Podcast Summary
Impact of personal involvement on real estate project success: Active participation and accurate financial analysis are crucial for successful real estate investing, as emphasized on the Bigger Pockets Podcast Show 173 with guest Steve Jones and the new rental property calculator feature.
The frequency of your involvement in your real estate projects significantly impacts their success. This was emphasized during the Bigger Pockets Podcast Show 173, where hosts Josh Dorkin and Brandon Turner discussed their personal experiences and the growth of BiggerPockets.com. They also shared a new feature on the BiggerPockets rental property calculator, which allows users to calculate total returns on investments beyond just cash on cash. The episode's guest, Steve Jones, is a real estate investor from Southern California. Additionally, the BiggerPockets team recently produced a promotional video that showcases their platform's benefits for those seeking an alternative to their unfulfilling jobs. Overall, the podcast episode underscores the importance of active participation and accurate financial analysis in real estate investing.
Investing in out-of-reach markets with smart strategies: Smart strategies, resources, and tools can help investors succeed in real estate markets previously thought out of reach, like Southern California. Tools like DealMachine aid in lead generation, while companies like Rent to Retirement offer turnkey rental investments with little to no money down.
It's possible to invest in real estate markets that are often considered out of reach, like Southern California, by employing smart strategies and being resourceful. Steve, who has flipped over a hundred houses in the Southern California area, demonstrates this by buying houses close to market value and making a profit. This challenges the common belief that investing outside of one's local market is necessary. Additionally, tools like DealMachine can help streamline lead generation, and companies like Rent to Retirement offer opportunities to invest in turnkey rental properties with little to no money down. Another important topic discussed was home security, with SimpliSafe providing peace of mind through their affordable and effective alarm systems. Overall, the show highlighted the importance of being informed, resourceful, and proactive in real estate investing.
Starting Real Estate Investing in Expensive Markets: Hard work and determination can lead to success in real estate investing, even in expensive markets. Steve's journey from buying a $140,000 home to selling it for $850,000 inspires others to start investing.
Real estate investing is possible in expensive markets like Southern California, despite common beliefs to the contrary. Steve, our guest today, started his investing journey in Orange County by buying a home in Laguna Beach for $140,000 and flipping it for a profit. He then went on to do a condo conversion, which untied each unit to sell them individually. Steve's first experience with real estate was unplanned, but the success he found inspired him to continue. The property he originally bought for $140,000 is now worth around $850,000. This story demonstrates that with hard work and determination, anyone can get started in real estate investing, even in expensive markets.
Reputation and relationships are key in Los Angeles real estate: In LA, reputation and relationships help secure deals, whether from off-market or MLS listings. Costs for renovations are comparable to other markets, despite higher purchase prices.
Flipping properties in Los Angeles, despite the high costs and intense competition, is similar in many ways to doing it anywhere else. Reputation and relationships play a significant role in securing deals, with both off-market and MLS listings being sources. The speaker, who has completed over 100 flips in the area, emphasizes that the costs for renovations are comparable to other markets, even if the purchase prices are higher. The competition is fierce, with many offers being made on desirable properties, but following up on every lead and maintaining a good reputation can lead to successful deals.
Transforming older homes in competitive markets: Successful real estate investors in competitive markets find hidden value in older homes through value-add projects, catering to local market needs and trends.
Successful real estate investors in competitive markets like Los Angeles focus on finding hidden value in older homes and transforming them through value-add projects. This can include creating a master suite with outdoor access, converting garage space into home offices, or even adjusting the garage size based on changing demographics and work-from-home trends. The key is to understand the unique needs and preferences of the local market and adapt accordingly. This approach allows investors to acquire deals at a price where they can make a profit, even in markets where properties are not typically underpriced.
Understanding unique market conditions and local amenities for successful house flipping: Focus on adding value through design and space in specific markets, look for older homes with potential for significant renovations, and aim for investments ranging from $100,000 to over $1,000,000.
Successful house flipping in different regions requires an understanding of unique market conditions and local amenities. Brandon and his team focus on adding value through design and space in the Los Angeles market, where they look for older homes to buy cheap and add significant square footage or convert duplexes into single families. Their typical investment ranges from $100,000 to over $1,000,000, and they've only lost money on a handful of projects. Despite the risks, they consistently aim for houses in need of extensive renovations, targeting older homes with beater conditions and challenging foundations.
Understanding buyer preferences for successful flips: Create a customer profile and prioritize their needs during renovations to avoid missed opportunities and financial losses in house flipping.
Successful house flipping requires understanding your customer base and their needs. A flipper's focus should not only be on what they want for the property but also on what potential buyers desire. In the speaker's experience, making assumptions about buyers' preferences, such as adding a parking space to a property without proper research, can lead to missed opportunities and financial losses. To avoid this, creating a customer profile and considering their priorities during the renovation process can help ensure a successful flip. Additionally, the speaker emphasizes the importance of having a risk-tolerant personality in the house flipping business, as there will always be uncertainties and challenges to overcome.
Putting Buyers' Needs First and Managing Contractors: Work with a team of trusted contractors, maintain clear communication, develop a thorough scope of work, and obtain competitive bids to keep real estate investing projects on budget.
Successful real estate investing involves putting the buyer's needs first and ensuring key areas like kitchens and bathrooms are up to par. Contractors are an essential part of the process, but managing multiple projects with one contractor can lead to delays and increased costs. Instead, it's recommended to work with a team of trusted contractors and maintain clear communication to avoid unexpected expenses. Developing a thorough scope of work and obtaining competitive bids from multiple contractors can help keep projects on budget. Additionally, be wary of contractors quoting low initial prices that may significantly increase during the project.
Thorough scope of work essential in real estate projects, especially for old homes: Clear agreements in writing help prevent disputes and unexpected costs in real estate projects, especially for old homes
Having a thorough and detailed scope of work is crucial in real estate projects to prevent misunderstandings and unexpected costs. Old homes, in particular, often hide hidden issues that require additional work and expenses. Contractors may encounter unexpected problems, but it's essential to have a clear agreement in writing to avoid disputes and potential legal issues like mechanic's liens. By allowing for contingencies in the scope of work and ensuring that all agreements are in writing, investors and contractors can build trust and maintain a successful working relationship.
Effective communication and regular site visits are crucial for successful real estate flips: Regular site visits and customized communication tools help ensure project success, while 1031 exchanges offer tax savings for rental property growth.
Effective communication and regular site visits are crucial for successful real estate flips. The speaker shared his experience of creating a custom bid form to ensure change orders are approved beforehand and making frequent visits to job sites to ensure everyone is on the same page. He emphasized that the level of involvement in a flip project can significantly impact its outcome, especially when working with new contractors. Additionally, the discussion touched upon tax savings through 1031 exchanges, which can help investors grow their rental property empires while deferring capital gains taxes. Lastly, the importance of reliable vacation home management was highlighted, with Vacasa being a solution that simplifies the process and earns homeowners an average of 20% more revenue.
Converting Apartments to Condos: A Strategic Investment Opportunity: Identifying a desirable location and customer profile, navigating the lengthy entitlement process, and calculating holding costs are crucial steps in converting an apartment building into condominiums.
Converting an apartment building into condominiums can be an attractive investment opportunity. The process involves evaluating the deal by assessing the future market value and purchase price of the land, considering the entitlement process and holding costs. The first step is identifying a desirable location and customer profile, as seen in a 12-unit rental property in Costa Mesa, California, where the developers saw potential for a "cool little community" for young professionals. The entitlement process can take several years and involves obtaining approvals from the city. The cost is then calculated by dividing the purchase price by the number of units. The holding costs include the time and resources spent on the entitlement process before any construction can begin. Overall, converting an apartment building into condominiums requires careful planning, patience, and a solid understanding of the local market.
Navigating the complexities of condo conversions: Investing in condo conversions involves a lengthy process with significant time, resources, and patience, but those who successfully deliver on their promises can earn trust and appreciation from investors.
Investing in real estate, specifically in condo conversions, is a lengthy and complex process that requires significant time, resources, and patience. Before even starting any physical work, developers face a long period of time for entitlements, HOA development, and tenant relocation. This process can take up to 6 months or more, and selling multiple units takes longer than selling a single home. The experience of going through this process can provide valuable insights into the home buying market and the needs and wants of potential buyers. Despite the risks and potential financial losses, those who are committed and deliver on their promises can earn the trust and appreciation of their investors, even in unfavorable economic conditions. Would I do it again? Absolutely, with an open mind and a solid plan.
Steve's commitment to communities and quality: Expertise in a specific neighborhood and dedication to providing a trustworthy product are crucial for success in flipping houses in expensive areas.
Steve's passion for making a difference in communities through real estate, coupled with his commitment to quality and branding, has driven him to excel in the business of flipping houses. He started by transforming a neglected neighborhood in Northeast Los Angeles and continued by redefining the concept of a "flip" with his "slow flip" approach, focusing on design, details, and quality. Steve's dedication to providing a trustworthy product and building a strong reputation has been key to his success in a small and interconnected real estate industry. For those starting out in flipping houses in expensive areas, Steve advises focusing on becoming an expert in a specific neighborhood.
Offer opportunities instead of asking for money: Successful partnerships come from offering returns to investors, delegating tasks to professionals, improving systems, and staying persistent and passionate.
For real estate investors, instead of asking for money, it's more effective to offer opportunities for those with capital to make a return. This mindset shift can lead to successful partnerships and investments. Another key point is that while new investors may want to do all the work themselves, it's often more efficient to delegate tasks to professionals. As an investor gains experience, they should aim to improve their systems and processes while continuing to learn and adapt. For example, an investor might manage the ordering and delivery of materials to keep the rehab process running smoothly. Lastly, for those starting out in real estate, persistence and passion are essential. Even with a full-time job, dedication to the industry can lead to opportunities and eventual success.
Starting Your Real Estate Investment Journey: Insights from Open Houses and Agents: Speak with agents, attend open houses, and observe buyers for valuable insights when starting in real estate. Familiarity and personal preference play a role in choosing local or distant markets. Typical flip timeline is 6 months. Read 'Rich Dad Poor Dad' for real estate, 'How We Buy' for consumer behavior insights.
For beginners looking to start their real estate investment journey, identifying neighborhoods and attending open houses are great starting points. Speaking with real estate agents and observing other buyers can provide valuable insights. Additionally, even after selling a flipped home, attending open houses can offer valuable feedback. Regarding investing locally versus in different markets, personal preference and familiarity with the area are important factors. The typical flip timeline is around six months from purchase to sale. A recommended book for real estate investing is "Rich Dad Poor Dad," and for business, "How We Buy" by Paco Underhill can provide insights into consumer behavior, which can be applied to home buying. Outside of real estate, the speaker enjoys surfing.
Importance of community and positivity in real estate investing: Surround yourself with like-minded individuals, learn through podcasts and books, and approach investing with optimism for successful real estate investing
Having a supportive community and maintaining a positive mindset are crucial for successful real estate investing. Steve Jones, a guest on the BiggerPockets podcast, shared his passion for old stuff and restoring old homes. He emphasized the importance of surrounding oneself with like-minded individuals and being in constant communication with them. Jones also highlighted the value of continuous learning through podcasts and books, which inspire and challenge him in his investing journey. He advised novice investors to approach real estate investing with optimism and embrace the learning process, even with its inevitable mistakes. To connect with Steve Jones, listeners can find him on Twitter, Instagram, and Better Shelter's website, as well as on BiggerPockets. Overall, Jones's insights emphasize the importance of community, positivity, and perseverance in real estate investing.
Being inspired and setting goals can lead to great achievements: The BiggerPockets community offers valuable resources for real estate investors, including free content, networking opportunities, and access to investor-friendly agents. Finding the right agent can help investors navigate the market and make informed decisions, but remember investing involves risk and consult advisors before making decisions.
Having a clear inspiration and setting goals can help individuals achieve great things, just like how the speaker was inspired by the Stretch Armstrong toy and aimed to be taller. The BiggerPockets community can serve as a valuable resource for real estate investors, offering free content, networking opportunities, and access to investor-friendly agents. Finding the right agent can help investors navigate the market and make informed decisions. However, it's important to remember that investing in real estate involves risk, and individuals should consult with qualified advisors before making any investment decisions. The BiggerPockets Radio podcast aims to simplify real estate investing for individuals, providing informational content and resources to help them reach their financial goals.
