Tag: Renovation

Looking beyond the quick buck
21 Mar 2014

Looking beyond the quick buck

Theresa Bradley-Banta is the founder and CEO of Theresa Bradley-Banta Real Estate Consultancy, a published author and sought after speaker on reality-based strategies for buying, owning and operating multi-family investment properties. Being an award-winning consultant and having overcome some of the unique challenges of being a woman in real estate, she hopes to mentor others by sharing some of the successes and failures she’s endured in the industry.

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Full Name: Theresa Bradley-Banta
Location: Denver, CO
Started investing in: 2004
Years spent investing in real estate: 10
Estimated portfolio size: I’ve owned or had primary ownership roles in properties from $50K to greater than $9M—including single-family rentals, multi-family apartment buildings and single-family development projects

As a woman in the real estate industry, what inspired you to get started?
I met several women real estate investors who were incredibly successful through some friends of mine. They were investing on a large-scale—not just your typical mom-and-pop rental properties. Instead, they had large portfolios of buy and hold investment properties as well as their own property management companies.

Over time, these women became wonderful friends and mentors of mine. They also provided me with an opportunity to invest in some of my very first properties.

When did you start investing and how did you get started?
I started investing in real estate in 2004 largely by accident when my husband and I moved out of our house. Instead of selling it, we rented it out to girls on the local university soccer team. I loved the experience.

With the encouragement of my husband and female friends who were already investing in real estate, I started buying and flipping single-family residences and small multi-family properties throughout the country.

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With each successful flip, our investment pool grew and I made it a rule to always put the profits from real estate investing back into real estate. No excuses.

We don’t use real estate profits to take vacations or to pay off consumer debt. The profits go straight back into new real estate acquisitions.

What do you love most about investing in real estate?
Real estate investing is tremendously exciting. Every project is totally different and keeps you on your toes.

One of my favorite investment deals was a mid-size Class C apartment building that was on its last breath. There were a lot of tenant issues; they were running the building and it was literally a free for all—late rent payments, noise, parties, crime, etc. On top of that, the building was in a terrible state of disrepair.

Finding properties like this is exactly why I love investing in real estate. We renovated the property, returned it to its former beauty and gave our new residents a well-managed, safe place to call home.

Have you encountered any challenges that you think are unique to being a woman in real estate?
Initially, I found that men wouldn’t take me seriously, especially when I decided to invest in apartment buildings. One of the first commercial brokers I interviewed spent the entire hour talking to my husband, acting as though I wasn’t in the room—even though I was the one who had arranged the interview.

At the time, I had already had quite a bit of success investing in single-family and small multi-family properties. It wasn’t until my husband, with no prompting from me, told the broker that I was the real estate investor in the family that I was even acknowledged.

The best way to deal with people who don’t take you seriously is to realize it has nothing to do with you.

Treat it as a non-issue and don’t make a big deal out of it. In the case of the broker who refused to deal directly with me, I chose not to hire him.

Most contractors and service providers I’ve worked with recognize who’s holding the checkbook. I think most women are naturally skilled at working as a team and building relationships and trust.

What is your biggest accomplishment so far?
You might think it would be a multi-million dollar deal, but my biggest triumph was the first house I bought, renovated and flipped. It was an amazing experience to find, finance and renovate a property for the very first time. It completely changed my psychology. Doing that deal gave me a lot of confidence and I eventually moved on to multi-million dollar projects. Learning to believe in my abilities was priceless.

Have you made any poor investment decisions?
One of my worst investment decisions was to buy properties in an area of the country that I really didn’t want to visit. I tried to manage the real estate from afar, which I’ve found is not a good idea.

It’s difficult to stay on top of market trends and your asset performance if you’re not willing to visit the area, tour your properties occasionally, meet with the residents and hold in-person meetings with your team. We ended up firing several managers and ultimately sold the property.

What would you advise a young woman who is thinking about getting into real estate investing?
Don’t immediately join your local real estate investor club. Does this surprise you? If you join a club you’ll most likely find yourself hanging out with other real estate investing hopefuls. The real estate business is about who you know. You need to connect with successful real estate investors so that you can learn and tap into their networks – the sooner the better.

Rather than join a club which might only meet monthly, pick up the phone or go online and start asking your friends, family, parents and business acquaintances, “Who do you know who has had success investing in real estate?” Start networking like crazy and really put yourself out there. Let people know you are just starting out and eager to learn about the various ways to invest in real estate.

Women make fantastic residential real estate investors. We tend to look beyond the “quick buck” and focus on other things that are important to us like the well being of our residents and health of our planet. I think women understand that having a positive impact on people’s lives and on the world we live in goes beyond a concept that we simply use in our marketing efforts. It’s something we really truly embrace.

What do you think is the 3 most important things every investor should know when investing in real estate?
1. It takes money to invest in real estate but it doesn’t have to be your money.

Good deals always attract money. Always.

As an investor, it’s your job to find the great deals. No guesswork, you must know how to analyze the market and numbers.

2. Real estate investing is not a way to get rich quick. To succeed, you must have time, patience, the support of friends and family and a great deal of education. Surround yourself with talented mentors and build a solid team.

3. Know your real estate investing market and submarkets intimately. Intuition and feelings have no place in selecting investment markets.

I can’t resist adding a fourth. Be smart about “hot new trends.” Sometimes the best time to buy is when everyone else is jumping ship. If you’ve heard about the latest hot new thing in real estate investing, chances are you’re too late to the party.

What are your investing goals for the future?
I’m always looking for real estate that presents a good value to add opportunity, especially large multi-family properties and apartment buildings. As a contributing author, speaker and writer, I’ll continue to share information and content on how to invest in real estate and on the ever-changing industry and markets.

I also have the great privilege to mentor clients on a national basis and hopefully will continue to serve as a role model to investors I meet. I love to share the successes and failures made by me and by my colleagues in my field.

Flipping success in a smaller city
20 Dec 2013

Flipping success in a smaller city

K&V Investment Group is a real estate company focused on distressed property rehabilitation, management and investment sales. Their goal is to grow their portfolio steadily, aiming for long-term success through all economic and real estate market fluctuations.

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Company: K&V Investment Group
Co-founder: James W. Vermillion III
Location: Lexington, KY
Years experience: 3
Number of properties flipped: 2-9 currently under contract

Why did you decide to start flipping real estate?

I initially became interested in real estate because of the abundance of options. With so many strategies, financing options and types of investments, it was only a matter of figuring out which strategy best fit my goals and personal situation. After researching, I decided rehabbing was a good starting point.

How did you get started?

After I decided to start rehabbing, I teamed up with a personal friend and we spent several months learning all we could about the business. As we were learning, we constantly developed and modified our business plan until we felt comfortable enough to start executing.

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With our business plan in place, we set the foundation for our flipping business. We formed a Limited Liability Company (LLC), met with potential lenders, became licensed agents and began our search for contractors. At the same time, we were hunting for our first property to rehab. We went to foreclosure auctions, searched the MLS and bid on online auctions, all with no success. While frustrating, we continued searching until we got our first property under contract.

How do you decide where and what to buy?

We look for properties in desirable areas that we can buy at a discount, which enables us to renovate the property and exit with a profit. You cannot rely on one indicator to analyze a property and need to consider as many variables as possible to ensure you are purchasing the right property at the right price.

How do you find your properties?

We search the MLS daily and do our best to keep tabs on the market and maintain an awareness of changes in conditions. In addition to using the MLS, we discuss investing with other real estate investors which can lead to opportunities. Recently, we have seen the market tightening up and have expanded to several smaller cities and towns where there is less competition.

K&V bathroom before and after

How do you finance your real estate investments?

The majority of our purchases are financed through the commercial lending portion of a local bank. The lender finances both the purchase and rehab costs, which leaves us responsible for the down-payment, closing costs, holding costs, renovation costs beyond the approved budget and any other associated costs.

In addition, we have started using a hard money lender when a fast closing is required or we are unable to get financing from the bank. In a few circumstances, we have also used private funds and plan to expand that method in the future.

What are the most common rehabs you have to make when flipping a property?

First impressions are critical to buyers, so enhancing curb appeal is important to make a quick sale. While landscaping and exterior improvements do not always need to be drastic, presenting a clean, attractive property will go a long way in getting people in the door.

Once in the door though, we provide a “new” looking home that is consistent throughout.  I always recommend rehabbers budget for a professional paint job, new light fixtures, interior doors, door and cabinet hardware, floors, etc. There are times when not all of those items will need to be replaced, but unless they look brand new, we upgrade them.

How long does it typically take for you to complete a flip project?

Usually between 4-6 months, although project lengths have varied from less than 2 weeks, to 9 months.

What are some ways you sell the property once you have completed the rehab?

We start by marketing the property while the renovations are underway. This can lead to a contract to sell before the property is even completed, limiting the holding expenses. When it comes to marketing our completed rehabs, we do not do anything special. Since we are licensed and real estate agents, we list the properties ourselves.

K&V living room before and after

How much do you typically make on a flip?

Unlike many rehabbers, we have experienced a wide-range of profit levels due to the range of properties we have flipped. Rehabbers in larger markets are able to focus on a few areas where most properties are very similar, thus they have little variance in purchase price, holding costs, rehab costs and ARV.

Being in a smaller market, we have had to take on a variety of projects, from historic single family properties, to townhouses and duplexes. In addition, the scope of work in our projects has ranged from primarily cosmetic to complete renovations.

Have you lost money from a flip?

While we have made our share of mistakes, we are fortunate to have not lost any money on a project. I credit this to focusing a lot of energy on analysis ahead of purchasing and including contingency funds in our budget for unexpected events or holding time.

What is the most common way people lose money when flipping properties?

There are several very common errors that lead to most failed flips. The first is overpaying for a property. The profit in flipping comes primarily from the purchase, so being able to identify solid flip candidates and purchasing them for the right price is a critical step. Overpaying for a property dooms the deal from the beginning.

Another common mistake is underestimating the rehab budget and timeline. Investors are notorious for using best-case scenarios in determining the renovation cost and timeline, which leads to blown budgets and additional holding costs.

The other major mistake I have seen repeatedly is overestimating ARV, again, due to using best case scenarios during analysis. This happens when rehabbers pick comps that support the top price point, and ignore those that validate a lower price.

What are some things you recommend staying away from when trying to increase a property’s value?

There aren’t any specific aspects I would warn investors about, just make sure you do your due diligence. We have rehabbed properties with foundation issues, water damage, mold, etc., and while many investors look at those problems as red-flags, we look at them as potential opportunities. The key is to make sure you are aware of the issues and are able to accurately budget for the solution.

Not sure what house flipping is? Read our article 4 essential house flipping rules for beginners to learn more!

From sweeping floors to owning doors
15 Nov 2013

From sweeping floors to owning doors

Engelo Rumora is a turnkey real estate professional and works with a house flipping team who have a combined experience of over 20 years. He is currently located in Kansas City, Missouri and in 4 years, has flipped over 40+ properties in the US.

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Why did you decide to start flipping real estate?
Real estate has been a big passion of mine for the past 4 years. When I initially entered the workforce, I started working as a laborer on both residential and commercial sites. After working long hours for minimum pay, I eventually started looking at other opportunities where I could make money, but not have to work a 9-5 job. Getting involved in the real estate industry seemed like a good way to do this.

How did you get started?
Not knowing much about the real estate industry, I decided to educate myself as much as possible and look for work in the field. After knocking on many doors, I ended up working as a buyer/seller’s agent.

It was a perfect mix which eventually led me to flipping houses. Laboring gave me knowledge of the construction side of flipping while working as a buyer/seller’s agent gave me skills in sourcing, negotiating and I learnt how to work with investors one-on-one.

Kitchen before and after

How do you finance your real estate investments?
It all depends on the demand. I work with a team of people and we use our own funds, but also have access to hard money lenders in both Australia and the US. Out of the 35 deals we flipped this year, half were financed with our own funds and the other half were with loans.

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How do you decide where to buy and what to buy?
There are certain areas we prefer. When I moved from Australia to Kansas City a year ago, it took me a while to get a good understanding of where and what to buy.

We also established relationships with the right people. Most of the people we flip houses with own numerous properties in the area and have extensive knowledge on the streets and types of houses that are good prospects for flipping.

How do you know a particular property is available?
I like the saying “leave no stone unturned.” We have established relationships with numerous bird dogs, wholesalers, realtors, etc., who know our criteria and that we are genuine when we submit offers. I get between 10-15 potential deals sent to my email every week and it’s just a matter of scanning through them for the next best deal.

We also buy properties through MLS. However, lately we have found quite a bit of competition on that system and have tried to stay away from bidding wars as someone will always end up overpaying.

Are there any other ways you find your deals?
We also have access to a local finance company’s online system that examines the demographics, crime, vacancy and employment rates of an area.

We like to purchase property in areas that have scored well in their system so that it is more likely they will fund the loans. This also allows us to offer these properties with finance options to potential buyers.

Outside before and after

What research do you do to narrow down a particular property?
We stay away from anything with signs of previous or current foundation issues and tend to start with B or C class areas because these properties are often undervalued. This also helps build in a buffer, in case a major mistake is made because the property didn’t cost a fortune or set us too far back when trying to recover any losses.

What key factors do you look for when deciding to purchase a property?
We tend to look at key features about a properties’ surroundings, such as its proximity to good schools, highways and the employment rate in the area.

Additionally, we always have the buyer in mind when purchasing a property. Most of our buyers are investors so we want to make sure that the tenants in the particular areas we buy have steady incomes and can afford to pay the rent with ease.

We also want the area to be half owner occupied and half tenanted. This gives our purchaser an exit strategy to one day offload the property to an owner occupier. An owner occupier is always willing to pay more than an investor for a property as their decisions tend to be more emotion based instead of being about the numbers like most investors.

What are the most common rehabs you make when flipping a property?
We never buy a house with previous or current signs of structural damage and prefer that the roofs have at least a 10 year life span left. Most of the properties we buy need a complete overhaul.

We also make sure to eliminate any potential maintenance issues that might occur in the years to come once the property is tenanted and rehabbed such as plumbing and electrical issues.

How long does it typically take for you to complete a flip?
It normally takes around 4 weeks for our team to complete a flip and we typically have 3 projects going at once.

You shouldn’t focus on making a quick dollar as a dollar quickly made is a dollar quickly lost.

What are some ways you sell the property once you have completed the rehab?
We focus on quality over quantity when selling a property. Currently, we are working on establishing relationships with individuals and groups worldwide to assist with the marketing and sales of our properties.

Do you have some unique tips to move properties quickly?
The best tip is to always have the end buyer’s interest at heart. You should deliver a great product at a reasonable price, offer fantastic after-sale service and assist the investor throughout the lifetime of the investment – which will set you apart from other companies.

Also, you shouldn’t focus on making a quick dollar as a dollar quickly made is a dollar quickly lost.

What are some types of properties investors should avoid trying to flip?
I strongly suggest beginner investors who are looking to flip avoid any property that needs a major rehab. You should begin with properties that need minor fixes like a cosmetic rehab. This is a great way to learn about flipping while building your experience.

What are some aspects of a property you recommend flippers always rehab?
You should always re-wire and re-plumb every house. Most of our buyers buy more than one house from us, so we always do this to ensure they are getting a good product and service every time. It’s much easier to do the work upfront and keep the investor happy then to not do the work and go looking for a new investor.

Not sure what house flipping is? Read our article 4 essential house flipping rules for beginners to learn more!

The Dirty 30: Success through rehabbing
30 Jan 2013

The Dirty 30: Success through rehabbing

Well here it is – our final “Dirty 30” young investor! Doug Medvetz of Round Table Partners did not want to wait for his job to provide him with the success he wanted. Through the help of a local investing mentor, he and his company are now staking out their own success through rehabbing property.

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Name: Doug Medvetz
Current Age: 31
Location: Greater Boston, Massachusetts
Started investing at: 30, a 2-family house in Hyde Park, MA wholesaled to another investor

How much real estate do you currently own?
My company and I are currently active in the rehabbing side of our business. We are generating capital to purchase apartment buildings with 6 units or more in Greater Boston and Western Massachusetts.

How did you get started in property investing? What inspired you to put your money in real estate at such a young age?
The inspiration was to have more time to spend with my family. I have been interested in real estate investing since my college years and I decided to get started because my career was not taking me where I wanted to be.

Your generation seems to be redefining what it means to be successful. What does success look like to you?
Success to me is NOT working a 9-to-5 for someone else.  It is also living life on my terms and not trading my time for money in the corporate world.

What’s your best advice for someone wanting to start investing early? Do you have any investing mentors?
I have been mentored by the FortuneBuilders group, by Marina Hauser in particular.

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My best advice is to educate yourself and to not be afraid to put yourself out there. Go out and network; there are a ton of people out there who are willing to share their experiences.

What are your future investing goals? Can you share a little bit about your plans?
My future goals are twofold:

  1. Raise enough capital through rehabbing in order to purchase buy-and-hold properties and support my family and business; and
  2. Take some of our capital and start a lending company for beginning investors to help them get started.

Thanks Doug for wrapping up “The Dirty 30”. A personal thank-you also to every, single one of our dirty 30 investors who openly shared their investing journeys so far so that you, a fellow investor, can elevate your results. We will also like to take this opportunity to thank our readers for supporting us in our first month of launch. Hopefully you’ve had more than a good dose of inspiration from these young guns! 

Next month, directly as a result of your feedback, we are sitting down the new, beginner investor and getting all the inside info on their very first property transaction. It could get ugly. Happy investing!

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