Delco Diamond Flip!

I got a call from my REO broker today on this property out in Springfield Delaware County.  I Like the home due to the fact it is a quick and easy clean up that can be done for 50k.  I also like the school district and the area of Springfield it is in.  This property sits right by the Blue Route (I-476), so you could work in Philly or Delaware with about a 15 minute commute. I also like the fact that these homes are all brick.  All brick houses will be around forever, and need very little work to keep the integrity of the cement in good shape.

I put in an offer of 100k for the property and the back end value is 240-260k.  I like buying these homes cause if they do not sell they make great rentals properties.  So here is how I do my numbers on something like this!

Puchase Price: 100k

Closing cost W/ transfer tax: 3.5k

Insurance: 1.5k

Rehab: 60k (20% contingency, IT ALWAYS GOES OVER!)

Total 165K.

So you could sell this place for a profit.  You will have other fees associated with selling, but you have room to make a spread in the deal. So this is why I have an offer on this place and actively closing in on it.  Hopefully I can scoop it up! Check out the work that need to be done for yourself.

Beatty Rd. updated & Video

Beatty Rd has come a long way from when we started a couple of months back.  We had some permitting issues that we finally resolved and now we are back on track.  My vision is coming together nicely.  Check it out the transformation of the front and back yard.  Video one is the first day we started the project.

Tree House of Horrors

So earlier this week my REO Broker calls me up and is super excited about a deal.  He starts the conversation off like this " Mike your gonna make a ton of F@!*ing money on this place".  Once I heard that, I admit I got a little excited myself!  So he proceeds to tell me the house is in this wonderful neighborhood and its a quick fix and flip and it's mine for 60k.  In the area of town he is talking about 60k, is an unheard of price!  So now he's got me fired up to drop everything and go lock this place up under contract.  My broker said there is one small issue with the property though........a tree fell through the roof!!!!

Needless to say the high I was feeling about the property went away and I knew it was not a quick fix.  Any time a tree falls in a house you can bet there is a ton of work to do.  Check out the video below and let me know what you think of this hell hole!

Who ya listening to?

So you may have heard me say this before but it is extremely important to understand the power of the people with whom you surround yourself.  I surround myself with like-minded people who strive to be better in all aspects of life. Take a look at the 5 people with whom you spend the most time with and that is who you will become.  So, if you are friends with 5 crooks, guess what, jail is probably in your future!!

My core group of business people are all savvy real estate investors and business owners.  My wife and I have decided that our goals are to be better at business and real estate investing, so those are the people we choose to surround ourselves with.  I have built strong a relationship with my group and discuss openly what is working and what is not working for us in our businesses.  The past mistakes and advice of these peers help me not to fall into a poor trend or pattern.

This video below is of a trusted friend, Alan.  He is a stud when it comes to buying rental properties.  He has helped me elevate my real estate game.  Alan is someone in my group that pushes me to think and act bigger than I have in the past years.  Alan has also "been there, done that" so he has helped me understand some of the fundamental mistakes I have made in my business.  Alan is the millionaire next door on steroids!!  Alan owns 100 doors in some of the most desirable areas of the city.  His slow methodical investing style has paid off big! So check out this video I shot of Alan the other night at one of our meetings.  Most of you will never get to meet Alan, but if you do, you will see that the energy and wisdom he has is priceless!  Enjoy!!

Historic Flip

This property that we are looking to do a deal on sits in a solid area of Philadelphia.  The home was built in the 1870's and could truly be a beautiful property once completed.  The tough thing about renovating a historic property is the fine line you can cross between old and new.  The people looking at these types of homes mostly like the charm of an older home.  If I get this property locked down this week, my biggest challenge will be to get a craftsman in here that really is a solid finish carpenter.

The home sits now at 1,600 sq. ft. and I would look to build a 500 sq. ft. addition on the back of the property.  This will allow us to get 700k plus for the home and we will now have the room to put another bedroom in place with a potential roof deck.  More bedroom and bathrooms = more cash.  That is our goal, more cash! Check out the videos below.

Deal Flow

Deal Flow is a must in the real estate investing business.  I have deals come across my desk all day, every day.  At times, just taking the time to review all of them is a huge undertaking in itself.  In order to do volume, you will need deal flow.  Getting in front of wholesalers, REO agents, motivated homeowners, etc. will help keep deals coming across your desk.  I recommend a combination of as many viable methods as possible and I try to touch base with each of my sources at least once a month.  You want to remind them that you are always looking to buy and have cash to execute deals.

Be specific- let your deal flow contacts know what area of town you want to be in, which price range, etc.  Often, they have so many houses to push, that all they do is fill up your inbox with junk.  Be direct and know your areas - this will help them get you the right type of deals.  As a result you save time and effort.  What helps me, is to define criteria - school district ratings, taxes, days on market, etc..  Knowledge of these factors can be the difference in a 50k profit or a break even deal.  That is why they always tell you to do deals in your own back yard!

Renovations gone wrong!

So I like filming these DIY weekend warriors.  These people are hilarious.  Some words of wisdom here,  if you sell insurance for a living, stick to that.  Please do not try to put together a kitchen project on the weekend.  I have friends who try to BS me and tell me they enjoy doing home improvements on the weekend.  Just cause you seen a guy on TV put tile in his bathroom, now you think your qualified to pull this off somehow.  That shit is not as easy as it looks.  I would say 50% of the houses we buy are from so called weekend warriors that went belly up.  I guess they think cause there cousin worked with a electrician for a month, that he should come over Saturday morning with a case of beer and rewire the house together.

I just do not see why people will not hire the right professionals for the job.   It pays to get someone in your house and do it right the first time and be done with it!  Your time and your well being will be better off in the long run.  Below is a video highlighting a DIY disaster.

REO Properties

REO (real estate owned) properties are a great way to get involved in real estate investing.  REO are bank owned properties which have been taken back through the foreclosure process.  The bank will then list these properties with a REO broker-real estate agents that focus on selling properties specifically for the bank.  These brokers are easy to find in you local market.  I deal with two groups here in Philadelphia, which I feel have the up most integrity and a mindset of an investor.  These people also own real estate themselves, so they understand what makes a good buy. Most Realtors are simply sales people, looking to move a product and score a commission.

To get in good with a REO broker you need to give up both sides of the commission.  The broker usually get 1.5% from the banks, so by letting them represent you as the buyer, they can make a bigger payday.  What you have to remember here is that you are in the real estate investing business, not the commissions business. You also want to know who goes out to preform the BPO (broker price opinion) on the properties.   Basically this is the appraisal the bank has done on the property, to determine how they are going to price the listing.  A savvy REO broker will go and persuade the BPO - making sure thay any issues with the property are noted and that the appropriate price is set on the property.  This is very important because persuading the BPO will help ensure that the property comes out on the market undervalue and priced for an investor.  There are plenty of REO agents that do not do this well.  They just give the BPO agent the house to appraise and hope they figure it out for themselves.  More often than not, that just equates to an incorrect analysis and a waste of my time!  I need people who want to chizzle every dime they can and save me money on the buy side.  You make your money in this business on how you buy!!

It's not easy to get plugged into REO network.  It takes time, but if you keep at it and never give up, you can pick up some killer deals!

Beatty Rd. Final

Beatty Road house is complete and ready to go up on the market.  We took our time over the winter to put this place together with perfection.  Our intentions at this property were to build a 2,800 sq. ft. house.  The banks told us no and would not lend us a dime for the construction (280k) even though we own the lot free and clear! So plan B was to renovate the existing house and move on.  Here is the finished product!  We are asking 325k for this house and it is priced to sell fast!

Front and first floor

Second Floor

Finished Basement