Learned from mistakes, got back on his saddle for a $165K equity deal
Pierre has experienced the ups and downs of real estate investing. One week he profited $36K on a deal, and the next he had thousands of dollars worth of appliances stolen from a house he was showing to potential renters.
Pierre is the to first admit that he learned a lot from making mistakes, which inform his decisions now as an investor. His business is now thriving, and he never hesitates to ask questions — especially when it comes to financing a deal!
Pierre’s experience as a real estate agent contributes to his investing business as he develops relationships and collaborations in the community. Pierre currently buys, fixes, and sells properties as he builds a leasing portfolio and strategic alliances.
Pierre says that having a mentor in the real estate business is just as important as inspecting the structure of a house when vetting a property. He enjoys the financial freedom and flexibility part-time investing brings him, and looks forward to being a full-time investor.
Listen to our conversation with Pierre, during which he talked about his recent deal, plus…
- How to identify an inaccurate ARV on a deal
- Creative ways to find reliable and cost effective contractors
- How to show a property to potential renters while keeping it secure
NOTE: Since Pierre is a Premium Elite member, he received a FULL refund of his up-front membership fee for simply doing a deal! Find out more about our Premium Elite membership here.
Read the full story here:
Tell Us More About Yourself…
Would you consider yourself a part-time or a full-time real estate investor?
I was part-time and I’m definitely moving into full-time.
How much time do you currently spend on your real estate investing business?
During the week, I spend probably about 20 hours a week looking at different properties. It used to be much more time, but when I found MyHouseDeals, I was able to free up a lot of time because there’s a lot of product here, through the website, and the daily updates. It’s really taken that burden of allocating my time out in the field away from me greatly. I find it very advantageous.
What is your full-time career?
I’m a licensed real estate agent and I work with Keller Williams in Atlanta, Georgia.
How long were you a real estate agent for before getting into investing?
Before I was a real estate agent, I invested in the early 2000s. I was buying and selling and flipping properties back then, but there were a couple of mistakes that were made from the hard money side. Then, I became a licensed real estate agent. Now that I’ve learned what I’ve learned, it’s allowed the opportunity for me to come back to home investing.
Tell me about the moment you realized that you wanted to be an investor. What motivated you?
I accidentally bought a couple of homes that were in really bad condition and in a really bad area of town. When I say, “accidentally,” somebody was really motivated and really needed some money. I happened to have cash. I bought it down by Turner Field, in a not so good area. I used basic skills that I had for painting and some carpentry. Put a “For Sale” sign up, and while I was still working on the house, I had it under contract. I sold it and realized a $37,000 profit inside of six weeks.
Then, I went and did a few more properties and projects with the intent to find them, and I found it was a difficult walk to do because I wasn’t educated. I didn’t have a MyHouseDeals.com company beneath me. I was still doing well and making some really good money. I made one really big
Can you tell me more about this mistake?
I found a property. It was a 3/1.5. I turned it into a 5/3. It was the Decatur area. I got a hard money loan for about 18%. I let somebody go in on a lock box without having them take a picture of themselves or me being onsite. When they went in, I said, “I’ll be there in 30 minutes.” Well, in 10 minutes, they had loaded up the refrigerator and about $5,000 worth of tools and a gas range. That put me behind. I had to re-invest that money. I got behind on my note with the hard money lender.
Then, they asked to be in the first position on the note. I didn’t know what that meant. It scared me. I ended up pretty much losing most of the deal. First position means, they just wanted to be paid first at closing. If I had that education, if I had known what that meant back then, I wouldn’t have given up on the property.
It was based on my ignorance because I didn’t surround myself with other investors or other groups like MyHouseDeals.com where I actually have resources and people to talk to and now share stories with and educate with. The power of education is so, so important. It’s so important to build up your real estate knowledge through investing education.
What would you tell a new investor to prevent this from happening to them?
First of all, never give somebody the code to your lock box unless you’re there on site or you can prove it’s an actual real estate agent or a broker. It’s a good idea to find an agent to represent you so that they can have control of that to take that off of the plate.
Build a good relationship with the lender and ask a lot of questions. Make sure that they know upfront that you may not know if you’re asking the right question or if you don’t understand something, just let them know, “Honestly, I don’t understand what that means. Could you please let me know what the risk is or what the advantage is to what you’re offering?”
Don’t be afraid to ask questions. Remember, you don’t know everything. You just simply don’t. It’s okay to ask the question. If I had asked those two questions or took those steps back then, just as quickly as I stumbled into the business, I may not have stumbled out just as quickly as well.
What motivated you to get back into real estate?
I went to a Fortune Builder’s Class to see if I could get my passion and juices flowing again. It was through them also that I had found MyHouseDeals, by the way. I was referred to the website. They seemed to be very ethical and full of information and sincerely wanting to help people. It woke me back up to doing something that I can do where I don’t have to go to a 9 to 5 every single day, work for somebody else, because I just don’t like doing that anyway.
I love building relationships. I love to help people buy a good deal, because it doesn’t have to be all one-sided. Everybody can have a win/win situation at the closing table, whether it’s wholesaling, investing, or leasing. I greatly enjoy getting a paycheck in my hand that’s sometimes $20K, sometimes $30K, sometimes $150,000. I really enjoy the cash component. It has improved my lifestyle greatly.
I have much more time on my hands with a higher reward. I like that. I also enjoy helping people, sometimes getting them into their first home, because I’m in it the right way. I can actually help them.
Tell Us About Your Real Estate Investing Strategies…
How do you build up your real estate investing education?
I go online. I check out the videos that you all have. I really appreciate it. I still go online and also I go to Atlanta Real Estate Investment Association meetings. I go to Home Builders meetings. I’m networking. Not networking like crazy, but I network enough so I get out there and find a few people to attach to and to gain market knowledge from. As far as education, like at Keller Williams, I do a MasterMind book. I meet with residential agents and I share with them, “Hey, if you find something that looks ugly or you don’t want to touch it, I’m interested. Let me know what you have.” One man’s trash is another one’s pot of gold.
I’m building those relationships as well. They’re also educating me on what’s in the market, in areas that they serve because they want really finished products and I don’t. When I’m done, I now have a finished product I can offer them back in their area. They really enjoy listing that property.
Do you focus more on buying, fixing, and re-selling or holding the properties?
Right now, I’m buying, fixing, and selling. My intention is to find properties to hold. I do want to build a leasing portfolio because I wish for my business to grow so it’s counter-cyclic, no matter what the economy is doing, my business is going to thrive.
What’s your long term strategy for investing?
My long term strategy is to find an investment group that is willing to share their pockets with me so I can go out for lateral property opportunities simultaneously. That’s what I would really like to do because if I’m going to do one house at a time, that’s okay but I have the crews to do 3 and 4 projects at one time, but I would like to get into multi-family, C class, D class properties, maybe find a trailer park or two. I’m definitely looking for town homes and town buildings that have been abandoned.
My business strategy is to flip and build cash, build a good reputation, re-build my reputation in the industry because I did step out for about 8 years. Then, have strategic alliances so that I can create a portfolio that’s worth somewhere north of $10,000,000 so I can receive a residual income of about $150,000 a year, plus my cash-out on my homes, on my flip properties where I’m making my cash as well. My end game is to realize somewhere between $350,000 and $425,000 net per year. I hope to achieve that within 3 to 4 years.
Tell Us More About This Deal…
With this particular deal, what kind of property were you looking for?
I was looking for older homes. Homes built before 1980 down to 1920. I was looking for 4/1’s, 3/1’s, 3/2’s. Anything like that where I could get at least two bathrooms in and maybe knockout a bedroom and somewhere in a denser, highly demographic profiled area in Atlanta, in an up and coming neighborhood, which is this deal.
I found this property on MyHouseDeals.com. It is a 4/1. We’re going to gut out the entire interior. It was built in 1938. We’re going to add on half of the house, a story on top of it. That’s the perfect ideal candidate. I got it for $120,000. I’m going to spend about $80,000 to $95,000 for the renovation. We’re going to sell it for about $375,000.
I made the offer on the property, the gentleman that had the property, he already had it under contract. I went away during the weekend. He said, “Nothing’s going to happen over the weekend.” During the weekend, he accepted a contract on the property, after he told me, “Don’t worry about it.” That’s something for you to learn too. If there’s a property you want, go out, write the contract, and you’ve got your 5, 7, or 15-day inspection period. Get control of the property so if you do go away for the weekend, you don’t lose the deal.
However, the person that wrote the contract, their earnest money didn’t hit on time and the seller gave me the opportunity that if my earnest money hit by noon the next day, that I would be the one earning the contract. That’s exactly what I did. I walked down there with a cashier’s check for $5,000, that would be non-refundable in 72 hours. I closed on the house inside of a month.
Did you find the ARV and estimated repair costs to be accurate on MyHouseDeals website?
There’s always room for a little nudging here and there. I would say it was pretty close. With some of the deals on MyHouseDeals.com, I don’t agree with the ARVs. I’d say they’re about 25% or 30% off, but in this deal, it’s been a 10% error.
What advice do you have for other investors who think the AVR is high?
Usually the repair cost might be too little and the ARV a little bit too high. When I see it a 20% to 30% difference it gives me a yellow flag. Of course, due diligence is “Beware the buyer.”
Tell Us More About Financing The Deal…
How did you finance this deal?
I got a cash buyer. I created an investment company called Harvest Home Investors, LLC. We are looking for investors to fill the offer so that when the deals do come by, we can immediately spring on them and then I’m offering a 7% return on people’s money. I am putting them on the first position of the title of the home. That way, they have full collateral without risk of losing the deal.
Do you have any advice for investors looking for private money?
Don’t be afraid to ask. I see people, and they don’t know how to ask. If you talk to somebody casually and say, “Hey, so what do you do?” They say, “I do this. I’m a dentist.” They’ll say, “What do you do?” You say, “I’m an investor and doing really well. How’s your money working for you?” If you ask them, “How their money’s working for them? Their IRA or their loss?”
They’re going to say, “4%.” My next question is, “How would you like to make 7 or 8%?” It perks their ears up. I take them to lunch. I show them my portfolio. I show them my team because I’ve got contractors. I let them know that I have the people around me to get the job done. I’m not a guy with the hammer. I’ll find out how much they are willing to put in on a cash deal. Then I set it up and put it in the account. I assign a deal to them based on what their needs are.
Is the property from your deal on the market now?
No, I’m not going to put this on the market now. We’re working for the permitting in Atlanta. Typically, I would put a “For Sale” sign out front anyway, while I’m doing the build-out, in case somebody wants to come in and pick their own colors, but when I’m finished with the interior demolition and I’ve got it ready to go, then part of my strategy is to put a “For Sale” sign out front. It would say, “While under complete renovation, buy this house and pick your colors and your granite counter tops.”
Tell Us More About Finding Contractors…
How are you able to find reliable contractors when you’re rehabbing a house?
I happen to have the resources around me from being in the business for on and off for 20 years. If I didn’t know how to get those people, I would strongly suggest going to a real estate investment association groups in your area. I would go to builder meetings. I would do that and start meeting people, with a warm smile, a good conversation, and a firm handshake. Let people know what you are looking for, or if they hear of somebody that is good, reliable and cost-effective. The cheapest guy is not always the best guy and the most expensive guy isn’t always the best guy. Find somebody who meets your needs, whether it’s a female or a male contractor, because I use both, by the way. Just get out there and network.
I use Craigslist sometimes. I go to Craigslist when I need somebody immediately. I interview them over the phone. I can tell if they know what they’re doing or not just over the phone conversation. Sometimes, you find some really great people that way. Go to Home Depot or Lowe’s. Walk up and down the aisles. Go to the Builder’s side. Look for somebody who looks like they build, or that they are a contractor. I’ll go to the plumbing section and maybe find a plumber.
Do you have any other tips for new investors?
I would say the most important thing other than mentoring is to look at the structure of the house. Know that the structure is sound. If you’re a first-time person and the structure is not sound, whether it’s from the subfloor, joists, or the rafters, I would say get away from it. Just get away from it. Make sure the structure (the bones) is good because the rest of it can be replaced. No matter what, once you do it, the day of closing, make sure your house is under a fully insured. Make sure it’s fully insured, if you don’t want to accidentally lose it the night you buy it.