Never Forget: “You Learn From Your First Deal More Than You Do From The Next Ten”Reading Time: 8 minutes
Although he is a self-proclaimed newbie to real estate investing, Kevin has always had a passion for the business. A couple years ago, he decided to sell his marketing agency and start a new chapter.
Finally able to make the time commitment, Kevin attended seminars and utilized resources until he gained the confidence to complete his first real estate deal. With MyHouseDeals as one of his resources, he has been able to find deals as well as private lenders to build his business.
Kevin views his first deal as a true learning experience, acknowledging that the lessons he learned during that time would go on to inform his next 10 deals. As he sees it, education helped build his confidence, then practical experience has helped him grow his business. We sat with him to learn about the most recent property that he flipped and his overall strategy as a real estate investor.
Kevin’s deals are straightforward flips, and he has enjoyed the flexibility of working with private lenders to get those deals financed. Kevin recognizes that building trust and relationships with private lenders will only help him expand his business.
With one deal under his belt in year one, two deals in year two, he’s excited to already have three deals in year three of his real estate investing career!
Listen to the interview or read it below and learn…
– Kevin’s go-to source for funding
– Why it’s okay to start small and grow over time
– Why and how to get CMAs (comparative market analysis) to help determine a property’s ARV (after repair value)
NOTE: Since Kevin 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 Kevin’s full story here…
Can you tell us about yourself and your investing background? What inspired you to invest in real estate, and how long have you been an investor?
Well, I’m a relative newbie to real estate investing. I’ve only been doing it for about a year and a half. Well a little less than two years now. I recently sold my marketing agency. I was looking for a new chapter in my life, and I’ve always had a passion for real estate, but really no time to commit to doing it.
When I started it, I kind of started a little slowly, and I purchased one property in 2014, then two last year. I’ve got three going right now, so now that I do have more time, I’m really jumping into it sort of head first.
How have you built up your education in real estate investing? What types of training or books do you focus on?
Real estate investing kind of seems like it’s in Vogue these days, especially in our market in the Dallas-Fort Worth area. It’s very competitive. I actually attended one of those big seminars that you hear advertised, and while it was very educational and I think I got a lot out of it, I think the biggest thing for me wasn’t so much the education, it was more gaining the confidence that you knew what you were doing, so that you can actually go out and make your first deal.
I think the biggest deterrent for most investors or people wanting to get into investing is they feel like they don’t know enough about it and they’re not confident to get out and start doing it. That was what seminars helped me do, but to be honest, you don’t have to do those things. There’s plenty of resources out there including MyHouseDeals.com, where you’ve got all the resources and tools at your disposal. Listening to other investors, and how they’ve done it, that’s just how I started.
What are your plans for this particular deal that we’re discussing today?
Well this is your pretty straight forward flip. It actually happens to be in an area of Dallas-Fort Worth that I’m really familiar with. I was pretty confident in knowing what I needed to do here as far as what sells well. It’s a full cosmetic rehab. The bones of the home are very, very good so it didn’t need any structural changes, any foundation or anything like that. It’s mainly cosmetic and updating the house to make it look new.
How are you able to find and keep good and reliable contractors for your rehabs?
Well that is a big challenge. For the three that I’ve done so far, I haven’t used the same contractor in any of them. When you’re first getting going, it’s really kind of an interview process. I mean you do your due diligence, and you do as much vetting as you can of the contractors before your hire them for the projects. But you don’t know how good, how reliable, or how responsive they are until you actually get into it. Not that I was terribly dissatisfied with any of the contractors I used, but I didn’t feel like any of them were really good fits for me.
Currently, I think I have a contractor who is going to be a good fit for me now. He’s working on two of my deals, so I think we’ve got good ones coming forward here. That is a big challenge. The ones that we used, we were referred, and I think that’s the best way to do it, is from people that have used them before. You can get them referred through other investors or other wholesalers.
How do you acquire reliable comps information when you’re analyzing a deal?
Well it’s imperative that you do your due diligence and you check other sold properties. I happen to have a friend of mine who’s in real estate. He’s a realtor, and helps me with comps and things like that when I need them. Doing a CMA or comparative market analysis around the area where your buying homes is imperative I think. I don’t think the wholesalers try to inflate their ARV’s. For the three that I’ve done, I’ve sold them for at or above what their initial ARV’s were.
I think they were pretty good, and I think a lot of it has to do with what you put into them to be honest. I will say this, it wasn’t the ARVs that were inflated, I think it was the rehab budget. The rehab budgets seem to be a little low when the investor or when the wholesalers are putting their information out there. That may be based on an average. Again, I may be putting more money into my homes, but maybe that’s why I’m getting a higher sale.
I think you have to do your research, and you have to know your areas. I think doing deals in areas where I’m familiar, makes a big difference because I know what the values are, and what they should be for homes that are rehabbed or not.
What funding sources do you use, and what do you recommend for new investors?
It’s not the same for everybody. Everybody is coming into it with different means. My first deal that I did, I was able to buy it for cash, and rehab it. I didn’t have to go through the typical lender. I’ve only had to use a lender twice so far, but when we’ve done it, there’s no shortage of lenders out there. If you’re buying through wholesalers, most of those have lending sources available through them.
There’s really quite a few private lenders and that’s really the direction I would recommend people go. You generally pay less fees with a private lender than you will with a hard money lender. A lot of the wholesalers will have a source, but a lot of times they are private. They’re a little easier to work with sometimes. Especially once you’ve done a few with them, you build up some trust with them. They’re very flexible on terms.
Rates and points tend to be pretty consistent, but the ease and flexibility of working through a private lender most of the time or at least in my experience, has been a lot easier then working with a hard money lender.
How do you find good private lenders?
Referrals. And I know that’s one of you all’s resources online. There are lists of those private lenders that you make available, and I have reached out through a number of those, and I did connect with a lender on your site. You have to ask people who you know, and you’ve worked with. You have to ask other wholesalers and other investors who they use. I don’t think people rely enough on other investors. These guys have gone through what you’ve gone through or are going through, so they’re a good source of information.
Networking plays a tremendous role in real estate investing, correct?
Yes, and I don’t do near enough of it, but it’s definitely a key part. It’s a good tool, and there’s a lot of good networking and real estate investment networks out there.
Looking back, what do you wish you knew when you first got started in real estate investing?
One thing that I didn’t realize when I first got started is that there’s more information out there that’s super easy to find and access, then I thought there was. Resources, videos, etc. You don’t have to go to some of these expensive schools to hear this stuff. Not that they’re not good, and that they don’t give you good information, they do, but you don’t have to attend. Like I said at the beginning, the one thing that I think a lot of people struggle with is just getting the courage to get out and do that first deal.
I looked at it this way, my first deal didn’t even have to make me money, it was just something that was an experience. You’ll learn more from your first deal then you probably will from your next ten. You just have to do it, but it takes a little guts to do it. That takes time to gather up, and that’s usually just through information and gaining some confidence by the information you have. I know the MyHouseDeals site has a lot of tools that can give a lot of people the confidence that they would need.