Brad shared his thoughts on investing in single family houses versus multifamily and buying property subject to the existing financing. His presentation was on mistakes to avoid when investing out of state.
1. Bad Math – Excel Is A Liar
- holding costs typically higher due to slower process out of state
- taxes and insurance will vary by state
- management, maintenance, and vacancy varies by location
- can compare gross returns, but net return is better
- maintenance is set number specific to house, not percentage
2. Cost of Houses – can overpay for a $5,000 house
- can get paid to buy houses
- value may be improvements
- house can be worthless
3. Crooked Contractors – good ole boy ain't necessarily good guy
- contractors do not trust out-of-state owners
- licensed does not mean someone is honest
- get referrals and develop relationship
- do not pay for incomplete work or labor up front
4. Looks Like A Nice House
- computer analysis only goes so far
- just because a house looks nice does not mean it is
- local knowledge is a must
- is cheap flight for great deal reasonable?
5. Underestimating Security
- appliances, air conditioners, furnaces can walk away
- motion-detector flood lights
- alarms
- security doors
- security signs
6. Assumptions
- get things in writing
- am I buying wholesale deal?
- verify lease, financial info
- is property management outsourced?
- who's doing the rehab?
- what's included in the rehab?
7. Package Deals – Value One At A Time
- pricing should work in buyer's favor
- due diligence on each property
8. Being Afraid – Think, Connect, Decide, Buy
- deals require quick decisions
- you will not have all info
- make sure you can afford it
- know exit strategy
- turn base hits into home runs
- get into the game
Difference in success is knowledge, not motivation. Work with those who are further along than you are to get to a different result. Action without knowledge is foolish. Knowledge without action is worthless.
Brad also explained how both the “subject to” and lease option strategies work.
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