I don’t have to do a lot of leg work. I can just log onto the website and scroll through the deals and see what would work out for me. I’m not a full time investor at this point. I don’t have the time to go look out and scout, do mailings and knock on doors. So really myhousedeals.com has cut my time in half and made it very convenient for me. It also helped me network with other wholesalers. So really it helped me start off with a bang.

Doug: These properties that you bought, you mentioned they were all wholesale deals, so is that where you like to spend most of your time as opposed to the motivated seller leads?

Stephen: Yes, I’m looking at some of the motivated sellers and I’ve seen some good deals but it looks like sometimes someone would get there before I did so I’m mostly spending a lot more time at the wholesale deals.

Doug: Some people see one or two wholesale properties that someone has posted with an inflated after repair value or a low cost repairs. And they get frustrated by that and they either cancel their membership or they just switch over to the motivated sellers. How have you handled the fact that some of the after repair values and repair costs on the wholesale side aren’t always accurate?

Stephen: When I see that number of an estimated repair I take that with a grain of salt because everybody has their own crews and I can do repairs different or maybe even cheaper or better. So I keep in mind that I might have to up that price by 20% or discount it 20% and I go out there and look at the property and see how much I can fix it for.

Doug: About how many properties have you found that you need to look at in order to buy one?

Stephen: I think about 6 to 8.

Doug: Is that actually going and visiting and looking at them or is that just looking at the numbers on the computer?

Stephen: I go by the numbers on the computer. Usually when I’ve actually looked at a property on wholesale deals, I can look at the numbers and say okay they match pretty good and I’ll do my comps with an agent of mine before I even go out there. So I do my homework. I’ve looked at the property, pulled out the comps, look at the tax records and crunching my numbers to see if it works and then I’ll go out there and look. And usually every time I went out and looked, it’s usually a good deal.

Doug: Do you typically offer the wholesalers about what they’re asking price is or do you go in and try to negotiate?

Stephen: I usually try and negotiate.

Doug: How much have you found that you can get off the asking price?

Stephen: I guess that really depends on the wholesale dealer. Some of them have been really easy to work with and some of them have been really firm. I really couldn’t give you a number.

Doug: Do you remember what the most was that you were able to get them to come off their asking price?

Stephen: Right off the top of my head probably about $8,000.

Doug: I found that a lot of times wholesalers will post a deal with a high asaking price to see if somebody will bite. And most investors don’t bite, so it frees up room for somebody like like you to go in and make a lower offer and get the deal. Is that what you found to be true?

Stephen: Yes, definitely. I’ve never been intimidated. I always go in and try to find out. I just say hey we’re really interested in that property, we have the money. Can you work with me? Usually when you come with that attitude, you’ve got the money, you’ve got the backing, then usually they’ll work with you to try and get that property sold because they want the money as much as you do.

Doug: They sure do. Now what kinds of houses do you focus on? Is it the lower end, the higher end, mid range?

Stephen: Mid range, we’re looking for at least 1200 square feet and up, 3 bedrooms, 2 bath brick home, so probably mid range.

Doug: Those properties are nice to hold on to for the long term. Do you have plans to start holding these properties eventually or do you just plan to continue to fix and resell them?

Stephen: At this point, we’re just fixing up and reselling them but we are going to be holding here pretty soon.

Doug: Very good. Thanks so much Stephen. Keep up the good work!

A sample from a string of comments recently posted about a property. This buyer effectively used comments to really grab the seller's attention and put the wheels in motion to close the deal.

… and ask about those pesky ARVs and repair estimates.

As you may already know, you can now leave comments and questions about properties you find on the website.

We were really excited to enable this commenting tool earlier this month because it makes obtaining information about a deal you like and following-up with the seller that much easier.

It’s often the case that a question from an investor is the same question twenty other investors have. We also know that numbers such as ARV, equity, and repair estimates are somewhat subjective and vary slightly from investor to investor, depending on the strategy they choose to apply to that deal. So by participating in a public discussion about a proprety you end up contributing to the accuracy of that deal. This is good for everyone!

I encourage you to use that space to discuss specifics about a deal, such as ARV, repairs, and asking price.

- Don’t agree with an ARV estimate? Request comps and more information from the seller about how they arrived on that number.

- Feel like estimated cost of repairs doesn’t match up with the repairs description? Ask for an itemized list of the repair items or contractor’s bid.

- Think the asking price is too high? Express your opinion and start bargaining with the seller.

- Found a deal that’s exactly what you’re looking for? Let the seller know and start negotiating immediately.

Your questions and comments will be instantly published on the details page for the property and the seller will be immediately alerted. This will allow for a quick reply and a conversation about that deal to begin.

If you haven’t yet tried this feature, log-in to your account and access any of the hundreds of properties we currently have available.You can use the box at the bottom of each property details page to leave your comment. Simple as that!

Many of you are already taking advantage of this new networking channel, and we want to know what you think of it. Tell us how commenting deals has been helpful to you, what you like about it, what you don’t, and what suggestions you may have to help us perfect it. Just leave a comment (HA!) below to share your feedback with us.

Happy (and profitable) investing!

– Doug and the MyHouseDeals Team

The Blackwells are smiling because their investments are protected

Today I want to share another excerpt from my interview with Curry Blackwell. If you remember from the last time I revealed some tidbits to you, Curry shared his secrets in an all-access interview with me on how he built a real estate empire of over 120 properties in less than 6 years. Curry bought his first rental property in 1997; it was a single family home near the Texas Tech University campus. Since then, Curry and his dad have bought and held onto many units and bought and sold several more.

Interviewed continued…

Doug: I’d like to talk about asset protection. This is something I’ve been dealing with my own properties recently, so I’m particularly interested in it. Curry, do you hold your properties in your own name or a company name and why?

Curry: The partnership that we have established is what we’ve found to be the best way to hold the properties, a corporation is fine too. Obviously personal liability is something I would try to stay away from. Anytime you can put your properties within a corporation or a partnership, then you can conceivably protect your personal belongings from any issues. So I would recommend that.

D: So you put them into a partnership for yourself and dad?

C: That’s right. The partnership can be as many people as you’d like. Doing it like this also helps make some of the bookkeeping and paperwork a little bit easier than when you’re doing it as a sole proprietor.

D: Does it cause problems with your lender? For example, since they’re loaning to you individually that they want you to own it in your own name?

C: Well, now we’re talking about it from a financial liability standpoint, Doug. You’re still giving a personal guarantee. So from a financial standpoint, it really doesn’t change the dynamics of the fact that you’re still responsible for paying that loan back. The lender doesn’t really care that it’s under a partnership or not, you’re still giving your personal guarantee for the loan or for any of the notes. And the partnership has more to do with the liability issues.

D: Okay. Do you have any sort of liability insurance or umbrella policies on your properties?

C: We do have a liability policy. It’s an umbrella policy that is basically added onto our personal property insurance. We have not had any issues that have come up of any kind of liability; I don’t know whether it’s just an ignorance issue, but I think most tenants understand that they’re still responsible for their own well being. But we do carry umbrella property insurance and there’s a liability addendum on that.

D: I see. Would you recommend that other investors get a liability insurance policy and if so, for how much?

C: I think so, but all that depends on the value of your property. We’ve done it for upwards of a million dollars just because of the value in the property, but at the same time we’re just keeping that there as a safety net.

D: What do you realistically think are the odds of getting sued by a tenant or someone who gets harmed on your property? And have you ever gotten sued by one of your tenants?

C: You’re going to make me find some wood and go knock on it. We’ve never had any lawsuits of any kind against our properties for any reason. We’ve had some accidents on our properties that involved property, more like cars and vehicles, or a tree gets struck by lightning and falls on a car. But we’ve never had any issue where a tenant has wanted to bring suit against us for anything.

D: Okay, good for you! Where can people get liability insurance if they’re looking to get that for their rental properties?

C: You can find liability insurance through any of the major companies that offer property insurance. I think the Internet would be a good source, just type in your city name and ‘liability insurance’ and I’ll bet you at least twenty will come up. Then just contact some of them and say, “Hey this is what I’m looking for, I need an umbrella policy, what do you have?”

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This posting is an excerpt of the two-hour interview I did with Curry Blackwell. The full interview is part of my Vault Investing System. The Vault contains 13 in-depth interviews with expert investors from across the nation and covers topics ranging from wholesaling to subject 2 investing to private money and more. Learn how you can get your hands on the Vault at a 36% discount by going to http://www.myhousedeals.com/thevault.

Until next time, happy (and profitable) investing!

Doug