Podcast Summary
New Wholesaling Calculator on BiggerPockets: BiggerPockets' new wholesaling calculator helps investors determine the right offer price for a property based on ARV or desired ROI.
The BiggerPockets team has launched their new wholesaling calculator, a tool designed to help real estate investors determine the right offer price for a property based on the desired end sale price (ARV) or desired return on investment (ROI). This calculator, which can be used for wholesaling, flipping, or buy-and-hold strategies, allows users to work backwards from the ARV or ROI to determine the right offer price. The tool was developed through collaboration with industry experts and is the latest addition to the suite of calculators available on BiggerPockets.com. This new calculator offers more functionality than the rental property and flipping calculators, making it a valuable resource for investors looking to expand their real estate investment strategies. Check it out at biggerpockets.com/calc.
Making a Profit on Your First Real Estate Deal: Starting out in real estate investing doesn't mean losing money. Find a good partner, have a solid strategy, and use tools like RentReady's tenant screening feature for success. High interest rates make funding difficult, but alternatives like Fundrise exist.
Starting out in real estate investing doesn't mean you have to lose money on your first deal. Today's guest, Jonathan Makovsky, shares his story of making almost $50,000 on his first flip and then wholesaling it. He also discusses the importance of finding a good partner and having a solid strategy. Additionally, RentReady's new tenant screening feature with proof of income verification was mentioned as a valuable tool for landlords. Lastly, high interest rates are making it difficult for investors to secure funding, but Fundrise offers an alternative investment opportunity for those in need. Listen to the full episode for more insights from Jonathan and these valuable resources.
Exploring Real Estate Opportunities Outside Comfort Zone: Jonathan's journey from CPA to successful real estate investor with Fundrise demonstrates the value of taking calculated risks and pursuing opportunities outside of one's comfort zone.
Fundrise's new private credit strategy offers investors an opportunity to earn healthy interest rates by providing bridge financing to top real estate investors on high-quality assets with creditworthy borrowers. With over $500 million in completed deals and an average net interest of 10.8%, this strategy has already proven successful, and Fundrise has a pipeline worth over $300 million. This could be an excellent investment opportunity for those looking to diversify their portfolio. The speaker, Jonathan, shares his background in real estate, starting from his experience working behind an Excel spreadsheet as a CPA to eventually working for his brother-in-law's restaurant and then a packaging company in the quick service restaurant space. Despite not being his business, he wanted something of his own and explored various businesses, including real estate, which his mother had been encouraging him to pursue. Despite initial doubts, Jonathan found success in real estate and is now part of Fundrise's team. This conversation highlights the potential rewards of taking calculated risks and pursuing opportunities outside of one's comfort zone.
Be open to new ideas and expand your network: Expanding your horizons and networking can lead to new investment opportunities. Don't limit yourself to one strategy and stay engaged within the real estate community.
Expanding your horizons and being open to new ideas can lead to great opportunities. The speaker shares his experience of struggling to find real estate deals in expensive markets and eventually discovering bigger pockets through networking and listening to the BiggerPockets podcast. He emphasizes the importance of not limiting yourself to one type of investment strategy and encourages active learning and engagement within the real estate community. Eventually, this led him to meet a potential business partner, who had a different background and expertise, and together they were able to start flipping houses. So, be open to new ideas, expand your network, and don't limit yourself to one strategy – you never know what opportunities might come your way.
Leveraging a Real Estate License for Successful House Flipping: A real estate license can open doors to more deals and better research, allowing for successful house flipping. Persistence and effective marketing are also crucial.
Having a real estate license can significantly increase your ability to find and secure deals in the real estate market. In February or March of 2014, the speaker started their investing journey slowly, visiting around 12 to 15 houses a day with their license, which was more than the average agent would show a client. They read Jay Scott's book on flipping houses, which emphasized the advantages of having a real estate license, including the ability to write offers based on their own research and disregard list prices. After not finding any deals through the end of April, they tried direct mail marketing campaigns but didn't follow up persistently with leads. In May, they redid their mailers and received a large number of responses, eventually closing a deal in July 2020 for $154,000 in Trumbull, Connecticut. The speaker also mentioned the importance of having a good brokerage as a partner, as they provided guidance, mentorship, and support without taking too much time or effort. Overall, having a real estate license and a strong brokerage partnership allowed the speaker to effectively navigate the real estate market and find a profitable deal.
Patience and clear investment criteria in real estate: Be patient and have clear investment criteria in real estate. Network extensively and speak to community members for valuable insights.
Being patient and having clear criteria are essential in real estate investing. The speaker shares his experience of investing in the Bronx, where opportunities are emerging but it's not as hot as Brooklyn. He emphasizes the importance of not compromising on your investment criteria and taking the time to find the right deal. The speaker also shares how he found his partner, George, on BiggerPockets and the importance of networking and talking to everyone and anyone in your search for a real estate partner or deal. Additionally, the speaker emphasizes the value of speaking to people in the community, such as mailmen or neighbors, as they can provide valuable insights into the neighborhood. Overall, the key takeaway is to be patient, have clear criteria, and network extensively in your real estate investing journey.
Discovering hidden costs: Oil tank example: Thorough inspections are crucial to identify potential issues and factor them into the budget. Even in expensive markets, deals can be found with careful planning and rehab investments.
Before making a real estate purchase, it's crucial to have a thorough inspection to identify any potential hidden costs or hazards. In this case, an oil tank was discovered beneath the property, which could have resulted in significant expenses for excavation and cleanup. The seller ultimately removed the tank, adding to the purchase price. This experience underscores the importance of being aware of potential issues and factoring them into the budget. Additionally, the discussion highlights the potential for finding deals even in expensive markets like New York City, where the speakers were able to purchase a property for $150,000 and complete a $134,000 rehab.
Unexpected costs during a house flip: Unexpected costs can arise during a house flip, but careful planning, partnerships, and multiple income streams can help mitigate the risks.
Unexpected changes during a house flip can significantly impact the budget and the final sale price. The interviewee shared their experience of changing the entrance and adding a master bathroom to a property, which led to overspending by $41,000. However, they managed to recoup the costs by selling the property for a higher price. It's essential for new rehabbers to be aware of the potential costs of making significant changes to a property and ensuring all work is up to code. Additionally, the interviewee mentioned the importance of partnerships and the benefits of closing multiple deals on the same day, such as a wholesale deal, which provided a side income. Overall, the key takeaway is that unexpected costs can arise during a house flip, but careful planning, partnerships, and multiple income streams can help mitigate the risks.
Staying conservative with numbers for successful real estate investments: Effective budgeting, ARV estimates, delegating tasks, and learning from past mistakes are crucial for successful real estate investments.
Being conservative with your numbers during the real estate investment process is crucial for success. The speakers shared their experience of staying cautious with their budgeting and ARV estimates, which helped them avoid overspending and ensure profitability. They also highlighted the importance of delegating tasks effectively and learning from past mistakes, such as paying subcontractors too early and not considering the big picture. By staying conservative with numbers and effectively managing the rehab process, investors can increase their chances of achieving a successful investment outcome. Additionally, the speakers emphasized the importance of learning from past experiences and applying those lessons to future projects.
Avoiding Emotional Decision-Making in Real Estate: Accurately calculate numbers using reliable tools, thoroughly screen tenants, and utilize trusted real estate platforms for successful transactions. Seek online therapy for personal growth.
Accurate calculations are crucial in real estate transactions to avoid emotional decision-making and potential financial losses. The speaker shares an experience where they used "eraser math," or manipulating numbers based on emotions, which led to trouble. To avoid this, they recommend using reliable calculators like the one available on BiggerPockets.com/analysis. Additionally, the speaker emphasizes the importance of thorough tenant screening using tools like RentReady's new proof of income verification feature. Lastly, they mention the importance of having a trusted real estate platform like Redfin to help navigate the buying or selling process. Furthermore, they highlight the benefits of online therapy through BetterHelp to help individuals discover their priorities and live a more fulfilling life.
Improving Response Rates with Direct Mail Marketing: Using colorful envelopes and sending letters instead of postcards can lead to higher response rates in direct mail marketing campaigns.
Online therapy through BetterHelp can help reduce stress and bring more clarity to your life with the convenience of scheduling and location flexibility. The speaker shared his experience with direct mail marketing, which at first didn't yield great results due to a lack of seriousness and time consumption. However, after implementing tips from the BP podcast, such as using colorful envelopes and sending letters instead of postcards, they saw an improvement in their response rate, which was around 8-14%. Although postcards may be more cost-effective and filter out less serious leads, the speaker's strength lies in building relationships, making letters a better fit for his approach.
Consistent effort leads to success: Persistence pays off in business and personal pursuits, even when faced with rejection or negative responses.
Persistence pays off in both business and personal pursuits. The speaker shared a story about his experience with direct mail marketing, where he faced rejection and negative responses, but continued to reach out to potential sellers. He also shared a historical anecdote about a friend who used a similar approach to mass messaging on Myspace to secure dates. While there are ethical considerations to be aware of, the underlying principle is that consistent effort can lead to success. In the context of real estate, the speaker is exploring opportunities in office buildings, having encountered a seller who owns an adjacent property. Despite being in the early stages, he sees potential for scalability and growth in this area.
Marketing for Buy and Hold Investors and Flippers: Direct mail marketing and partnerships can boost results for buy and hold investors. Wholesalers and rehabbers can form beneficial partnerships. BiggerPockets is a valuable resource for networking, education, and growth in real estate investing.
Marketing is not just for wholesalers, but also for buy and hold investors and flippers. Direct mail marketing, in particular, can significantly boost results for buy and hold investors by helping them acquire properties at discounted prices. Partnerships are also valuable in real estate investing, especially when individuals have complementary skills. For instance, a wholesaler and a rehabber can form a partnership, with each focusing on their respective strengths. BiggerPockets has been instrumental in helping investors connect, learn, and grow. It provides a platform for networking, access to educational resources, and opportunities to learn from experienced investors. By applying the principles of wholesaling and flipping to their buy and hold strategies, investors can accelerate their growth and achieve greater success in the long term.
Meeting Business Partners and Building Networks on BiggerPockets: BiggerPockets is a valuable tool for real estate investors, offering education, networking opportunities, and a platform to take action.
BiggerPockets is an essential tool for real estate investors. The platform has provided countless benefits, from learning the value of deals and meeting valuable industry connections to starting local meetups. The speaker shared his personal experience of how he met his business partner and learned the ropes of real estate investing through the site. He emphasized the importance of taking action and not just relying on education. Additionally, starting a local meetup as a pro member has been a valuable experience for him, leading to networking opportunities and establishing himself as a connector in his area. Overall, BiggerPockets is more than just a supplement for real estate education; it's a platform that can help investors take action and build their network.
Discovering Impactful Real Estate and Business Books: Jay Scott's book on flipping houses and Frank Gallanelli's book on cash flow provided actionable tips and financial insights, while 'How to Win Friends and Influence People' and the Wall Street Journal offered relationship-building skills and industry knowledge.
Using an abundance of descriptive language can bring excitement and enthusiasm to a conversation. During this episode of the Bigger Pockets podcast (show 107), the topic of favorite real estate and business books was discussed. Two books were highlighted for their impact on the speakers' real estate journeys. The first was Jay Scott's book on flipping houses, which provided actionable steps and tips on wholesaling. The second was Frank Gallanelli's book on cash flow and financial measures, emphasizing the importance of understanding the financial aspects of real estate investing. In terms of business books, the speakers recommended "How to Win Friends and Influence People" by Dale Carnegie for its focus on relationship building, and the Wall Street Journal for insights into running a business and staying informed about the industry. The conversation also touched on the importance of hobbies and inspiration, with the speaker sharing his past experience of being inspired by the Forbes 400 list. Overall, the conversation showcased the power of using vivid language to express the significance of various resources in real estate and business success.
Actions, partnerships, and reputation set successful real estate investors apart: Take action, form partnerships, and maintain a good reputation for long-term real estate investing success.
Successful real estate investors are distinguished from those who give up, fail, or never get started by their actions, partnerships, and reputation. For those who have yet to begin, taking action and educating oneself through resources like BiggerPockets is crucial. For those who give up, perseverance and forming partnerships can help overcome obstacles. Lastly, for those who fail, maintaining a good reputation by treating others well is essential for long-term success. Jonathan Makovsky, a guest on the BiggerPockets podcast, emphasized these points based on his personal experiences in real estate investing. He shared his journey from being a ski racer in New York to becoming an experienced investor in the East Coast market. Makovsky's advice for those looking to get started in real estate investing is to take action, form partnerships, and maintain a good reputation. He can be reached on BiggerPockets for any questions or inquiries.
Bigger Pockets Radio: Simplifying Real Estate Investing: Join the BiggerPockets community for resources and connections, take action with an investor-friendly agent, and remember investing involves risk. Stay informed and engaged.
The Bigger Pockets Radio podcast, hosted by Josh Dorgan and Peyton, is all about simplifying real estate investing for individuals, regardless of their experience level. They emphasized the importance of being an active member of the BiggerPockets community, which offers valuable resources and connections for investors. They also encouraged listeners to contribute jingles for the show and shared their appreciation for the listeners' support. They reminded everyone that the goal of real estate investing is financial freedom and emphasized the importance of taking action with the help of an investor-friendly agent. They also reminded listeners that investing involves risk and encouraged them to consult with qualified advisors before making any investment decisions. Despite a momentary lapse where they forgot a guest's name, the hosts kept the show going and encouraged their audience to stay engaged and informed.
