Flipping America 546, The BIG Question and Answer ShowFlipping America

Opening:

You’ve got questions? We’ve got the internet, er, we’ve got experts, um, we’ve got the Realty Bluebook. Seriously, today on Flipping America, we’ve got a pile of answers coming your way. Hopefully some of them will connect with your questions.

Here’s your reminder that if you have questions about real estate or real estate investing, you can send them to questions@flippingamerica.net. Or you can call 877-55-ROGER (877-557-6437) ext 1 and leave your question. We answer every question that comes in, usually within 24 hours, and some of them make it to the show.

There is an exception to the promise of answering every question. We are not going to do your homework for you. We can’t run comps on your potential property and we can’t really tell you if a particular deal is one you should do. We couldn’t possibly know enough about any particular situation. But if your question is more broadly useful to others, it’s ideal for our use. So keep on sending them!

How to contact us

Facebook.com/flippingamericamedia

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Call our National Comment Line: 877-55-ROGER (877-557-6437) ext 1. Leave your message or your question.

News and Resources:

An interesting biographical sketch of Robert de Heer, the author of The Realty Bluebook, who died in 2008. https://www.inman.com/2010/07/08/author-realty-bluebook-dead-87

Starr Has Questions:

Ellen, Milwaukee, WI. “My husband and I just sold our home to downsize and we are trying to figure out what to do with the money — over $200,000. He’s semi-retired, bored, and handy. We’ve thought about flipping some houses. What advice would you give us?”
Kandra, Las Vegas, NV “I recently attended a seminar here put on by [a TV personality]. I felt like it was just a sales pitch for a $20,000 course. But I was here for a course and really didn’t learn anything. I’m concerned that if I paid the $20,000 I might not learn anything there either. And I don’t have $20,000 anyway. So I didn’t do it. But I’m back to square one. I really want to learn this business! I don’t have any money and my credit has a few dings. Is there any hope for me?”
D’Wayne, Louisville, KY “How do you decide whether you are going to fix a property and flip it, fix it and keep it, or just wholesale it? I figure there must be a way to figure out the best thing to do with a property. I have a deal under contract for 72,000. It needs updating and paint and carpet. I think I’ll get $150,000 for it if I flip it. Or I could rent it out for $900 per month. But another investor just offered me $10,000 for my contract. What would you do?
James, Lancaster, PA “I’ve been researching various REITs and crowdfunding platforms. REITs seem like less involvement from me, which I prefer, but the returns I’m seeing are at best around 6%. With crowdfunding I can get closer to 10% on my money but I have to be a bit more involved. While I’m thinking about it, do you have other options you would recommend?”
Ellen, Villages of Ocala, FL, “We are trying to maximize the returns on our self-directed IRA. We started a little late in the game and don’t really have enough money in there to buy and flip a house. Any suggestions?”
Karenza, Long Beach, CA “I want to dive into buying rental properties here in southern california. My question is, am I too late?”
Britney, Penn Hills, PA “My husband and I are finishing up our first flip — so exciting! We are having a discussion about interior paint colors. Our property is in an area that has a lot of investor activity with trendy styles and colors. I want a bold color scheme, but my husband wants builder’s beige. Can you settle the debate?”
Elmer, Villages of Ocala, FL, “Please explain the installment land contract.”
Dorothy, Tampa, FL “My husband and I want to invest in rental properties but we are disagreeing about the type of property. He wants to buy cheap houses in older neighborhoods. I’m concerned about crime and the transient nature of the residents. I want to buy in nice middle class neighborhoods, but he is concerned that our returns would not be very good. We would appreciate your thoughts.”
Aldo, McDonough, GA “I bought a home in 2010 and today homes in the neighborhood are selling for twice what I paid for mine. Should I sell now while the price is high?”
Emily, Wayne, PA, “I’ve done three flips in the past two years. I really want to quit my job and do this full time, but I need to do four to five flips in a year to do that. How do I get to that level?”

Quote of the Day

Working harder on the wrong thing won’t accomplish the objective.

Expected Air Date: Wed 8/17/2022

Transcript

[0:00] You’ve got questions.

Seriously.

[0:17] Music.

[0:34] Real estate wherever you are.

Whatever your situation, there is an opportunity for you and now, here’s that flipping America guy, Roger Blankenship. Thank you, Kathy Curtis. Hello, America and welcome to the flipping America show.

[0:50] The show is golf Lipping America but we don’t believe that flipping houses is for everyone you shouldn’t drop what you’re doing and go start flipping houses like you see on TV.

It really isn’t for everyone but we do believe that everyone should be connected somehow to real estate and real estate investing we strongly believe in that.

And to that end, the show is here to give you the very best news and information, statistics, demographics, methods, research,

For you and real estate and here is your reminder that we answer every question.

[1:27] That comes to us about real estate or real estate investing with

I just want exception I’ll get to in a minute but if you have a question about real estate or real estate investing you can send them to questions at flipping America. Net questions are flipping America. Net or you can call 877 55 Roger that’s 877557

6437 extension one and leave your question

We answer every question that comes in usually within 24 hours and some of those questions actually make it to the show which today we call the big Q&A show,

We’re not gonna do your homework for you we can’t run comps on your potential property while we could but we’re not going to and we can’t really tell you if,

A particular deal is one you should do

Pay us.

[2:41] Okay?

Keep on sending them and we’ll keep on answering them. If you wanna follow us on social media, flip at flipping America on Twitter and Instagram or flipping American media on,

Hey Facebook,

Thanks to our sponsor today flipping America go we just rolled it out as a partnership that we we’re doing with house folios I’m really excited about it you type in the address you look at the indicators based on your own deal criteria and when you see a green light,

Go that’s flipping America go at flipping America go. Com 7 day free trial and a 30 day money back guarantee.

[3:30] For picking America go.

[3:35] I mentioned in the opening the real the realty blue book Robert to hear put this book together years and years and years ago and I haven’t the notes a very interesting.

Biographical tribute to Robert Robert to hear.

Holocaust in World War two.

I swear by the Realty Blue Book and you should do you will too if you get it if you are in real estate at all and you don’t have a copy of the Realty Blue Book you need to go to Amazon or your local book seller and get a copy right now.

[4:22] Okay.

[4:26] Ellen from Milwaukee Wisconsin my husband and i just sold her home to downsize and we’re trying to figure out what to do with the money it’s over $200 thousand his semi retired board and handy.

We’ve thought about flipping some houses. What advice would you give us?

I think that the first thing you might wanna do is sit down with your husband and talk about what your goals are,

Okay you did mention he’s bored and handy so maybe it’s a fit,

Talk to a real financial adviser i am not one and i don’t even play one on the radio

Hey if you wanna think about flipping houses,

My standard recommendation is that you get some knowledge then get a mentor and then follow a proven path now I know that there is a,

There are groups in Milwaukee that meet up called

Real estate investor associations reas I don’t know the people in Milwaukee personally but I know that there’s a rea group there and sometimes you can connect with people there who have some experience and when I’ve noticed is that.

[5:53] In the rear groups there is a general smattering of knowledge there if if you have.

100 people in the room there will be 10 of them that are active in doing deals

And another five or so that our curious enough that they will actually take the steps to become an investor out of the 10 that are actively doing deals,

Will be.

They might wanna get paid for their trouble, but yeah, that is a very good place. Now, if you’re already handy, you know some things about fixing the house, you may want to just,

Take a look at some online resources such as you get it flipping America. Net

And slash flip starter. Look at flip starter. Think about taking the course. I know that we’re running a special price on it right now.

Normal retail price but look at

Flipping America. Net forward slash flip started. That’s a good place to start. We gotta take a little break. Flipping America go allows you to sift three thousands of single family properties and find the best deals

Best.

[7:14] The season veteran. You could save your preferred property assumption so that when you see a green light, you know the property meet your criteria and is a good deal for you.

If you’re new to investing don’t worry go comes with settings already created and used by experienced investors which will help you get started.

[7:30] Would you analyze spreadsheets or scan the MLS whether the house is on or off the market go we’ll help you find and analyze the property.

It comes with the money back guarantee and a 7 day free trial just go to flipping America go. Com that’s flipping America go.

[7:47] Okay, that break kinda just jumped up there at me. So let’s pick up the pace a little bit because that’s one question. I hope that helps there.

If you have online resources and of course we have a mentoring coaching program as well Ellen and we would be happy to talk to you about that and I would encourage anyone listening if you want

Schedule a call. You can go to Flipping America. Net and there is a link at the bottom of the first page to schedule a strategy call. Let us spend 30 minutes on the phone with you. We’ll just you know make that our gift

In your business and maybe there are things that we can do together maybe not but.

[8:28] We’ll certainly be glad to help you try to figure it out

Cuz the name but we’re just gonna say TV personality,

I might not learn anything there either and I don’t have 20 1000 anyway so I didn’t do it.

But I’m back to square one. I really wanna learn this business. I don’t have any money in my credit has a few dings. Is there any hope for me? Kendra, there is hope for you. There is hope for everyone.

The first thing you’d really need to do is just start listening to this show all the time,

Get on over to Flipping America. Net and here I am you know pitching our courses again but I have a course and we sent you a coupon code candle.

[9:22] I have a course called Real Estate Investing Quick Start.

So, you could take it for $79. Now, if anyone is hearing us, hearing me say this right now, and you want that code, all you have to do,

Drop an email to questions at flipping America. Net.

Okay cuz that way it helps us know how many people are responding to what we’re saying here.

[10:05] Okay.

Or fix it and keep it or just wholesale it.

[10:18] That’s a good question. I figure there must be a way to figure out the best thing to do with the property. I have a deal under contract for 72 1000,

It needs updating and paint and carpet i think i’d get 150 1000 forward if I flip it or I can rent it out for 900 a month but another investor just offered me 10 1000 for my contract what would you do.

Hmm.

[10:48] Hey we’re strongly encourage you to just,

Take a moment and look at your life you’re in a good situation because you know you got that 10 1000 I know you need to respond to that pretty quickly because you know

Timers of the essence in real estate deals in the clock is ticking and it never goes backwards interestingly enough so you’re moving toward that closing date

And you gotta figure this out. So, if it needs updating paint carpet, I don’t know anything about the age of the house or the square footage but I’m gonna say that you’re looking at a $30 thousand rehab. So, you’re gonna be

Let’s say you’re all in,

For 205 1000 if you sell for 150 1000 by the time you pay for the cost associated with the closing you’ll clear about 35 1000 it will clear about 135 so

135 minus your say 105 so there’s a 30 1000 gross profit but if you have cost of capital to figure in there you’re gonna pay I don’t know

Let’s just say 5000 in the cost of capital.

[11:58] If you’re in it for 105 1000 you’re renting it for 900 a month it doesn’t qualify as a one percenter,

Good because your cost basis is just too high. For 900 a month, you will want your cosplays to be 90 1000, okay?

I think what it really comes down to is the investor offering you 10 1000 now

Or the possibility of making 25006 months from now that’s what you’re looking at and which one of those would be better for you,

Only you can decide that twain but i hope to just the process of thinking through it like this helps you to think through your situation,

Figure out what to do. I know you can. You’re smart enough kids stealing a contract. You can figure this out.

[12:49] Good job by the way

Seem like less involvement from me which I prefer but the returns I’m seeing are at best around six% with crowdfunding I can get closer to 10% on my money but I have to be a little bit more involved.

[13:11] While I’m thinking about it, do you have other options you would recommend? Well,

Yeah James I I know a note guy and a an apartment guy that both if you have enough money to put into it one of their funds that you can make 12%,

By investing with us in our flips and.

You know, we we set them up so that they haven’t average annual return 25% or better.

Anyway

You can find some wreaths that are getting double digits returns but you’ve got a lot of things in real estate that you can be passively involved in and make

10% are better on your money,

We offer some of those things but you can find some wreaths and of course you can do it with crowdfunding as well.

You’re on it.

[14:37] We are trying to maximize the returns on our self-directed IRA. We started a little late in the game and don’t really have enough money in there to buy and flip a house. Any suggestions?

Well it depends on who you know.

One of the things that I did early on was myself directed was I did an option swap with a friend of mine we were both flipping houses outside of our IRAs with other money.

[15:05] I had a property where it looked like I was gonna make about 25 or 28 1000. He had one that looked like he was gonna make about 25 or 28 1000. So,

I took my IRA money and I bought an option on his property he sold it to me for a $1000,

And I sold him an option I wanna mine for a $1000 and we agreed that the option payoff would be 20 1000 so when I went to sell my property.

They saw that I had an option recorded as an incumbents on the property and so they called my friend and said what’s the payoff on this option

Or do you wanna exercise it? He said, no, I’m not gonna exercise. It’s payoffs $20 thousand. Well, he bought the auction.

Option with his self-directed IRA money so the payoff went to his self-directed IRA and then he sold his property and the same thing happened so we traded.

Options on our flips.

[15:58] That’s pretty cool. I know the thing that you can do and I don’t know how active you are, Ellen, but another thing that you can do is you can put a property under contract.

And use your self-directed IRA

And you know, you can get loans for through yourself direct to diary. You may need to talk to your banker and make sure you have that, you know, duck lined up

Before you put a property under contract but it’s possible to get loans and and do the deals you don’t necessarily have to have all the cash right in your IRA and here’s another

Interesting thing and you you need to talk to your custodian about this because they have different understandings of this but.

Other entity. So, let’s say that you have an entity called.

[16:58] Okay? Well, hell Ellen. Ellen and my hubby LLC can,

Proportionally.

[17:24] Are you glad you wrote in.

I hope so.

Remind you to check out Dimitri Phomachenco.

[17:39] Yeah I I shouldn’t have said that because I can’t call his website right off but if you looked.

[17:49] Unusual spelling for Dimitri former Chinco FOME.

And in self-drated area he is a good guy

And he has a great program. He’s got a self-directed program and one of my investors actually connected with Dimitri and loves working with the guy.

[18:15] Pretty cool.

Interesting name. Long Beach California.

[18:28] And karinza I’m going to say.

Sorry.

The fact is I would not buy any investment property in California because I do not want to deal with the morons in Sacramento I I don’t want to you know the overregulation there in California is,

Amazing. It’s amazing to me that anyone would wanna do business there because of what you have to put up with.

You know, for your states but I actually have a person in the buyers club who was going through this long-evolved process to do something with the house from our club in Ohio and I and I was on the phone with her. I said, look,

You know how to do all this.

[19:24] She said, well, I know, here in California, it’s this, this, this, this, this, this, this, this, this, this, and this. And I said, you can take all of those things, all of those this is, and you can do none of them.

She said really,

I said welcome to the rest of the United States the land of the free the home of the brave.

First of all, the regulation California is crazy. The environment that shows bias toward tenants is another reason I wouldn’t be in California and when you say Southern California, I’m not oh you’re in Long Beach. So, you’re in the LA area.

Boy with rent controls going in there and all and and how difficult it would be to get tense out.

Nah.

Instead of buying properties in California stay and live enjoy the weather there and buy your rental properties in other states like in flyover country.

And there are several places you can go like that.

And the rest of the country and I know you might be thinking why would anybody wanna live in Indianapolis, Indiana? Well, the people that are from there wanna live there and it it’s it’s a real town.

You know, it’s beginning of David’s own NFL franchise. So.

[20:46] And I’ve been there and I know some guys that sell turnkey rentals there and the turnkey rental things which you really want.

[21:07] My husband and I are finishing up our first flip. So exciting. We’ll congratulations. We’re having a discussion about interior paint colors. Our property is in an area.

There’s a lot of investor activity with trendy styles and colors i want a bold color scheme but my husband wants builders beige can you settle the debate.

Well, the answer to your question is, no, I don’t think I can.

But i can weigh in on it if you would like and I’m sure you would like cuz that’s why you wrote. So, here’s what I think.

[21:41] In general.

I don’t wanna create a love hate relationship with anyone that comes out there. Some people may love it. Some people may hate it. I don’t want there to be anything that controversial.

I am though however looking for at least one wow factor in every house.

[22:05] Take for example Toyota automobiles.

As Paragons of style they are not.

[22:20] Unusual performance? No.

Popular because they are reliable.

[22:35] And that’s really kind of the thinking behind the generic sort of builders page. The difference is it’s a lot easier to paint a bedroom than it is to paint your car. So,

If you paint the house with a neutral light color people can come in and they can picture painting it with a colors that they really like you know for a while heirloom pink in 2019 was the trendy hot color so

If you went out and painted you know the walls in your dining room heirloom pink there would be a dozen people

They would look at it and say oh that’s so trendy that’s so cool. And there would be 500 people that would say who wants a pink dining room?

And so you you would get that you see and that’s that’s what I’m talking about. Now.

I actually,

I was doing the whole neutral colors throughout but my realtor said I understand the neutral colors and so forth I think you gotta do something to make the front door pop,

Now this house was a cream color and it had a cedar.

Type of trim and we had cedar shutters on. It looked really good on the outside. We painted the front door a bright light turquoise color.

[23:57] And I would have thought I I thought I would never want a house with a front door that screams look at me that much however.

[24:07] No one ever.

Said anything other than cool front door. If people didn’t like it, they didn’t say it but a lot of people said, cool front door. And you know, we weren’t the only cool front door on the street that so,

That might be a happy compromise actually find one thing that you can do to give a pop of color or a wow factor I want the,

If it’s a couple buying my property and it’s subman and a woman I want the woman I’m sorry I know that sounds massaging is to whatever but I do know that in these situations.

The man is like whatever. Does it have a garage? I can put some tools in. They don’t care about the inside of the house that much. They just want their wife to be happy. And so I want to hear the wife say oh wow,

At least one time in the tour of the property if we can get that mission accomplished they can paint the rest of it to suit them but i want them to have at least one wow factor if that’s the front door fine essay actually a cheap way to do it

I usually look for something in the kitchen or the master bedroom to make them say wow but.

[25:19] Those are my.

[25:27] I think we can get a couple more in here. Elmer says, Elmer from the villages of Ocala says, please explain the installment land contract. Oh, well, maybe we won’t get a couple more in here.

It has to do with land or real estate,

And it’s a contract so it’s an agreement

And then after the payments are all made, there’s a transfer of the deed. Sometimes it’s called a an agreement for deed, sometimes just called a bond for deed, sometimes it’s called a contract for deed, but land installment land contract.

What it is? Now, these have been around for a long time,

It is a way to provide financing to people who would not be able to get it from the bank or on properties that may not be bankable,

Lindamore. So, it could be the people or the property that wouldn’t be able to secure the loan.

[26:32] We use them all the time. I’ve used them hundreds of times.

Because we do a lot of seller financing of properties that need work. And this is an ideal way to do it. Now.

[26:46] In case of a default on an installment land contract the people have been making the payments but they have not been accumulating any equity in the property,

It is a popular tool with unscrupulous investors who find a way at say do you have a 10 year contract and.

After 8 years of good, you know, faithful paying. They trump up some charge and kick the people out.

Well under the terms of the strict terms of the agreement

And I think that’s a wrong way to treat people and the courts have agreed and so now there are increasing regulations coming in about the use of installment land contracts

And it’s one of those things that, you know, in the next 10, 15 years, I may go away completely but until they do, I’m gonna continue to use them,

Because it helps us get buyers and homes.

[27:41] I have a person who does have great credit and I wouldn’t really want to do a note and security deed where I would have to foreclose on them if they’d fall to because it’s just too costly but,

And I do this especially in difficult or judicial foreclosure states.

Even though the contract says that it’s still not allowed you’re not allowed to do that in the state of Illinois.

And things are changing in Ohio and there’s rumblings of things changing in Pennsylvania to so keep in mind that if you wanna use installment land agreement,

Or the assignment lane contract you’re gonna need to check with the local laws and probably have a good attorney in that area

Well, okay, I got time for one more anyway. Dorothy Tampa, Florida, my husband and i want to invest in rental properties but we are disagreeing about the types property. He wants to buy a cheap houses in older neighborhoods.

I am concerned about crime in the transient nature of the residents i wanna buy a nice middle class neighborhoods but he is concerned that I return to not be very good we would appreciate your thoughts,

Yeah, split the difference. No, seriously, okay.

[28:56] Ear returns are not gonna be great in a in a even if the numbers look good on the house if you have crime or a lot of moving in and out your numbers are not good I’ve been there done that.

I think it’ll be better often than nicer middle class neighborhoods with decent schools because the best cash flowing single family homes are ones where people move in stay for several years,

And you don’t have to worry about them until maybe their kids are growing.

That’s the best single-family rental house. I got a lot more to say about that but we are clearly out of time as evidence by that music. So, let me just say.

For yourself. Working harder on the wrong thing won’t accomplish the objective.

You’ve been listening to flipping America real estate investing for everyone. Listen three times a week on stations across the country or on the flipping America.

[29:51] Music.

Flipping America

Flipping America 546, The BIG Question and Answer Show