May 31, 2019
A few days ago we got a question from Lamar asking, “What
questions should new investors be asking?” We liked the question so
much we decided to make an entire episode out of it. We conducted a
survey online and got some interesting responses which I will share
plus I will weigh in. Here’s why this is important. If you are new,
you need to make sure that your first project has the best chance
of succeeding. In order to do that, you must engage in risk
mitigation. And how do you do that? Ask questions. Ask a lot of
them. Don’t be afraid to be new. Everyone was at some point. The
question may be obvious, even to you, but ask it if you don’t know
or are unsure. Today I’m going to focus on questions that may not
be so obvious to you, the newbie, that we all wish we WOULD have
asked if we had known.
Plus we have news about the world of real estate coming up in
just a few minutes.
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Announcements:
- Lunch with me every Wednesday. Baraonda
- My latest article in Forbes is out. bit.ly/findredeals.
- The FAN is here!
- Would you like to invest in the Flipping America projects
across the country? Coming soon you will be able to for as little
as $100. That’s right, Flipping America is partnering with Ground
Floor Funding to create a crowd-funded platform where you can
invest in the deals we are doing here. The fund will pay out a 8%
preferred rate of return and can go as high as 16%. You can make
money with me, the Flipping America Guy.
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- Want a quick analytical tool to tell you how strong a potential
fix and flip deal is? Download the Property Grade app. You answer
10 simple questions about the property and the app instantly tells
you what you can expect to make, your return on investment, your
return on cash, and then the program gives the project a letter
grade using the proprietary Flipping America Investment Property
Grade algorithm.
Real Estate News-
Local News
The biggest mall owner in the US ‘can’t guarantee’ there won’t
be more retail wreckage this year
https://www.cnbc.com/2019/04/30/us-mall-owner-simon-property-group-reports-first-quarter-2019-earnings.html
One of the most valuable malls in America is getting a
makeover
https://www.cnbc.com/2019/04/30/westfields-garden-state-plaza-mall-is-getting-a-makeover.html
Rising rents for Millennials give rise to a new breed of
lender
https://www.realtor.com/news/real-estate-news/rising-rents-for-millennials-give-rise-to-a-new-breed-of-lender/
CIM Group has announced that its $5 billion development of
apartments, offices, hotels and retail at The Gulch will be called
Centennial Yards.
https://atlantaintownpaper.com/2019/05/real-estate-briefs-gulch-project-named-centennial-yards/
National News
Do you consider your home a great investment?
https://www.cnbc.com/2019/05/22/do-you-consider-your-home-a-great-investment-think-again.html
26 year old millionaire investor talks about the mistakes he
made while buying homes
https://www.cnbc.com/2019/05/23/self-made-millionaire-investor-dont-make-the-huge-homebuying-mistake-i-made.html
Home sales fell in April despite a big drop in mortgage
rates
https://www.cnbc.com/2019/05/21/home-sales-fell-in-april-despite-a-big-drop-in-mortgage-rates.html
The most splendid housing bubbles in America
https://seekingalpha.com/article/4258900-splendid-housing-bubbles-america-april-update
International News
Real Estate firm names the top cities for risk-seeking
investors
https://www.cnbc.com/2019/05/01/real-estate-firms-names-the-top-cities-for-risk-seeking-investors.html
China-owned tower in New York City reportedly wouldn’t let
Amnesty International move in
https://www.cnbc.com/2019/05/14/china-owned-nyc-tower-reportedly-blocked-amnesty-international-lease.html
Venture Capital flows between China and the US surpass direct
investment for the first time
https://www.cnbc.com/2019/05/08/venture-capital-flows-between-us-china-surpass-direct-investment.html
The Questions new investors ought to be
asking:
- From our friends:
- Bryan “How do I determine the finished value of my flip home
before I begin repairs?
- Cindy “Could my resources (time, money, skills, etc) produce a
better outcome sooner if used elsewhere?”
- Stewart “How do you quickly determine the cost of repairs to
determine if it's a good deal or not? (I'm assuming there's other
interest and there's little/no time for due diligence)”
- Tom: “Why am I doing this? The answer has to be more than ‘make
money.’”
- Victoria: “Do the numbers really work or am I working the
numbers?”
- Jeff: “Am I prepared to lose the money I am investing? Never
invest money you can't afford to lose.”
- Damion: “How do you pull comps if you’re not a realtor?”
- Pat: “Is there an app that includes both repairs AND comps?”
:)
- From Roger:
- What type of investment is this? (one time income, cash-flow,
appreciation, speculation?)
- When should I expect to see returns?
- How liquid is my cash?
- How could this deal bite me in the fanny? In other words, What
are the risks and how are they mitigated?
- What happens if things get sideways?
- What are the numbers I need to know and how can I know
them?
- What’s Plan B?
- Pricing alternative
- Alternative funding source?
- Alternative exit strategy?
- Backup Contractor?
- What is the pricing trend (rents or sales, depending on your
exit plan)?
- For flips, what is the average DoM for this price range in this
area?
- For rentals, what is the long-term outlook for this
neighborhood? Which way is it heading? (the best hoods are those
that are immune to value swings)
- For rentals, how are the schools?
- For AirBnB, are there any rumblings in local government that
threaten this business model?
- If investing cash in someone else’s deal
- What is that person’s experience?
- What is that person’s reputation?
- Do we have values alignment?
Questions
- Sandra, Kansas City, MO, “How do you get in and see all the
properties around the country you and your investors are
buying?”
Comment Line calls and Questions
Call 404-369-1018, press 1 and leave your message!
Motivational Thoughts for the day
- “It does not matter how slowly you go as long as you do
not stop.”
- - Confucius