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AdvisorNet

I want to know what it takes to be successful in real estate.

Veteran

Brad Blum Macclenny, FL

I want to flip and rent houses. I would also like to become a realtor and get people in their perfect home.

30 April 2019 3 replies Career Advancement

Answers

Advisor

Kimberly Smith Chicago, IL

Hello, thank you for your service. I am passing along some experienced answers from my husband who has been a real estate broker for 17 years as well as from the both of us who have been long time flippers and own many rental units as back up income and part of our retirement plan.

Broker Role:
Its all about networking and building trust. Brokers are a dime a dozen these days and everyone knows one they can refer so you have to focus on what makes you different. People will want to work with someone they trust and like more over than anything else. With of course a baseline of competence. To get started, you need to build experience and your network so join a team. Remax and @ properties are 2 companies that do well with tenured brokers bringing in teams of newer brokers to work under them to partner up on the work and also learn as you go. You need to bring what you can to the table but that is often hard until you have a base of experience to speak of. Being part of a team off the bat will get you that. Call the local offices and ask them what they have to offer to new agents as part of team work. Always ask about the compensation structure. Different offices even at the same company can have different pay structures. The more they do for you in terms of leads and marketing, the more you have to pay them from your commissions. It is worth it to a point to get experience but different models work for different people. There is also a company called RedFin that you can either work directly for in a salary model instead of commission or as a referral agent where they send you the lower end leads. I would not suggest you waste time with rentals as a core focus but take a few that would pan out to build your network as many renters become owners. Always keep contact info and mail/email or call to check in with them with some sort of regular cadence to stay in their line of sight.

Flipping:
Be careful here. The market has slowed significantly from the rebound of the market crash. Not sure about where you want to set up shop so look into profit margins. It is not like it used to be. To keep costs down you may have to do alot of the work yourself if possible. The ideal is to buy cash so you dont have high carrying costs if that is possible. If you are not doing the work yourself, make sure you have a contractor lined up that even does a walk through to give you a quote on the work before you buy. Often a good contractor partner will look at any property you are thinking of buying to give you input because you also want construction to start the day you close so you dont lose time. Getting the work done and back on the market is absolutely key. Pay attention to market timing depending on where you are, certain times of year are better in the market depending on what kind of house like if you are in an area for kids, people will want to move before school years start, not in the middle of a school year or in cold climates there is less activity in the winter. Get a couple quotes from contractors. Keep design basic and clean, not too trendy but dont skimp on the things in your market that are most important. Like kitchens and bathrooms sell. Dont put in a thin granite, put in the full thickness - if they can see where you skimped they will wonder what they cant see where you skimped. Look at other redone properties to see what sells the highest in your area so you know the look people want.

Rentals: Do the math. Always do the math. Some properties will pay out very well with a profit even if you have a mortgage on them so you let someone else in essence pay your mortgage for you with their rent. Plan for a month or 2 between tenants since it can go unrented so you need money to cover those down months. Nothing is better than a long term tenant so it is worth to take a little less for a longer term lease but ONLY for those qualified. And if I can offer you anything from experience, do NOT take a chance on renting to someone not qualified but needs a chance. This usually does not pan out. It is a business, don't take risks with your tenants. I would not suggest renting to someone that needs a co-signer unless MAYBE it is an instate parent. Otherwise you will never collect. Know your state laws about eviction. Inevitably you will have to deal with this if you are a landlord long enough. If they miss one payment, start the eviction process. This will either get them back on track immediately or you will end up wasting less time. Always remember this is a business, your tenant should never be your friend and definitely never a family member.

Also start an LLC for each rental property you have. Do NOT put them under your own name. Rent should be paid to the LLC and you should have a separate bank account for that LLC for each property separately. This will protect you if something were to ever go wrong. If you get sued, your LLC is a stand alone entity and they can not come after more than just that LLC at a max so they can not touch other properties or anything of yours personally. You would pay yourself a salary from the LLC for whatever profit there is but pay all your bills for that property and taxes via the LLC account. If you are a single owner for your LLC then you just put it on your normal taxes but get an accountant. If you have multiple owners in your LLC you have to file separate and earlier taxes. I would also highly recommend NOT having partners in this endeavor if at all possible. That never ends well.

Good luck, hope that helps. Let me know if you have followup questions, there is so much to share so I hope this gets you started!

1 May 2019 Helpful answer

Advisor

Roberto Izurieta Washington, DC

make it simple
take things out

the simple the better and cheaper :)
paint it
if it has natural light (looks at the south sun) better

put it on the market of sell or rent (whatever comes first) and you go for the next...

30 April 2019 Helpful answer

Advisor

Amit Chaudhary Cupertino, CA

You have 1 month to 24 months before the boom needs then you will need to wait & change strategy to distressed approach.
Either way, a good plan, be extra aware though

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