You are currently viewing Flipping America 251, The Questions You SHOULD be Asking

Flipping America 251, The Questions You SHOULD be Asking

The Questions New Investors SHOULD be asking

Expected Air Date: 5/25/19

Opening:

A few days ago we got a question from Lamar asking, “What questions should new investors be asking?” We liked the question so much we decided to make an entire episode out of it. We conducted a survey online and got some interesting responses which I will share plus I will weigh in. Here’s why this is important. If you are new, you need to make sure that your first project has the best chance of succeeding. In order to do that, you must engage in risk mitigation. And how do you do that? Ask questions. Ask a lot of them. Don’t be afraid to be new. Everyone was at some point. The question may be obvious, even to you, but ask it if you don’t know or are unsure. Today I’m going to focus on questions that may not be so obvious to you, the newbie, that we all wish we WOULD have asked if we had known. 

Plus we have news about the world of real estate coming up in just a few minutes. 

How to contact us

www.RogerBlankenship.com

Facebook.com/flippingamericamedia

Twitter and Instagram @FlippingAmerica

Call our National Comment Line: 404-369-1018, ext 1. Leave your message or your question. 

Email your questions to questions@rogerblankenship.com. Please always tell us where you are from. We like to know where the show is being heard. And let us know how you found out about us if you don’t mind. 

Announcements:

  • Lunch with me every Wednesday. Baraonda
  • My latest article in Forbes is out. bit.ly/findredeals.
  • The FAN is here!
  • Would you like to invest in the Flipping America projects across the country? Coming soon you will be able to for as little as $100. That’s right, Flipping America is partnering with Ground Floor Funding to create a crowd-funded platform where you can invest in the deals we are doing here. The fund will pay out a 8% preferred rate of return and can go as high as 16%. You can make money with me, the Flipping America Guy. 
  • Flipping America App is in the app store. You can listen to the show, read the show notes, and the entire catalog of shows is now available to you. It’s a free download and there are no upsells or in-app purchases. Free to download, free to listen. Go ahead and give it a try and drop me a line and let me know what you think.
  • Want a quick analytical tool to tell you how strong a potential fix and flip deal is? Download the Property Grade app. You answer 10 simple questions about the property and the app instantly tells you what you can expect to make, your return on investment, your return on cash, and then the program gives the project a letter grade using the proprietary Flipping America Investment Property Grade algorithm.  

Real Estate News

Local News

The biggest mall owner in the US ‘can’t guarantee’ there won’t be more retail wreckage this year

https://www.cnbc.com/2019/04/30/us-mall-owner-simon-property-group-reports-first-quarter-2019-earnings.html

One of the most valuable malls in America is getting a makeover

https://www.cnbc.com/2019/04/30/westfields-garden-state-plaza-mall-is-getting-a-makeover.html

Rising rents for Millennials give rise to a new breed of lender

https://www.realtor.com/news/real-estate-news/rising-rents-for-millennials-give-rise-to-a-new-breed-of-lender/

CIM Group has announced that its $5 billion development of apartments, offices, hotels and retail at The Gulch will be called Centennial Yards.

https://atlantaintownpaper.com/2019/05/real-estate-briefs-gulch-project-named-centennial-yards/

National News

Do you consider your home a great investment?

https://www.cnbc.com/2019/05/22/do-you-consider-your-home-a-great-investment-think-again.html

26 year old millionaire investor talks about the mistakes he made while buying homes 

https://www.cnbc.com/2019/05/23/self-made-millionaire-investor-dont-make-the-huge-homebuying-mistake-i-made.html

Home sales fell in April despite a big drop in mortgage rates

https://www.cnbc.com/2019/05/21/home-sales-fell-in-april-despite-a-big-drop-in-mortgage-rates.html

The most splendid housing bubbles in America

https://seekingalpha.com/article/4258900-splendid-housing-bubbles-america-april-update

International News

Real Estate firm names the top cities for risk-seeking investors

https://www.cnbc.com/2019/05/01/real-estate-firms-names-the-top-cities-for-risk-seeking-investors.html

China-owned tower in New York City reportedly wouldn’t let Amnesty International move in

https://www.cnbc.com/2019/05/14/china-owned-nyc-tower-reportedly-blocked-amnesty-international-lease.html

Venture Capital flows between China and the US surpass direct investment for the first time

https://www.cnbc.com/2019/05/08/venture-capital-flows-between-us-china-surpass-direct-investment.html

The Questions new investors ought to be asking:

  • From our friends:
    • Bryan “How do I determine the finished value of my flip home before I begin repairs?
    • Cindy “Could my resources (time, money, skills, etc) produce a better outcome sooner if used elsewhere?”
    • Stewart “How do you quickly determine the cost of repairs to determine if it’s a good deal or not? (I’m assuming there’s other interest and there’s little/no time for due diligence)”
    • Tom: “Why am I doing this? The answer has to be more than ‘make money.’”
    • Victoria: “Do the numbers really work or am I working the numbers?”
    • Jeff: “Am I prepared to lose the money I am investing? Never invest money you can’t afford to lose.”
    • Damion: “How do you pull comps if you’re not a realtor?”
    • Pat: “Is there an app that includes both repairs AND comps?” 🙂
  • From Roger:
    • What type of investment is this? (one time income, cash-flow, appreciation, speculation?)
    • When should I expect to see returns?
    • How liquid is my cash?
    • How could this deal bite me in the fanny? In other words, What are the risks and how are they mitigated?
    • What happens if things get sideways?
    • What are the numbers I need to know and how can I know them?
    • What’s Plan B?
      • Pricing alternative
      • Alternative funding source?
      • Alternative exit strategy?
      • Backup Contractor?
    • What is the pricing trend (rents or sales, depending on your exit plan)?
    • For flips, what is the average DoM for this price range in this area?
    • For rentals, what is the long-term outlook for this neighborhood? Which way is it heading? (the best hoods are those that are immune to value swings)
    • For rentals, how are the schools?
    • For AirBnB, are there any rumblings in local government that threaten this business model?
    • If investing cash in someone else’s deal
      • What is that person’s experience?
      • What is that person’s reputation?
      • Do we have values alignment?

Questions

  • Sandra, Kansas City, MO, “How do you get in and see all the properties around the country you and your investors are buying?”

Comment Line calls and Questions

Call 404-369-1018, press 1 and leave your message!

Motivational Thoughts for the day

  • “It does not matter how slowly you go as long as you do not stop.” 
  • – Confucius

Transcript

[0:00] Music.

[0:17] Show that teaches you how to make money in real estate wherever you are whatever your situation there is an opportunity for you flipping America is sponsored in part by American IRA

founded by investors for investors on the web at American Ira. Com.

And by Braswell Capital Solutions commercial lending made easy on the web at Braswell Capital Solutions. Com.

And now you’re sad flipping America guy Rodger Blankenship

hello everyone it’s great to be talking with you about real estate than I am Rodger Blankenship your host and I teach people how to make money in real estate.

Today we’re taking an entire show.

To deal with one question that came from Lamar I think he was from Las Vegas it was a few shows ago Lamar asked this question.

What questions should new investors be asking.

We liked that question so much we decided to make an entire episode out of it we conducted a survey online and got some interesting responses for from some other investors which I will share plus I’m going to weigh in.

Here’s why this is important if you are new you need to make sure that your first project has the best chance of succeeding.

[1:32] In order to do that you must engage in a type of risk mitigation you must get some knowledge and how do you do those things ask questions.

[1:43] Ask a lot of them.

[1:45] Don’t be afraid to be new this is something that happened to me when I was new I felt like I needed to fake it till I make it then they pretend that I knew things and I didn’t ask

a lot of questions because I want to do a peer of someone who is already knowledgeable that was probably a mistake everyone.

[2:05] Was new in this business at some point you get to be new you get to ask it’s okay.

The question you want to ask may be obvious even to you but ask it if you don’t know or are unsure.

And of course you can ask us and remain relatively Anonymous you can send a question about anything real estate related to questions at Roger Blankenship. Com we answer

100% of the questions that come in and we will answer yours even if we’ve answered it a thousand times before we will answer it as if we’re hearing it for the first time because we know if you’re asking if you’re asking him for the first time and so we’re going to deliver your answer with Cairn it would make it delivered here on the show if it’s one that we

feel like with the benefits and that’s how we get our question-and-answer segment here if we feel like it would benefit a lot of people all right so don’t hesitate

to ask the questions today I’m going to focus on questions that may not be so obvious to you as a new investor.

These are questions that we all wish we would have known and wish we would have asked when we get started.

[3:20] Plus we’re going to have some news about the world of real estate coming up in just a few minutes let me tell you how to contact this here I am Rodger Blankenship my website is Roger Blankenship

dot-com is a little bit of a change if you’re a longtime listener but everything you need is at Rodger Blankenship.

But, if you want to hear this show I know that many many of you are listening right now on AM FM stations across the country and we’re grateful to you for that and thank you for listening in tuning in but we also.

I realize that we’re not everywhere and so we have created an App for you it’s called flipping America it’s in the App Store and it’s completely absolutely 100% free

there’s never an in-app charge or are purchase or upsell.

The app itself is free you can listen to every show all 250 something of them all right and not only that but you get access to the show notes as well.

If you’re not going to listen to are at perhaps you’re already a podcast listener on iTunes we got a new little thing going on internally we’re trying to boost our listenership on iTunes we haven’t really tried that before.

[4:27] We took a look and saw that we were in the top 150 and we’re working our way to get in the top hundred and maybe even into the top 50.

By encouraging you my friend to listen to us in iTunes get us a list and give us a review please write a review on iTunes and tell us what you think about the show.

Because we’ve had some some ratings and they’re all five stars.

That’s good we appreciate that but no one has said anything yet we have been on iTunes that long.

So we’d be glad to get your comments and we appreciate it now that’s a little bit about how to contact us.

I also want to encourage you to check out the fan which is the flipping America Network which is a buy and sell site for Real Estate Investors actually it’s not just for investors if you are a homeowner.

Looking to sell and you need to sell to an investor in your willing to look at an offer you can post your home in the fan for free.

There’s no listing fee your listing charge like that if it sells you will pay a whopping $100 technology fee that’s it $100.

[5:38] Best deal around.

Also if you are someone looking to buy a house and maybe you just want to buy a fixer-upper and move in

you should create a profile on the fan and here’s the beautiful thing for the buyers on the fan once you create your profile

you tell us where you were looking and give us the ZIP code or zip codes if you’re looking more than one and as soon as the property is posted in that zip code you will get a text message notifying you of that property for sale.

So you have an immediate opportunity to take a look at what gets posted you don’t have to sit on the application you don’t have to let you know open up the app on your phone you just get notified

that’s pretty cool that’s flipping America network.com I also want to ask you please follow us on Twitter and Instagram

because the kids on the team have convinced me that helps

I guess it does it helps sir standing in the in the social media credibility thing you know I’ve always thought that just flipping seven or eight or nine hundred houses would be enough to build credibility but I guess that’s not enough.

I I think I need you to follow me on Twitter and Instagram and just find the handle.

At flipping America okay run Twitter and Instagram and and if you want to find us on Facebook you need to look up flipping America media.

[6:59] Okay if you don’t do the social network thing and and if you like me you tried the social network thing and you got tired of seeing what your friends are having for supper that night and you just kind of lost interest.

I understand I get it if you don’t do the social-media thing that’s fine if you do please follow us but if you don’t actually go and follow soon way then proceed to ignore it.

[7:20] Because that will also help us believe it or not but if you want to call in with your questions or comments call 404 and 369

1018 extension one that’s 404-369-1018 and extension one will get you to the comment line now.

[7:41] If you are someone like a contractor or an insurance agent or someone that has a product or service for investors and you think you would like to advertise on this show I don’t know if I’ve ever said this but when you call that National number 404-369-1018 press extension 702

to be connected with our sales team and you too could be advertising your product or service on Flipping America okay

when you contact us however you contact this we always want to know where you’re from

and if you have the time and space to tell us how you found out about the show because those stories are fascinating to me.

Kind of a personal thing but I love to hear word of mouth. I love to go to one of our events and someone shows up and they heard about it from a friend of a friend and and are they

they were looking for something and stumbled across something else and came across our page or are

podcaster whatever and they listened and they liked it and and there they were so I’m I always appreciate knowing that to let us know how you found out about us

couple of other announcements for you we have lunch every Wednesday and Atlanta and dinner every Thursday I know that’s not news most people eat lunch on Wednesday and dinner on Thursday but we do it together as a group

if you want to come join us for lunch if you’re not in Atlanta and.

[9:03] If you don’t live in Atlanta but you happen to be traveling to Atlanta and you’re going to be here on a Wednesday at lunch time

please come have lunch with us at baraonda Italian restaurant at the corner of Peachtree and 3rd right in the heart of Midtown it’s a very nice little Italian place and we love the food and they give us a room to ourselves and we sit and talk

we may have five we may have 25 and we’ve even had as many as 50 come out and sit and shoot the breeze and talk real estate it’s very informal

but if you’re from out of town and you tell me that you heard about it on the show your lunch is on me so you got nothing to lose

and then on Thursdays we do dinner at City Tap which is just three blocks away from boronda again right in the heart of Midtown and every Thursday night we gather for informal networking

wonderful food maybe an adult beverage or two and I want some month we do this show actually we’re starting that back up again and in just actually starting next week

will do this show in front of a live

it’s not a studio audience it’s a live restaurant audience and we’ll have a lot of fun next week we’re going to be talking with.

[10:08] Mark delfine Mark delfine is coming out from Indianapolis he’s doing the boot camp here in Atlanta on Saturday June 1st he’s one of the best that I’ve seen.

When talking about how you were Vision affects everything else that you do.

When I had him on my show not too long ago we talked about it and I asked the questions and I was actually expecting the standard boilerplate stuff about vision

he goes much beyond that and really does a very nice job of connecting your vision with what you need to be doing with your life I liked it so much.

I asked him to come back and be on the show again and help let me help him promote his boot camp coming up on Saturday.

So that’s next Thursday night May 30th here in Atlanta and you can find out all about this stuff at Roger Blankenship. Com also you can go and

Go to meetup.com and just look up flipping America and you can join us there

and you’ll be notified of all of the meetings coming up we actually kind of prefer that you join us.

That’s a Rodger Blankenship., because then I have your email address and when I send you emails from there they’re a little prettier they’re little more formatted they have a little bit more information in them and we also can track and find out you know what the open rate is

and I know some of you will know exactly what I mean somebody who know what I mean and don’t care and that’s fine either way all right let’s take him in and do the news.

[11:37] Music.

[11:42] The biggest mall owner in the world can’t guarantee there won’t be more

retail record this year that’s in the news from CNBC I pick this up this is Simon Property Group and if you gone into a mall in.

[11:59] You know the last year to you probably saw a little placard somewhere a little brass

thing in the wall that said own and operated by Simon Property Group biggest mall owner in the world and they own just about every mall I can think of and I don’t really spend a lot of time in the malls but when I do it’s almost always a Simon Mall so there you go

anyway they’re talking about what’s going on in the marketplace they they in this story it was supposed to earnings call and

the CEO said that he was nervous about a few more retail bankruptcies during the first quarter and that was just before the Charlotte Russe Things Remembered and Payless ShoeSource all file bankruptcy that was back in February but they believe they’ve seen the worst of it

did they believe they’ve seen the worst of it but they’re not so sure and they’re not you know they’re they’re not fully out of the woods yet but in a

what I think is probably a brilliant move to preserve their own future

he also announced that they have partnered with ohio-based marijuana company green growth Brands to open a hundred and eight location selling CBD products this year and its properties includes including Roosevelt Field mall in New York

and the Galleria in Houston.

[13:12] So I’m not saying anything for a con about CBD it works for some people and who knows but I can tell you this its cells and.

I think that right there in that one moves they’ve done a lot to kind of shore up the defenses so to speak against what’s going on because I’m pretty sure you can’t buy CBD oil over Amazon just yet

speaking of malls one of the largest and most prestigious malls in the United States the Garden State Plaza Mall in Paramus New Jersey is getting a complete makeover trying to address

the needs and desires of today Shoppers so here’s a mall and it is getting.

[13:51] As part of its makeup or makeover is getting

residential area more food options office space space for gym operators and

yoga studios a hotel and an open green space for the surrounding Community to use now I’m not sure why a Suburban Mall needs open Green Space and then that what yards are for

anyway they’re they’re trying to do this to just appeal to people give people another reason to go to the mall and give teenagers another thing to do on Friday night

never not doing this blindly they’ve got evidence to support what they’re doing a recent study by the fossils.

Found at malls with the so-called experiential tenants aren’t just aren’t they’re not just focus on selling products like apple Italian food Hall Eataly and Tesla they really haven’t been bringing in the extra traffic the people would hope for what

they did discover is that additions like office space in apartments at the sales per square foot go up dramatically all right

we have to go to a break I’ve got more news but when we come back we’re going to start dealing with the topic of the day we just questions and if we have time we’ll get this more news okay hey folks thanks for listening.

[15:05] Music.

[15:22] You never know what’s around the corner

but you can be confident that you’ll be ready for whatever comes your way Legal Shield and ID shield look out for you so you can get back to living life.

LegalShield is a prepaid legal service for individuals

should businesses for low monthly rates you get comprehensive legal coverage entire law firm of professionals with a variety of issues and provide advice whenever you need it.

Protect it for a number of legal issues and assistance with common legal needs just go to Rodger b helps. Com right now to sign up that’s Rodger V.

[16:03] Dot-com Legal Shield protection for every part of life I want to take a couple minutes and tell you about the ultimate

real estate investing course it’s my new course it’s available online and what it is is the compilation of everything that I’ve learned over the last 17 years of investing in real estate buying and selling houses

buying rental properties buying commercial buildings everything I know is condensed about it now is condensed into this course and.

The reason I can call it the ultimate real estate investing course is as I learn new things I will be continually adding to the course now this is the same content.

And I think in some ways better than people are going out there and pay him $30,000 for with the guru’s that come through town you can access this course are you ready for this.

$50 a month that’s right for $50 a month.

[17:00] You get access to the course all of the materials all of the spreadsheets the files the documents the contracts the papers everything

as long as you stay a subscriber you have access to all of those things once you downloaded the documents well they’re yours and you can just do with them what you want

and of course you know within reason according to the law but all of this is available for $50 a month now there is an Initiation fee

an Initiation fee is $750 that’s going to get you.

Access to the course and then it’s $50 a month for as long as you want to stay a member I really didn’t even want to do the $750 Initiation fee but the people that are on my team now believe that the information so valuable they wanted me to charge you if you know 1500 up front and then

I agreed to split the difference with him and so it’s 750 but here’s what I’m going to do because I’m the boss and I can do this I am going to give you an opportunity.

To save $300 off that because you are listening to the show right now all you have to do is go to Roger Blankenship.com click on the resources Tab and then click on Ultimate real estate investing course

register for the course and at checkout use the coupon code save 300.

And you say $300 that’s the ultimate real estate investing course at Roger Blankenship. Com.

[18:25] Many people are just now finding out that not only can make with stocks mutual funds and gold in their IRA.

There is a reason also invested a vast amount of alternative assets like real estate mortgages tax liens Private Stock and the list goes on.

We are at the plant Benefit services in American Estate and Trust Company if the nation’s industry leader in self-directed Ira active Clan has been helping people sales director Ira as per your like 35 years.

Go to full control irs.com for more information and to download the free guide that’s full control irs.com.

[18:54] Music.

[19:08] All right we’re to the question 7 in the theme for Today Show the questions you should be asking if you’re a new real estate investor these are the questions you should be asking and we’re skipping over the ones that are obvious to everyone but the questions that

I experienced investors wished they had been asking when they started so we surveyed

friends online and we got a lot of the standard response pack and we thank you for that but we have narrowed it down to the top three choices that we’re not already included on my list and actually some of the things that came in were just to be fair

but that we have the top three questions from our audience who proposed questions that you might not think of it.

[19:53] Brian how do I determine the finished value of my flip phone before I begin repairs.

Now the reason we included this question is if you watch enough of these TV shows you see them buying a house spending much money fixing it and then bringing in a realtor and asking how much are we going to sell it for.

Some people may think this sounds done I promise you if those people on TV or actually in this business that’s not how they’re doing it

they know before they buy it what they’re going to sell it for that’s the first number you need and so even though that may seem like an obvious question I wanted to go ahead and include that as well Cindy said could my resources

time money skills that reproduce a better outcome.

Sooner if used elsewhere this is a great question and one that everyone should ask here’s what happened sometimes.

[20:44] People watch the TV shows they get excited about flipping houses they hear about somebody from the TV shows coming to their town to do some exciting rahraw seminar they’ve got.

Music npa’s and lights flashing and Banners that show private airplanes and Yachts and they’re all enamored with this lifestyle and they want to be like that guy up on stage only

the guy up on stage isn’t the guy that’s the famous guy that’s on TV this is just some Lackey that he hired but they kind of thinking overlooked that after their initial disappointment and they’re all fired up and excited and the pain 32 $50,000 for a course and after they spend that much money they think they’ve got to go out and do something and they’ve got to do it now we’ve got to make this course pay off we’ve got to get that money back and then

kitchen is Big new lifestyle that we expect

and so they can get into the marketplace and they see deal after deal after deal that doesn’t match the numbers that they were trained to look for and you know what I’m talkin about folks a lot of you do the so-called

maximum allowable offer rule are Mao where you want to be all in in a property at 70% of value I preach and teach this rule.

Unlike others I give you the reasons why and the times when you can make an exception although I’m not doing that in this segment.

I’ve done it before on the show I’ll do it again I’m sure you can also write in and ask me nicely and I’ll send it to you anyway.

[22:04] They’re taking two reasons for this but they can’t find those deals so you know they do that go out and buy a marginal deal or they buy a deal where everything has to go perfectly for their make their numbers

and things never go perfectly especially on your first Flip or they buy something that’s a little thinner thing I don’t need to be greedy I can operate on less margin and they end up and maybe they even make

money A lot of times they don’t.

I can’t tell you how many people have told me hey we just did our first deal and no we didn’t make any money but we learned a lot and you know I have to resist the temptation every single time to just say wait didn’t you just pay $30,000 to learn a lot.

You shouldn’t have to be doing that after you paid all that much money you could have gone out there and learned a lot without spending the $30,000 first back you might have

you might have learned just as much for a lot less than 30,000 if you just gone about a property okay but I’m digressing a little bit anyway.

At the end even the people that make money many times come back and realize with the time and effort and cash that they put into it that you know just that just a return on their cash they made about 10% on their money.

[23:09] Will look if you want to make 10% on your money just go to ground floor. Us and buy into one of the loan if you can make 10% passively.

Okay you don’t have to do all the work you don’t have to hunt for deals and you know

I guess I would accept this 10% result on your first one if you were determined to never do that again but Cindy asked this question and it is so profound you need to ask this could my resources

time money and skills Etc produce a better outcome if used elsewhere and.

It’s not just the your money but it’s also your time the amount of time that you spend in this and all the things that you do know I’m not trying to discourage you from getting in the business I’m just saying you need to ask these questions.

[23:59] Then Stewart suggested this question how do you quickly determine the cost of repairs to determine if it’s a good deal or not.

I’m assuming there’s other interest in there’s little or no time for due diligence that’s usually the case how do you quickly determine the cost of repairs to determine if it’s a good deal or not.

Okay folks I’m not going to answer that question here but I will tell you this is going to be your surprise freebie offer of the day if you were right into me.

Roger at Roger Blankenship. Calm and ask for a copy of.

My quickcalcs spreadsheet I will send you a spreadsheet that will tell you what it’s going to cost to repair a house you don’t even have to go to the house.

It’s it’s an estimate of course but it’s based on the age of the house in the square footage and a couple of other factors explain it all in the spreadsheet and a video that accompanies it and if you want it absolutely for free all you have to do is send an email to me

Roger at Roger Blankenship. Calm and I will answer that question and so thank you for that Stewart and out back to the questions from Tom.

[25:06] Why am I doing this the answer has to be more than make money that is a very good question and thank you Tom for sharing that.

[25:17] Victoria said do the numbers really work or am I working the numbers

and yes that is a another great question we have often seen people trying to make deals fit and fiddling around with the numbers just to try and trying to justify this house that they this project that they really want to do.

Jeff am I prepared to lose the money I’m investing never invest money you can’t afford to lose that is Sound Advice.

And so many people have been damaged or devastated by investing money they really couldn’t afford to lose assuming nothing can go wrong.

Well a lot of times things don’t go wrong but sometimes things do and you don’t want to be in a destitute situation if it does.

[26:07] Damien how do you pull comps if you’re not a realtor that is a great question you need to ask it and you need to get an answer for it.

Pet is there an app that includes both repairs and comps

okay Pat that was Pat Dornan weighing in on on the Facebook posting

the answer to that is yes and you’ll hear the ad and this show for the ultimate rehab estimator which now includes comps when you pop in the property address you’ll get comps and that’s a brand new feature and I’m going to have to get Pat back on the show to explain how it works

and I’ll probably get the add updated to but there you go those are questions that are coming from.

Our friends and this is the list that we called and selected the questions that you might not automatically think of so make a note of them refer back to the show notes and make sure of your new investor you ask those questions then.

[27:00] Here comes the part that I want to add these are the questions that I think you should ask and we only got a couple of minutes here so I’ll probably only get to a couple of them but we’ll do the rest after the break okay

first question what type of investment is this

this is something that you need to know you need to think of it before you go in is this a one-time income deal like a Fix and Flip or is this a cash flow deal which means that opens up a whole different set of questions about how good the deal is and what the numbers are supposed to look like is this

and appreciation deal which I don’t recommend.

Because real estate appreciates too slowly and to rely on that you might as well put your money into an index stock fund this is not Financial advice that’s just too kind of an idea that I have

all right.

Or is it speculation also something that’s not for the faint of heart and something I wouldn’t recommend this is where you think that in 10 years time to Columbia Mall there you going to buy this land and hold it and.

At the mall or some shopping center something wants to come and pay you a lot more and that’s what I mean by speculation buying in the path of progress nothing wrong with.

But also nothing certain about it I like the things that are little bit more certain like the income and the you know the one time income and the ongoing cash flow income

next question that you need to ask is when should I expect to see returns.

[28:24] There are three primary ways to invest in real estate one is in the activity of fixing and flipping this can be any asset class from a single family home.

To a factory in anything in between if you’re buying it with the intent to fix it up and resell the property for a profit that’s a Fix and Flip model and.

You need to know when you can expect to see returns is this a 2 month 4 month 6 month 10-year what is the project length expected to be and if it’s if you expect it to be a multi-year project.

Remember to divide your cash-on-cash return by the number of years so you get an annualized.

Return okay and you need to annualize your return if it’s less than one year also.

[29:13] Next how liquid is my cash

this kind of applies to passive real estate investing in there is that on the previous question 2 when should you expect to see returns and how liquid is your cash if you

do you use your cash to buy a property that your company is going to own and you’re either going to manage it or higher out management you’re not liquid at all

it’s going to take some time to pull your cash out of there the very best you can hope for is a refinance to pull your cash out but if you started that today it would be six to eight weeks before you got cash so you’re not liquid in a real estate investment trust your liquid.

In most forms of.

[29:54] A crowdfunding you’re fairly liquid but the rates are mean the terms vary depending on the crowdfunding platform so you just have to ask now if

that’s if you’re passive if you’re an active investor where you’re putting your money into a deal you’re just not going to be liquid at all but you need to know this you need to know that you’re not going to have access to that cash and it it’s kind of intuitive when you’re buying a property to flip.

But it’s worth thinking about if you’re putting money into a passive deal somehow all right we got I got more questions to offer to you but I’ll do that one.

[30:25] Music.

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[32:14] Music.

[32:29] This is the show the questions you should be asking.

Questions new investors should be asking but it probably every investor should ask and I’m about to give you the most important one out of all this is the one that a lot of people don’t think about they don’t ask they don’t

they don’t consider and you need to consider this it should be at the Forefront of your mind and here is the question how could this deal bite me in the fanny.

Does the family oriented show so I said Fanny.

All right if you have another word that you want to put in there that’s between you and God okay well how can this deal bite me in the fanny and other words what are the risks of this deal.

[33:12] And once you’ve asked that question how can they be mitigated.

[33:18] I want you before you spend a dime doing a deal to ask yourself how can things go horribly wrong in this project.

And know the answer to that before you begin.

[33:31] And if you know the answer to that then you have some things that you can do if things start going horribly wrong.

Now the next question is similar to this

what happens if things get sideways and there are many ways you need to approach this question if you are partnering with one or more people on this project and

you start to lose money or the project starts to need more money what happens

if you disagree about a direction maybe you got a repair that you might oughta make I have a friend who has a house that the floor was a unlevel it wasn’t hideous.

And how’s that other I think bigger more pressing concerns to be honest with you but the floor was definitely on level it slow from one room to the other.

A local company that specializes in foundation repair had previously come to the property and had stabilized the foundation and it had a lifetime transferable warranty

they had inherited the warranty and as they have it and they were able to pass that on to whoever buys it from them in the future so the my friend and his Partners got into a fairly heated discussion about the priority of of leveling up

put that floor moving it another oh maybe a half inch over 15 feet to get it perfectly level.

Versus some other really pressing issues in a terrible landscape out out back and.

[35:00] You know you’ve got to kind of know these things you won’t know all of the issues before you begin but if you got multiple partners on it do you need to ask what do we do if we disagree

how do we break a tie or who is the final decision-making Authority.

[35:16] You’ve got to resolve that because you can get stuck if you’ve got a partnership where everyone has an equal voice and particularly if you have an even number of Partners and you end up with like a tutu to tie or 1 to 1 or 3 to 3 tie whatever it is

there has to be a tiebreaker figured out.

And then what are you going to do if everybody is put in the money that they can listen and you got uneven percentages in there and then

you end up needing more money what are you going to do do you have that figured out there are a lot of ways that things can go sideways and the more.

People participating and the more complex the rehab the more likely things are going to get a little out of joint here and there.

So you need to think about that next question what are the numbers I need to know and how can I know them

you see the numbers that you need for a Fix and Flip are different than the numbers that you really need for a buy-and-hold the numbers that you need for a single-family buy-and-hold are different than the numbers you’re going to want for a multi-family well once you get up

5 units above into commercial you going to get some different numbers and valuations are going to be different if your regular listener to the show you know that that’s true

so you need to know what are the numbers you really need to know and how can you know them.

[36:41] Okay the next question I want you to think about is what’s Plan B.

[36:50] You know in our three-year plans in life we never have.

As part of a written out plan something is going to go horribly wrong I’m going to make a stupid decision and I’m going to derail my life and it’s going to take me 6 months or two years to get back on track and when that happens here’s what I’m going to do about it.

[37:10] Nobody ever puts it in the 3-year plan still most entrepreneurs make some Dreadful mistake along the way.

[37:18] Present company included all right and.

You need to have a plan B you need to have a plan B for your life you need to have a plan B for the project you need to have a plan B for the parts of the project

Plan B for your rehab going over budget a plan B for a pricing alternative a plan B before you even get the project and you’re still thinking about buying it and alternative funding source.

You need maybe a plan B for an alternative exit strategy you definitely need plan b c and d for alternative contractors because

sometimes you have to fire contractors and sometimes good contractors that you like we’ll move on to greener pastures or other things or start their own fixing flip business trying to do what you do

make the money you make whatever it is you you’re always going to need a stable of contractors and in ready to draw on.

So every major piece of this puzzle probably needs a plan B and I want to encourage you to think about that.

[38:24] Next what is the pricing Trend rent or sales depending on your exit plan now.

[38:32] If you look back at show number 187 you will find the eighth key metric set.

[38:39] We and our research barber near flipping America use to keep our finger on the pulse of the market in American Real Estate we’re tracking it.

[38:49] And we’re digesting the graphs in the charts in the data and all that so you don’t have to

if you just stay with us and listen to the show we’re going to tell you what’s going on and we’ll tell you when it’s good it will tell you when it’s turning will tell you when it’s our will tell you what to do in all the circumstances at least make some suggestions for you and will help you understand but we

probably are not going to get granular enough to know what’s going on in your individual Market

and sometimes your individual Market is broken down just by neighborhood and sometimes Street by Street

you need to know what’s going on and your realtor is going to be the best source of this if your realtor can’t give you this information you probably need a different realtor all right.

You need to know what’s going on with the rents and sales in the trends in your area

and also in this particular price range because Trends are a little different in different price ranges in Atlanta right now most in town sales of anything less than 500,000 you’re still going to get an offer pretty quick and sand and houses are going to sell

if you get up above 750 you’re going to sit on it now that’s just Atlanta

and that’s just in those price points and those are things that you need to know I’m just saying that as an example is definitely not the same everywhere so you need to know what the pricing trend is going to be.

[40:10] Because if prices are cooling off if if sales are cooling off in the price range of this project you’re considering you need to plan to sit on a little bit longer I’m not saying don’t do its plan to sit on a little bit longer.

[40:22] 4 flips you need to know this the next question the average days on Market in the price range in this area.

That’s an important thing because especially if you borrow money you have a daily cost attached to that property.

For rentals what is the long-term outlook for this neighborhood.

[40:41] Which way is it heading is it on the rise is it improving is it gentrifying is it getting better or is it going downhill is it getting worse is it a crime scene is it a war zone are the schools terrible and in the only people that live there are people who don’t care about their children’s education

you need to know this and I would say to you for most of you across America listening this

you’re going to be best off for long-term buy-and-hold if you buy in neighborhoods that seem to be immune to these kinds of swings honestly inside the perimeter in Atlanta I don’t know

and even a little bit outside I don’t know if there is a neighborhood that is immune to these kinds of swings

I’ve been on in and around Atlanta now for the better part of 25 or 30 years and I’ve watched neighborhoods that were once great and go terrible and then come back again while other areas

you know they’re always swinging up and down it seems like there aren’t very many stable areas there are a few and I’m promising you you’re not going to find $15,000 three

three bedroom houses there

you’re going to pay a little bit more but you’re going to reap the rewards of that stability by the type of people that you put in there and the long-term appreciation potential and the less risk you have for what’s going to happen in that neighborhood

going forward okay so make sure you ask that question as well.

[42:08] And if you’re considering Airbnb here’s another question are there any Rumblings and local government that threaten this business model Airbnb can be quite lucrative and I’m going to have another Airbnb guest on pretty soon and we’ll be talkin about this and more also going to talk about what’s going on at the governmental levels because some

cities.

Are trying to shut down all Erin bear B&B completely which I think would not pass the a constitutional test but.

Definitely condo buildings high-rises in the city of Atlanta in other places

they’re shutting out Airbnb as quickly as they can because the the people that live there don’t want to deal with the the uncertainty that comes from other airbnb’s one city that I know of has an ordinance forbidding Airbnb Citywide

based on the complaint of one resident yep so there’s a little bit of reactionary regulation

going there but we’ll see you just have to pay attention talk to somebody in your area who’s doing Airbnb and find out what’s going on in your local government local and state government.

[43:15] Okay now last questions that I have are questions concerning that that you need to ask if you’re investing in someone else’s deal

because this is an opportunity to make some serious Returns on your money with

no effort this is where you can really put your money to work even right now if you if you were able to get a hold of Lyft America guy and said I’ve got some money and I want to make 10 to 15% return on the money

and not lift a finger I’ve got opportunities I can put you in right here in Atlanta and some of these are opportunities that I’m involved in as well and you’re saying well Rodger where you put your money well I thought a lot of these

inexpensive houses lately and I’m just letting you know.

I can’t buy everything that’s in front of me right so I can put you into some of these opportunities for people are willing to pay this kind of return 15% but here’s the questions you need to ask when you’re looking at someone else’s deal what is that person’s experience.

What is that person’s reputation and do we have an alignment of values now that’s going to take a little bit to get to know them.

And if they are a wise recruiter of private money they will take the time to get to know you as well

they have it folks my questions now some of you are right now thinking that’s an overwhelming amount of questions I want to tell you what to do about that when we get.

[44:39] Music.

[44:49] If you’re a real estate investor.

[44:52] You owe it to yourself to get a profile on the fan the flipping America Network it’s at flipping America network.com.

The profile is free if you’re a buyer a landlord a rehabber you enter what you’re looking for.

Particularly the ZIP codes of interest you can put up to 10 but we’ve already we’re working now to expand at 2:25.

You don’t have to sit on the app you don’t have to sit on the on the website.

All you have to do is tell us what you’re looking for your profile includes your cell phone number which will verify at the time you register and when a property is posted in the zip code you’re interested in your going to get a text message that says.

Look what just hit the fan everyone should register.

All 43,000 ZIP codes in the United States are included and you could be finding your next property just by listening for your text tone we call it snap click sold because.

If you are a seller.

[45:55] You can download the app will anyone can download the app and in the App Store it’s called flipping America Network all one word no spaces you download the app flipping America Network and.

If the course has a buyer you can search for properties using the app but as a seller you could be at the property negotiating a deal with someone that you want to wholesale you could take a few pictures of the property that’s the snap.

Then you can click to upload this property to the fan put a little information about the property there and.

Immediately that property will get texted to 5:10 dozen hundred I don’t know

however many investors have expressed an interest in that zip code you no longer need to manage a mailing list you don’t have to go out and put together your flyers in your brochures or create

ads for Craigslist or other sites just posted in the fan dozens of people will see it it may be sold by the time you get back to the office that’s why we’re calling it snap.

Click sold www.dot flipping America Network. Com register now.

[47:16] As I mentioned going into the break that’s a lot of questions to ask and you probably can’t

remember or won’t remember to ask all of them every time the point of this exercise is to give you a little bit of wisdom pointing out the fact that you just can’t

buy real estate deals based on what the seller is telling you

you maybe if you’re new at this you may be talking to an experienced wholesaler who says yeah I know this properties it’s going to self at 3:25 and you’re going to spend 40,000 rehabbing it and daughters purchase price in these numbers were.

If you just take them at face value and believe them then you’re making a serious mistake you need to ask a lot of these other questions.

[48:00] First of all when you’re dealing with wholesalers I think you should have a healthy distrust of their numbers it’s not that wholesalers are going to lie to you in fact.

I know a lot of wholesalers that are just good people and they know what they’re doing.

But I also know a lot of wholesalers that are basically good people who have no idea what they’re doing and when it comes to the numbers are just guessing

and yes I know a fair number of wholesalers who know what the numbers are supposed to be and will present a deal with numbers that would work if you don’t question numbers but when you do look into the numbers you’ll see that the property is not going to sell for what they say or the repairs are going to be more than what they say

be wary.

[48:41] Okay ask the questions get the show notes from this show to get a transcript of the show.

Write them down think about them ask a lot of questions be healthily distrustful.

[48:57] And don’t just do a deal because you’re in love with the idea of doing a deal or.

Because you can see how you could create a beautiful thing with this dilapidated house that’s art folks and you know where most artists are.

They’re starving you don’t want to be a starving artist real estate investor you want to be a successful real estate investor and the key to this is not being

in love with the house and turning it into some work of art and some miracle thing that you could showcase on your website how you brought it back.

And Like a Phoenix Rising From the Ashes that’s not the point that’s not what you should be doing but I’m afraid that’s why a lot of people get into this business what you need to be doing is looking sensibly

and almost coldly at the property as something that you’re going to turn into extra money.

And if if you can do that that’s fine now I know that

this number of questions can seem overwhelming and I have had people who sit in my flip starter event who were all excited about flipping houses and when they come to the Flint starter event

they just know I’m going to give them that final piece of the puzzle to help

them and they sit there and they listen to me go through the steps involved in a rehab and they come up to me afterwards and thank me that it only cost them $300 to find out they don’t want to do this.

[50:18] It’s not.

That difficult but there are a lot of moving parts and there are a lot of ways things can go wrong if you are on top of them from the beginning

and if you know some things about what you’re doing and if you have good cash reserves and a good heart and patience you can make this business work.

[50:41] I just want you to ask the right questions.

[50:45] Okay now we’re going to segment in the show where we normally get questions from you but I want to do a follow-up I want to start with a follow-up from Linda from Jacksonville

if you’re a regular listener you know that we’ve had a little ongoing thing with Linda and a roofing contractor and I want to read to you the email she sent as a follow-up

she said good morning.

Oh I thought I should tell you that the little background Village of the didn’t hear this before she got a quote from roofing contractor and then after they put

pulled the shingles off of the roof they told her that the roof pitch wasn’t high enough to put shingles and they had to put a modified roof on it and was going to be a lot more money and had to make some unexpected repairs in her bid went from 7000 to 17000 and expected her to pay it

and so there’s a little bit of a dispute going on there there was also an insurance claim which kind of complicated things so.

If you were listening I gave her some suggestions about how to handle this this is a buy-and-hold property not a flip and my suggestions.

[51:47] For handling this would be different if it were a flip OK anyway she just wrote me back and said good morning.

After I emailed the company with as they said

threats which I wouldn’t have called it that I just inform them that I was a member of to Ria’s and I also plan to contact Better Business Bureau as well as take legal actions against them if this problem

wasn’t resolved immediately no folks that I would probably be perceived as a threat as well

we received a final bill for $11,289.54 which insurance paid 10001 25.96 and are deductible for wind damage was 1000

we were very happy it’s really a shame that we had to go through this but hopefully by sharing information others won’t make the same mistake we did

the model from this experience is if you’re dealing with a roofer get an estimate always don’t count on your insurance company to do anything for you you are the project manager on the job.

[52:52] It’s material should change in any way get a revised quote on the job because we went from a shingle roof to a modified because after the shingles were taken off

the 2-inch pitch was not there also never trust anyone including roofers.

Even if you’ve done business with them before I am 68 years old and I started in this business at the age of 48 and I am still learning

thanks for your interest in also for sharing and caring Linda thank you for getting the answer back to us and those are some good lessons to learn she had done business with his roofing company before but the ownership of changed hands prior to this project

no I don’t I can’t really say on this show from this far away this was in Jacksonville Florida I can’t say

for sure that the roofers were out to kind of take advantage of her it’s easy to assume that

but it could be that there were in every rehab situation it’s possible that you will run into situations that were not foreseen and so here’s the way I approach this I want to know.

Was this reasonably foreseeable.

[54:03] If it was not reasonably foreseeable then I am much more amenable to a solution that’s going to cost me more money.

[54:12] If this was foreseeable but they just didn’t catch it.

That’s what I’m going to hold their feet to the fire on the bed and that’s what I encouraged her to do and you noticed they sent her an invoice for over 17,000 and they modified it to 11000 289 and I’m.

Thinking probably that was either cost or a little bit of a loss probably a loss for them on this but the point is the pitch of a roof is knowable in advance.

They should have could have an any professional roofer would have known that this roof

was not ready to receive the same type of roofing that was on it.

I apparently because of new regulations now I’m not sure what she even means by 2 inch pitch if that’s a 212 that’s a fairly flat roof now.

In the South for hillsview that list nap in Pittsburgh in Wisconsin. You probably have never seen a 2/12 roof

but in the South especially in Jacksonville Florida you don’t have to worry about snow load it just has to be able to shed rain and if you’re shedding rain it just has to be a little bit down hill

it doesn’t take much downhill at all for water to flow and the water will always flow down so it to 12 is almost a flat roof.

But they could have known this and they should have known this and they did know this before they quoted or a shingle roof somebody doing the quoting missed it.

[55:41] So should the owners pay for the mistake of their employee that went out there and quoted the job.

[55:48] Absolutely yes because that’s it’s it’s maybe the the employees fault but it’s the owner’s responsibility now look books.

[55:58] If I say this about them I have to say this about me too I have borne the brunt of many mistakes made by my employees over the years.

And in every case.

I will look at the person in the eye and say to them this is not my fault but it is my responsibility and I am going to make it right.

[56:20] Those are words to live by.

[56:24] And because I live by them I can therefore hold those that I do business with to the same standard.

So Linda again thanks for sharing your email and I think we have time to get to one email from the inbox so let’s pick one.

[56:41] Sandra from Kansas City Missouri and also I got this question at the Meetup group on Thursday night how do you get in and see all the properties around the country you and your investors are buying that’s very good question and the answer is we don’t.

And I know that the person I was speaking with the other night said how can you buy it if you haven’t gotten in to see it when we’re buying houses for you know.

Under $10,000 usually around 5 or 7,000 and we’re relying on the pictures posted by the auction sites if we start finding at the auction sites are not posting reliable pictures I’ll have a different answer to this but right now.

Week I found that we can pretty much rely on the properties to be in the condition as pictured they don’t all have some pictures of the interior.

And in that case it needs to be even less but I have bought a couple houses for one or two thousand dollars now we’re not selling them for much.

We’re not making that much money on them and back.

Truth be told we’re making very little because we’re seller financing them just getting small monthly payments for my buyers but.

We’re not touching them either we’re buying them very inexpensively and I tell my investor Partners you know we could lose all this money but you don’t $5,000.

[58:02] So it when we make it work we create cash flow for a few years out of each one of them and that’s the point we sell them as is fixer uppers to locals were going to move in.

And pay at a much reduced payment for the property for just you know probably 7 years.

And then exchanged that they have to fix up what’s wrong with it cuz it’s their house.

Took gives them an opportunity to become homeowners at a very cheap price and gives us opportunities to create cash flow.

[58:32] That’s why we do it that’s how we do it that’s not everything about how we do it but that’s enough enough cuz the music is playing so we’ll see.

[58:37] Music.

[58:50] This week has been from Confucius it does not matter how slowly you go as long as you do not stop.

And this thought has brought to you today by the foundation for Renewal working together with.

Communities across the country to bring lasting life change and impact find them on the web at renewal fund. Net and as always your gift in any amount is very much appreciated and tax deductible will see you soon.

[59:14] Music.

[59:31] You’ve been listening to flipping America real estate investing for everyone if you have any questions about real estate send them two questions at flipping America network.com.

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