Podcast #01

In our first podcast, Bryan reveals how he got started flipping homes in his spare time. More importantly, he breaks down how he is able to complete a rehab project in less than 15 hours of his time (and how you can do the same).

Getting Started Flipping Homes in your Spare Time

Podcast # 02

Today  in our second podcast we are going to tackle another of the biggest misconceptions in real estate investing.  Specifically, we want to dispel the myth that you have to have a lot of real estate and construction knowledge in order to be successful flipping houses.
Dispelling a Major REI Myth

Podcast # 03

In our third podcast we are going to look at another myth when it comes to flipping houses; that you have to have a lot of money in the bank to start. Today Erik and Bryan talk about how to finance the deal and what the process looks like.

How to Finance the Deal

Podcast # 04

Today in our fourth podcast we will delve a little more into systems. Our past few podcasts we have mentioned how important having systems is while investing in real estate. In this episode Bryan and Erik talk about how using the seven step system will put you on the right track for rehabbing success.

The 7 Steps to Every Rehab

Podcast # 05

Today in our next podcast, we will be discussing your real estate team and why you need it. In this episode Bryan and Erik talk about not getting overwhelmed by building your real estate team. They will discuss who is on that team and what responsibilities each team member has.

Building Your Real Estate Team

Podcast # 06

In our last podcast, Bryan and Erik talked about building your team and the different levels each team member make up. This week they discuss the most important team member…YOU!

The Most Important Team Member

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 1. Recognize that  investing is a business.

Being a landlord and an REI is different from being a private homeowner — it’s a business and you need to treat it like that. Have a good business plan. This type of investment is not hands-off. It can be passive but it requires involvement. It requires your time. It requires certain knowledge and skills.

2. Start small.

Don’t get in over your head right away. Starting with a single house or smaller multiple-dwelling unit, perhaps with a partner, is a good staring move to see if the business really suits you. Starting with a single home will allow you to get a feel for the maintenance, bookkeeping and other work required.

3. Know your Farm Area

As with any business, location can be critical. And we all know real estate is all about location, location, location. A home that seems to be a steal might be priced lower because it’s in a neighborhood most people wouldn’t actually want to live in — one that has higher crime, noisy streets or poor schools. For that reason, investing in out-of-state property is a gamble. Do your research and get comps from your Realtor and only  buy in neighborhoods you know well or have carefully researched.

4. Figure out the right rent and rentors

Rents differ widely around the United States. Zillow, Craigslist or a real estate agent can give you an idea what they are where you’re buying. Then you need to determine if that rent will be enough to cover your costs.

Too often, people take a look at their loan and think if they cover that, they’re doing fine. But you’ll need to pay property taxes and insurance. Don’t forget though about regular maintenance. Things break, and you will need some money in the bank to deal with unexpected expenses.

You’ll also want to know the rate of return you’re getting on your investment. There are formulas, such as the “capitalization rate,” to help with this, but you might want to turn to a professional. A good accountant can make sure the purchase makes sense.

Finding a good first tenant is also an important step. Run background checks if you can. Finding and keeping good tenants is the heart of successfully investing long-term in real estate.Happy tenants are critically important. They’re your customers and the way you keep them happy is by keeping the property in good shape and treating them with respect

 5. Leave it to the professionals

If you decide to manage your property, you’ll probably need to consult a real estate lawyer to get a solid lease and learn the rights of tenants. You may want an accountant, and you’ll need a list of good plumbers, electricians and tradesmen. Building your investment team is very important; so is leveraging other people’s talents. Your goal is to have a second income, not a second job.Turning to a property management company can be a smart move. It’s usually worth it to pay 7% to 10% of our rental income to a manager.

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Woman Can Too!

But as more and more women are becoming CEOs and other top ranked executives of Fortune 500 companies, this new wave of women are flooding the flipping market. Women are being drawn toward real estate investing as a viable way to ensure to take care of their family and make sure that they will have income or can retire early.

It is no longer a man’s world. Real estate investing, with its potentially high returns, can offer women an excellent way to boost their income streams for years to come.  This can be especially important in retirement, since women are at a greater risk of outliving their savings due to their longer life expectancy, fewer years in the workforce, and smaller paychecks.

Like anything else you endeavor into, you want to make sure first and foremost you know what you are doing. Whether you are a man or a woman always make sure you are getting the right resources by thoroughly educating yourself in the business. If you are a woman who would like to get started in real estate investing, either in commercial properties  or residential properties consider joining a local real estate investing club. Here you can network with other investors—male and female. There are also clubs designed specifically for women real estate investors across the country. One way to find these groups is through a site like Meetup.com. Today there are even online investing clubs devoted exclusively to female real estate investors. There are also many online resources that can help you get started. Be sure to check out our Flipping University for helpful tips and blogs on how to get started investing in real estate.

Just remember: it’s 2014. Women real estate investors no longer have to feel invisible or feel inferior. Don’t be afraid of getting taken advantage or getting ripped off by service providers. Be confident and have the knowledge and nothing can stop you.  If men can be successful flippers, women can too!

News stories and resources

Real Estate Investing from A Woman’s Perspective (Toronto), Meetup.com

“Real Estate Investing is No Longer a Private Club,” Forbes.com, April 2, 2014

“Real Estate Investing, It Isn’t Just for the Boys Anymore,” Huffington Post, July 12, 2013

Field Guide to Women in Real Estate, National Association of Realtors®

Meetup.com

National Real Estate Investment Club

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Building Your Real Estate Team

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 Association Information

If the home or neighborhood is governed by a home owners’ association (HOA) you should disclose that fact. You also need to know about the HOA’s financial health and provide this information to the buyer so that he or she can make an informed purchasing decision. Or if  the home is part of a historic association, buyers will need to know if the home is in a special historic district because it will affect their ability to make repairs and alterations, and it might also increase the cost of those activities.


Repairs and Lists of Items

Buyers need to know the home’s repair history so they can have their home inspector pay extra attention to problem areas and be aware of probable future issues. Texas law, for example, requires sellers to disclose previous structural or roof repairs; landfill, settling, soil movement or fault lines; and defects or malfunctions in walls, the roof, fences, the foundation, floors, sidewalks and any other current or previous problems affecting the home’s structural integrity. You may also need to disclose electrical or plumbing repairs and any other problems you would want to know about if you were going to buy the home and live in it.

Some states, like Texas and Michigan, will require sellers to disclose whether the property comes with a long list of items, including kitchen appliances, central air conditioning and heating, rain gutters, exhaust fans and water heaters.

Water Damage

When water gets in where it shouldn’t, it can damage personal possessions, undermine the home’s structure and even create a health hazard if it encourages mold growth. Mold is not always a bad thing though; it is usually an easy fix and will turn off other potential investors. Sellers should disclose past or present leaks or water damage. Michigan, for example, requires sellers to disclose evidence of water in a basement or crawl space, roof leaks, major damage from floods, the type of plumbing system (e.g., galvanized, copper, other) and any known plumbing problems. It can be difficult to know about water problems (and many other types of problems) if you’re flipping the home and only own it for a month or two.

Just always keep in mind that there are many risks for flippers or investors when closing on a rehabbed property. Some things might not have been obvious on your initial walk-through when you were filling out your Property Repair Estimate Sheet, particularly if it was in winter or during a dry spell. With both situations can be concealed. In situations such as these, check to see how much protection your state’s laws offer from disclosing information you would have had no way of knowing.

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Campbell County was founded December 17, 1794, two years after the creation of the Commonwealth of Kentucky, becoming the state’s 19th county. Campbell County was carved out of Scott, Harrison and Mason counties. Interestingly, Campbell County is named in honor of John Campbell, an Irish immigrant who was a soldier, explorer, statesman and one of the drafters of the Kentucky Constitution. Another interesting piece of history for the county is it used to house more than 12 casinos, 9 of which went on to start up in Las Vegas. Seems in the 30’s and now again Campbell county is the place to be for fast cash.

 Campbell County is actually part of the Cincinnati-Northern Kentucky metropolitan area. Perhaps the best know attraction in the Cincinnati area actually NOT in Ohio is in Newport, one of Campbell Counties county seats. Newport Aquarium showcases thousands of animals from around the world in a million gallons of water.  The Aquarium’s continues popularity since it opened 15 years ago has continually brought many jobs and tourism to the county as a whole. 

Newport Aquarium

So let’s take a look at the county’s stats:

Campbell County, Ky.
Return on investment: 69.9%
Increase in foreclosures: 238.5%
Unemployment rate: 6.3%
 Number of flips: 163

The median home price in Campbell County was $90,800 in the 12 months through March 2014, among the lower median prices nationwide. The area’s estimated median income for 2014 was comparably low as well, at slightly less than $60,000. This suggests homebuyers did not commit to mortgages well in excess of their income. And yet, foreclosures in Campbell County increased dramatically in recent months, jumping by 238% between the first quarter of 2013 and the first quarter of 2014, boosting the potential inventory for home flips. More distressed homes may help flipping activity return to 2013 levels, when more than 10% of all home sales were flips. Flipped homes accounted for just 3.4% of sales as of the beginning of 2014.

In order to be considered a good place for flipping houses, a county had to meet the following criteria all of which Campbell County passed with flying colors:

• the county had to have at least 100 single-family homes flipped between April 2013 and March 2014
• the flips had to have at least a 30% return on investment
• unemployment had to be below the national average of 6.7% in March
• the county had to have an increase in foreclosure activity in the first quarter of 2014, compared to the same time a year ago

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Why was this not disclosed to you? Do you have to disclose this to your potential buyers? Reality is rules are different in each state. Here’s what we would suggest.

1. Death in the Home

Some buyers may have concerns or superstitions about purchasing a home in which someone has died, so it’s important to know if your state requires sellers to disclose a previous death in the home. Keep in mind each state will have slightly different requirements for disclosure. A seller is required to disclose deaths related to the condition of the property or violent crimes though. For example, if a previous occupant’s child drowned in the swimming pool because it didn’t have the proper safety fence, the seller would need to disclose the death even after remedying the safety issue by installing a proper pool enclosure. There are, however, circumstances where sellers do not have to disclose a death on the property.

There are no states in which there is an obligation to disclose the death of a person who has deceased under natural conditions though. But even when disclosure isn’t required – for example, Georgia does not require the disclosure of homicide or suicide – you may want to err on the side of giving the buyer notice of a death on the property. You would want to know, right?  Remember how you learned of the suicide? They will hear about it from the neighbors anyways.

2. Neighborhood Nuisances

A nuisance is a noise or odor from a source outside the property that could irritate the property’s occupants. If you are investing in North Carolina, that state requires sellers to disclose noises, odors, smoke or other nuisances from commercial, industrial or military sources that affect the property. Michigan requires sellers to disclose farms, farm operations, landfills, airports, shooting ranges and other nuisances in the vicinity, but Pennsylvania leaves it up to the buyer to determine the presence of agricultural nuisances.

3. Environmental and Natural Hazards

If the home is at an increased risk of damage from a natural disaster or has known or potential environmental contamination, you may be required to disclose this information to the buyer.

Texas law requires sellers to disclose the presence of hazardous or toxic waste, asbestos, urea-formaldehyde insulation, radon gas, lead-based paint and previous use of the premises for the manufacture of methamphetamine. 

New York’s Property Condition Disclosure Act requires sellers to notify buyers about whether the property is located in a flood plain, wetland or agricultural district; whether it has ever been a landfill site; if there have ever been fuel-storage tanks above or below ground on the property; if and where the structure contains asbestos; if there is lead plumbing; whether the home has been tested for radon; and whether any fuel, oil, hazardous or toxic substance has been spilled or leaked on the property. 

 California’s Natural Hazards Disclosure Act requires sellers to disclose whether the property is in a seismic hazard zone and could therefore be subject to liquefaction or landslides after an earthquake. 

While most disclosure requirements are governed by the states, the federal government mandates one: the disclosure that lead-based paint may be present on any property constructed before 1978. 


Check in next week for What You Must Disclose Part 2!


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1. Treat it as a Business

First and foremost being a landlord is different from being a private homeowner — it’s a business and you need to treat it as such. Although some lending requirements for personal mortgages have relaxed a bit recently, the requirements for rental property have basically remained the same. If you’re borrowing money for your first rental house, you’re going to need at least a 20% down payment. If you can swing 25% down, it’s likely to get you a better interest rate and lower fees. If it’s your first rental property, your current income is going to have to be enough to handle the mortgages for both your residence and your new property.

2. Don’t Bite off More Than You Can Chew

What we mean by this is start small. Starting with a single house or smaller multiple-dwelling unit, perhaps with a partner, would be ideal to see if the business really suits you. Save your condo buys when you can afford  a larger down payment and monthly association fees. Starting with a single home will allow you to get a feel for the maintenance, bookkeeping and other work required. Finding a good first tenant is also an important step. Beware of shady tenants!

3. Know Your Farm Area

Location, location, location. We can’t stress researching your intended investment market. A home that seems to be a steal might be priced lower because it’s in a neighborhood most people wouldn’t actually want to live in — one that has higher crime, noisy streets or poor schools. This will also be helpful when figuring out the right rent and rate of return. Make sure you budget for maintenance as well. A common rule of thumb that also assigns 5% of gross rental income to regular maintenance and another 5% to pay for the downtime and repairs that come with vacancies should cover you.

4. Happy Tenants, Happy Life

Be a good landlord, communicate with your tenants. Happy tenants are critically important. Remember that they are the customers of your business that we talked about earlier. By keeping the property in good shape and taking care of issues in a timely manner you can expect the same respect back when it comes to paying rent on time. Then you will both be happy and you’ll be building wealth with an investment you can feel good about.

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In a new twist it is Maryland counties that are surprisingly among those offering the

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