What advice would you give to a beginning investor?
Amanda and I first got into investing about 5 years ago when my father helped us buy an office condo he was selling by carrying back a 2nd mortgage. About a year later we did our first flip (known as a rehab back then!). In about 5 months, we made about $50k on the project, but it was a tough way to make money considering I was working there every weekend and several nights a week. This was while I working a 60 hour per week full time job and having two children under the age of 2 in the house.
You need to make sure you have cash reserves or the property(s) generate enough cash flow to ride out having multiple vacancies and/or having to do renovations on a property Nike Air Force 1 Low Womens just to get it rented.
Not doing enough of my own analysis or due diligence when buying 15 units in one year. I should have demanded that I see more, inspect more, spend more time in the properties, and frankly I should have even walked away from a couple of the buildings.
I have seen many new investors buy too much too quickly and then become overwhelmed. I manage almost 30 units by myself while having Nike Air Force Black And Gold
How many deals have you done in your career?
Tell Us About Your First Deal . . .
I love when I have the opportunity to meet investors with different backgrounds. A full time investor, landlord, and Realtor, Scott has a great deal of experience that should prove to be inspiring and helpful to any new landlord. He has had his share of difficult deals and has also experienced the benefits of being a landlord. Read on and learn how in just a few short years, he was able to quit his job and become a full time real estate investor.
Now as a Realtor, I have taken all the mistakes that I made as a buyer/new investor and try to prevent my customers from making the same ones. The Mortgage Broker I started with 4 years ago is still my informal partner. We built a spreadsheet that ranks investments based upon several criteria and we do not buy anything that falls below those criteria. If the finances work, then we look at location, condition, neighborhood, etc. Lastly, I like to cluster my properties (and those of my clients) so that you are not driving all over the city to get to your properties. 14 of my units are within 1 mile of each other. Five more are 20 miles away, but are within 2 miles of each other. The others are close to my house or my office so they are where I normally travel. I recommend the same for my clients.
Landlord and Realtor
Yes. Late in 2006, I decided to leave corporate life as the Director of Information Systems for Caribou Coffee and become a full time investor and real estate agent with Keller Williams.
We bought our first commercial property 5 years ago. We did our first flip 4 years ago, and then went heavily into residential real estate 3 years ago.
My wife, Amanda, and I decided that we wanted more control and the possibility for larger returns in our retirement program than just 401ks' and IRAs. My father was a general contractor all his life. Growing up I always watched him in his projects and ventures and was fascinated by it. I worked many summers during school (first high school then college) in construction, so I initially thought I would do flips, but after the first one, we realized it was too large of a risk and time commitment for our new family. We decided that owning investment property would still bring the returns and I could use my experience, but the risks were lower.
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the financial management that comes along with owning more than just your home.
When we bought the commercial property, I knew nothing about owning property, being a landlord, or tenants. Thankfully, we were able to find great tenants that signed 5 year leases and never called about anything! It was a big learning experience as I needed to quickly get up to speed about all Nike Air Force 1 Ultra Flyknit Mid
Personally it was a duplex that I bought and closed on the last day of the month. The previous owner had found a new tenant who was supposed to move in that day. Well, the previous tenant said she never intended to move and was refusing to vacate the property. Here I had just closed less than 2 hours earlier, the new tenant was sitting out front in her moving van, this irate previous tenant was refusing to move out, and the unit was suppose to be totally repainted before the new tenant could move in.
How did you get started investing?
Wow! I think there are many that I have made and seen other people make. Let me give you just a few:
I like renting to students and middle income families. I like owning 4 plexes with 1 2 bedrooms each that have architectural character. I keep them in nice condition where I would live in any of my units. My other focus now is helping new investors buy investment property and then supporting them with my experience to make them successful.
What do you look for in an investment?
Do you have your real estate license?
As an investor and advisor to other investors, what are some of the biggest mistakes you made or seen others make?
I see many people read all the books, buy all the tapes, go to seminars, and then never do anything. I tell interested person I meet: "You need 2 people that you can trust: A Mortgage Broker and a Realtor. Both must own investment property and both must work primarily with investors." Then just do it. What is the worst that is going to happen? You hate it; you sell the property 6 months later for a loss of $10 30k. At least you stepped up to bat!
a full time job, because I have become accustom to handling that volume. Many people can't. Many new investors don't realize this is a business and you must put time into running it as such.
What attracted you to becoming a real estate investor?
is your investing focus (area of expertise)?
For one of my customers it would be where he bought a boarded, bank owned property in Minneapolis. We were closing in 10 days and received notice that the City was having a hearing to discuss the demolition of the building! We had to go in front of the City Council with our plans and timelines to convince them to not tear down this building my customer just bought!
Another big mistake that I made in the early years which cost me literally $1000s was being too lenient or too nave or to forgiving on tenants paying their rent. You must set a policy on how you deal with late payments, no payments, and when you will start an eviction and stick too it.
After we sold the flip, we decided to slow down and buy a house that needed work (do a slow flip). While buying this new property, we were referred to a Mortgage Broker that ironically specialized in investment properties. He turned us onto a realtor that he partnered with to find investment properties. We bought a duplex and a 4 plex shortly thereafter. The next year we bought 15 more units and last year we bought 5 discounted new construction town homes.
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