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Diary of a Newbie Real Estate Investor 7/1/2014

July 2, 2014 by bostonareia Leave a Comment

So…after about 4 months of mentoring….listening to me (Bernadette) drone on about the website, Bernadette Trafton, Chief Connectormarketing, branding and social media and listening to Peg (JEM Property Group) on deal structuring, writing contracts and more…I just got this blog post!  I can’t tell you how proud of Mike and Jacqui I am for actually listening to us, taking it in and then, above all, taking action!  This is WAY BEYOND COOL!

mike and jacquiThe Deal & Advice for Our Fellow Newbies

We finally have some exciting news!  We have an offer accepted for our first rehab deal and will be closing by the end of the month.  I have to say, we were starting to get discouraged.  We had been marketing with door hangers, direct mail, driving for dollars and attending as many networking meetings as our free time would allow.  But so far, no deal.  Weeks turned in to months and we just felt like nothing was going to happen.  Then one day we suddenly had a house and we are overwhelmed (in a good way) with the amount of work to do.

How did we get the deal?  Mike and I spent a lot of time working on our website with the help of Thrivehive and wanted to make sure that if someone did come across our webpage it would be easy to navigate and easy to get in touch with us.  We have received leads through our website about potential deals before but this is the first lead where we were like “Wow! We NEED this.” (*note from Bernadette, the tracking that Thrivehive provides is awesome, and they build the website using your ideas, so glad they listened on this one and their website – www.FitzProperty.com looks awesome!)

A seller was calling local investors to quickly sell his home.  When we returned the call the seller stated he had accepted another offer with a national rehabbing company.  Mike asked “Did you sign anything??” (He didn’t!) We told him we would view the property that night and get him an offer by 8am the next morning.  So we grabbed our flashlight and ladder and snuck around in the dark peeking through every window and door.  We were able to see the heating system, water and electricity through the basement windows.  The upstairs was UGLY which is perfect for us.  We went to bed confident and excited that we could get this house.  This was exactly what we were looking for.

The next morning at 7:30am Mike gets a call from the seller who says he is sorry but he is only accepting the first offer.  WHAT!? Even though we hadn’t even been inside the property we decided to take action. We made an offer during that phone call…. rejected.  We made an offer over text message…. rejected.  We tried to call again… ignored. Finally Mike decided he was going to email the seller an official offer with a copy of our check to purchase.  A few hours later we received a call from the seller’s attorney. After a conversation between our attorney and the seller’s attorney we had a signed and accepted offer.  Talk about a roller coaster of highs and lows.  Peg was very helpful giving tips on how to pursue this deal and then walking us through the financing process.  We may not have been able to seal this deal without her!

Now that we have an accepted offer how are we going to pay for this? They say the money will come when you have a great deal.  True and false.  The money comes with a price.

What we learned so far:

1. The quote “It takes money to make money.” is true.  With this deal we had no issues with finding lenders, the problem is they can come with a big cost. We are looking at putting out a minimum of $35k with the private money and bank options we have considered so far. Do your research and be prepared to go all in, if you don’t believe in your investment who will?

2. Set up your business legally.  The week we got the deal under contract we had to scramble to get our LLC registered.  We had no idea that the majority of lenders only loan when you have a business.

3. Get all your ducks in a row.  Be prepared and have your key group of people readily available. Lawyers, contractors, plumbers, electricians, real estate brokers, lenders. Mike and I needed some help here. Thank you to our mentor, Peg, of JEM Property Group for being available 24/7!

 4. Be prepared to make a very detailed list of what you plan on doing with the property.  Exit strategy, marketing plans, comps, rehab plans. You will need to present this to potential lenders and investors. It is also just good to have a business plan for your own reference.

We plan on having 2 open houses (one during construction and one at completion) for Boston AREIA members and Fitz Property followers.  We look forward to seeing everyone and answering questions and hearing your advice.  In the meantime we are continuing to market and look for future rehab deals. Keep reading the blog in to hear about our progress.

Also please check out www.fitzproperty.com where we will be posting pictures of our recent major remodel of an apartment in one of our rental properties.

Mike & Jacqui
www.facebook.com/FitzProperty  
www.fitzproperty.com

 

Filed Under: Uncategorized Tagged With: 12/31/2012 deadline for gift tax, an advisor you can trust, Boston Area real estate investors, boston area real estate investors association, Boston real estate investing, Boston real estate investors, boston real estate investors association, boston reia, Commerical Real Estate in Boston, fitz property, flip properties in boston, flip properties in framingham, JEM Property Group, sell your house fast, sell your house in boston, sell your house now, trusted advisor, www.bostonareia.com

Diary of a Newbie Real Estate Investor

May 5, 2014 by bostonareia 1 Comment

Bernadette Trafton, Chief ConnectorGood morning folks, Well Mike and Jacqui have been moving forward with their real estate business.  Their website is almost complete, they’ve been doing direct mail marketing and Mike was able to go to a property with Peg and a few others with the agent he’s working with.  A little over a month ago, I got a call about a property in Newton center.  I figured that this would be a great learning opportunity for Mike.  I called my co-mentor Peg Graveline of JEM Property Group and set up a time for them to go view the property.  Mike took all the pictures and got to watch Peg negotiate and sign the contract.  In the Wednesday night mentoring sessions that we do every week, we’ve covered how to put together a package for exit strategies for a property.  This is essential when pulling together funding partners or presenting to investors you may want to wholesale the property to.  We’ve covered the importance of consistent marketing and developing relationships with Realtors.  I introduced them to my favorite account Joe Craft, CPA and in our most recent session introduced them to John Syron of Aurelian Lending to go over the possibility of using their Unsecured Lines of Credit program.  We will be doing a new webinar on this service in May.  Stay tuned.  I also sent them a property in Dorchester that came across my desk this past week.  Not sure if they went to view it, that’s for the next post.  For, now….what have Mike and Jacqui been up to over the past week? mike and jacquiUpdate: Evaluating Potential Rehab Deals Since our last post we have been working with local real estate agents to learn more about the market for single family rehab investments. Last weekend, we went out with Matt Heisler, an investor friendly real estate agent who specializes in the central and metro-west markets.  Matt understands we are looking at properties from an investment point of view and has been a great resource.  With Matt we looked at properties inside the 495 belt, but about 30 minutes away from our target market of Framingham. The first house we saw, the Cat House, was a small 900 sq ft ranch in your average working class neighborhood. We immediately noticed the smell of cat urine and that the house was pretty much a mess. Our hunch is the house is currently rented to tenants and the seller may be motivated due to the extensive deferred maintenance inside and outside of the property. To expand the house, we could potentially add value by finishing the basement and adding a garage. However, we are unsure if the addition of a garage provides a significant enough return on investment to make it worthwhile. Our research suggests you may only get a 1:1 return on the money you invest to build the garage, however you will attract a larger market of potential buyers. Kitchens and bathrooms all need to be gutted and the exterior of the house needs some cleaning up.  House has original hardwoods throughout but the current tenants have let their cat wild and don’t seem to care about cleaning up therefore flooring needs to be replaced.  We are thinking of offering $160k. Estimated rehab costs: $45-60k depending if we add a garage) Potential sale price: $250-275k. House number two, the Old Folks House, seemed much more promising and we will admit, it was a breath of fresh air walking in. No cat urine! This was a much larger ranch in a quiet hill top neighborhood.  Real estate owned property that has been on and off the market for the last year. Needs new kitchen, paint and possibly updating the basement.  The basement was finished probably 25-30 years ago and although it is large and bright with a full bath, it is outdated. We would want to refinish the basement, but are concerned about return on investment. The house is located in a beautiful neighborhood, however across the street is a large Victorian that has been converted to a nursing home.  Not really an eyesore, but definitely out of place in a neighborhood of single family homes.  Is this a deal breaker for buyers? To be on the safe side of the budget we are reducing the estimated after repair value by 5-10%.  We are thinking of offering: $200k. Estimated rehab costs: $50k. Potential sale price: $315k. As we move forward we are still refining our investment criteria for a rehab property, however we are current looking for: 3-4 bedrooms with the potential for 2 full bathrooms, hopefully a master bath or space to add one in.  If the layout is not ideal, is it easy enough to manipulate? After that we don’t really care what the inside looks like because we will probably be replacing most of it, so the uglier the better. We also look outside and at the curb appeal, is there enough yard? How is the neighborhood? Spy on the neighbors, would you buy a house here?  From a numbers perspective we are targeting a minimum of $30k profit and for houses over $300k we are targeting a profit of at least 10% of the purchase price. Stay tuned to hear about any offers we put in and if accepted, how we were able to finance the deal as new investors.  In the meantime we are sending out our next batch of direct mail letters.  With our last mailing we got one response “Please take me off your mailing list”.  Hey, at least we know the letters were read! If you want to get in touch with us please contact us at jacqui@fitzpropery.com or mike@fitzproperty.com.

Filed Under: Uncategorized Tagged With: 12/31/2012 deadline for gift tax, an advisor you can trust, Boston Area real estate investors, boston area real estate investors association, Boston real estate investors, boston real estate investors association, diary of a newbie real estate investor, flipping properties, flipping properties in boston, real estate around boston, real estate club, real estate mentorship contest, sell your house fast, sell your house now, The meaning of fear, trusted advisor, unsecured loans, www.bostonareia.com

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