Sold after only 10 Days on the market, David’s rehab netted him a 38K profitReading Time: 8 minutes
With a long standing interest in real estate investing and a desire to grow his net worth, David took the plunge to become an investor and he hasn’t looked back. To get started, he joined local real estate clubs and attended seminars. David has been now been an active investor for about a year. He has done one deal and is currently working on two others. He relies on MyHouseDeals to identify properties that fit specific parameters in a desired location.
David recently found a fix and flip deal. After the repairs were completed, this property was back on the market for 10 days before it sold for the full asking price, netting David $38K.
David sums up the real estate investing business by saying “If you’re not networking, you’re not working.” Following this motto, he actively connects with others in the industry to help grow his business. And the strategy is paying off: David recently hired a contractor who was recommended by a private money lender.
As David continues growing his business, he always does his homework. This ranges from pulling his own comparables to carefully vetting contractors. At the end of the day, David knows that he needs to continue buying houses and choosing good contractors to stay relevant in the real estate investing game.
Listen to the interview or read it below and learn…
- The tool David uses to negotiate cheaper funding from hard money lenders
- What you should look for on a job site when vetting contractors
- What factors you should consider when pulling comps for a property
NOTE: Since David is a Premium Elite member, he received a FULL refund of his upfront membership fee for simply doing a deal! Find out more about our Premium Elite membership here.
Check out David’s story below.
Tell Us About Yourself…
What inspired you to invest in real estate?
I’ve always been interested in real estate. I do not have an investing or real estate background. I got into this fairly recently, just over a year ago and I’ve always been interested in building my net worth and my generational income so I decided that real investing was the vehicle. I talked to a few other people and they strongly suggested I get into real estate investing. So, I thought I’d jump in with both feet.
How long have you been an investor and how have you personally built up your real estate investing education?
I have been in it just over one year and attended numerous seminars, local real estate investor events, and networked with a wide variety of other real estate investors.
Can you name any of those seminars that you attended? Are you a member of any local real estate investing clubs?
Yes, I am a member of the Atlanta Real Estate Investment Group. There are several here in the Metro area and I’m a member of a couple of different ones. Also, one summer I attended the Fortune Builders Real Estate seminar. Networking is critical. You need to network for all aspects of real estate investing, whether it’s for leads, buyers, real estate agents, brokers, or contractors. The list is never ending of how and why you need to network. And the networking is probably number two behind marketing. Networking is critical.
What are your favorite features of MyHouseDeals.com and how do you use the site as a resource?
I love the variety within MyHouseDeals. There are houses available all over the Metro area with different price points and different levels of rehab needed. No matter what sort of project or property I’m looking for, I can find it. There are many listings and there is plenty of opportunity for a wide variety of investors on MyHouseDeals.com.
Tell Us About the Investment Deal…
How long did it take you from start to finish, from the moment you purchased the property to the moment that you put it back on the market?
It took a little longer than we projected because we had a small issue with the contractor and we needed to get another contractor to finish it up. I think it was about five and a half months total. We have closed on and sold the house. We are thrilled.
How much money did you spend on repairs for the property?
We spent $59,000 on rehab of the property.
How much did you purchase the deal for?
The purchase price was $33,000.
What types of repairs did this property need?
This property needed some additional structural work. It was on a crawl space and we needed to put a little more support under the floor. It did not have sufficient structural support for the county inspector so we had to add a couple of things. That took a little bit longer than we anticipated. We raised the ceilings. It was an older house and had fairly low ceilings and we thought that if we raised the ceiling it would create a much more dramatic effect, and it did. When people walked in the house they really were blown away by the look and the feel of the house.
How much did you end up selling the property for once you put it back on the market?
$130,000. We were able to get full asking price after ten days on the market!
How did you find good and reliable contractors?
There are a couple different ways to find contractors. In addition to just finding them you usually need to check them out. Go see them on properties they’re already working on, see what sort of job site they like to have where they are working. See if the contractors are smoking in the houses that they are working on or littering the area with trash. Little things like that let you know what sort of contractor you are dealing with. You are looking for a really professional contractor at all times. You can find a contractor anywhere. Anybody who swings a hammer says they are a contractor but you need to find really good, solid, professional ones who are going to take care of your property.
The contractors for this deal were referred by a private money lender who I know here in the Atlanta Metro area. He has a good friend who is a General Contractor and he recommended I talk to him. We hit it off and he did that property for us and he’s actually working on two more for us now.
Networking is critical. If you’re not networking, you’re not working.
Can you discuss the ARV for this deal?
I always do my own due diligence. I pull my own comparatives (comps). I don’t rely on anyone else to tell me what the ARV should be because what they tell me may be based on incorrect information. I don’t know where they get their numbers from. That is why I always do mine own comps. I based my comps for this property on the style of house, distance to my property, age of house, and the finishes in the house. There are a lot of different factors that go into generating the ARV. So, I always run my own. I don’t allow anyone else to give me what they think the number should be.
Where do you get from your comps from?
We use the MLS. I have a real estate agent who we work with and we are able to get total comps off the MLS.
How did you fund your first deal?
The first deal we did, we actually funded ourselves. We used the equity in our home. We wanted to prove to our future investment partners that we knew what we were doing, that we could be successful, and that we could have an outstanding finished product. We did it as a challenge to ourselves, to fund it ourselves and prove that we could be successful and we did. For our two current deals, we’ve used hard money lenders. These lenders are available out there. You just need to make sure you choose one that will work with your parameters, as well as theirs.
Do you use a portfolio for credibility now?
We do. We created a credibility packet for our future investors. We include our previous houses, before and after pics, details of our scope of work, and repairs that we did. We definitely put a credibility packet together for our future projects.
Does a credibility packet help to secure funding?
Absolutely. It shows a high level of professionalism. It shows that you need to be taken seriously and that you are really committed to the project and to the business. I think it’s very difficult to gain credibility with an investor if you just walk up to them and slap them on the back and say, “Hey, can I borrow $250,000?” You have to show them a little bit of why and with our credibility packet we can show them what the house looked like before and what it looked like during/after.
We can show them what we paid, the ARV, and we can show them the neighborhood. It shows that we made good choices when it comes to buying the house, we bought in the right neighborhood at the right price, we made good choices when it came to selecting our contractor, we made good choices on our finishes, and we made good choices on our selling price.
Will a credibility packet affect the interest rate for a loan?
Absolutely. I know some guys who are doing rehabs similar to us but they are paying 15% interest plus 4 points, which is crazy. When we approached our hard money lender for these two projects, we were able to reduce that because we had a very successful first rehab project and the future projects will be even more conducive for us to continue to do business with them.
What advice would you give to someone who is just beginning his/her real estate business?
Make sure you do your homework on your contractor. The contractor can really help make or break you. And secondly, don’t be afraid. Just grab your helmet and get in the game. There is a lot to learn and you’re probably going to make mistakes, but you need to be in the game to be successful. Make sure you keep on top of your contractor and buy some houses.