The "Reality" in reality tv flipping shows
Written by Lance Manywounds on July 28th, 2018
   This is a fun topic because most know reality tv is staged and produced to a large extent to garner the highest ratings. The question that I get from a lot of people is what are these shows not showing about a real estate flip that would benefit me to know. Well it's a number of important items but let's talk about probably the biggest myth which has to do with the actual profit realized by flippers on these shows. 
 
   This one always frustrates me because it paints a very rose colored picture with what you can make flipping houses and this hurts a lot of newer investors/flippers. The TV shows generally leave out the cost of the money they borrowed(lender carry costs) which can add up to a significant portion and hurt the bottom line depending on how long you hold the property. Other expenses not usually included are splits with investors(amount you owe an investor to borrow their money), realtor fees, purchase closing fees, escrow fees, insurance, lender fees, budget overruns, taxes(this is a big one because depending on where you build you could end up paying A LOT more to city/state/others), lawyer fees, title fees etc. The list is quite long and rarely are these numbers shown. I'll show you an example of this on a $510,000 sale how skewed this can be. 
 
Reality Tv 
 
$300,000-Purchase price 
$100,000-Rehab 
$400,000- Total all in Cost 
 
$510,000- Sale Price 
 
$110,000-Profit Made!!  (something like this is what reality tv shows) 
 
Actual Number 
 
$340,000-Loan( 80% of purchase price+100% of rehab costs@12% interest) 
 
$30,600- Realtor fees at 6% 
$20,400-Cost of interest on loan for 6 months from purchase to sale(4 months build+2 month sale) This is actually a pretty aggressive timeline as well if it's your first project 
$4,000- Purchase closing costs(title fees, lender junk fees, appraisals, lawyer fees, taxes, hoa capital contributions and others) 
$10,000- Escrow closing costs(similar as above but the seller is generally responsible for a larger percentage of all fees associated with closing) 
 
$110,000- Profit 
-$65,000- Total extra fees 
$45,000- Total Profit 
 
$22,500- 50% Profit split with investor/partner 
 
   Surprising and sure does change the rosy $110,000 that they show on TV! This doesn't even take into account budget overruns, increased timelines, hidden taxes which could easily add on another 30k-45k which would then make this project very tight or not profitable at all.  
 
   I don't show this to discourage anyone from investing in real estate or from taking on their first flip but to help educate them about the truth. You can make a lot of money flipping houses and lay a great foundation for yourself to pursue other areas of real estate but there are some specific steps you need to take in order to make sure you are successful!  
 
   Hope that helps get you started!
Can you really buy real estate with no money down?
Written by Lance Manywounds on June 30th, 2018
Can you really buy real estate with no money down?  
  
   This a pretty popular question that gets asked by a lot by people, can you do real estate if you have no money? The answer is definitely a resounding yes in certain areas but an asterisk in other areas.   
   A lot of people get started in real estate by wholesaling which generally requires little to no capital upfront because all you are doing is matching a seller with a buyer without taking possession of the property. It gives you the opportunity to build up some cash to move to the other areas of real estate that generate larger lump sums of cash or passive income. The process to wholesale a property usually looks like this:  
  
1. Identify motivated sellers(lots of ways to do this; Craigslist, FB ads, direct mailers etc.)  
 
2. Reach out to motivated sellers with offer to buy house for cash  
 
3. If communication succeeds; determine the offer by pulling comps in the area  
 
4. Seller accepts your offer  
 
5. Blast out email,texts or call your buyers list(this is easier to build than people think)  
 
6. One of your buyers accepts your offer   
 
7. Assign contract through title and you’ll get paid your assignment fee when it closes  
  
   There are a few more pieces to this but that gives an overview of the transaction :)   
  
   Most other areas in real estate you will need access to some funds. This can still be OPM(other peoples money) which would still allow you to buy real estate without putting in your own funds. Now don’t get me wrong, this strategy is “not” a no money down strategy and you shouldn’t think of it that way. Someone is putting money in and if you’re the one overseeing the funds without your own funds invested then you should treat that money like it’s yours and take great care of it. This is a powerful method should you do a great job because you can quickly scale once you have an excellent track record. People love winners and real estate is no different. We started with our own $200,000 to invest but quickly grew it into a multi-million dollar investor pool with the ability to take on multiple large projects with larger payoffs(25 mil+ under development at certain points over the last few years).   
  
  Bottom line is regardless of where you are at financially, real estate is a great way to build wealth in an industry that isn’t going anywhere. Real estate has always been one of the safest investments and it’ll continue that way for a very long time. If you work hard and use the right strategies anyone can be successful and build wealth in real estate.   
  
   Hope that helps! Feel free to message me if you have other topics you would like to talk about! 
The Different Strategies And Roles You Can Take Within Real Estate Investing
Written by Lance Manywounds on May 23rd, 2018
There are so many strategies to flip a house it’s crazy. From the do it yourself people who do all or most of the work themselves to the passive investor who partners with a go getter that manages all the oversight for a cut of the profit.   
  
   I believe the best way to look at it is from a what’s your time worth scenario? Since time really is the most valuable commodity and flipping is a means to an end, not an end point for most people getting into real estate.   
  
   The do it yourself people- this sounds great but it’s quite laborious and time consuming especially if you’re not a handy person to start off with. Let’s say it takes 2 months for you to do all the work in a small fix and flip which you’ll profit $20,000. You spent 30 hours/week(this is probably low if it’s your first one) for 8 weeks. That means you made roughly $83/hr(20,000/ (30x8)). Not bad but let’s look at the other options.  
  
   The realtor+ do it yourself person- You’ll make the same 20,000+ the 3% commission(let’s say the house above was a $200,000 sale). That means you made $26,000 or $108/hr. This also assumes you spent zero time marketing and selling the house just for the sake of helping these numbers.  
  
   The contractor investor- this person will generally make 15%+3-5% for overhead on a job this size. We’ll say the rehab was $50,000. That means the contractor investor makes $20,000+$10,000(50,000x20%). The contractor uses subs so generally will not be on site every day. They put in probably around 8-12 hours/week depending on how efficient/experienced they are. At 10 hours/week the contractor/investor is making around $375/The efficiency numbers can increase significantly depending on the contractors ability.   
  
   Project manager- this person usually works for a cut off the profit and generally spends around 4-6 hours/week overseeing the project. That’s around 40 hours(5x8 weeks) for the duration of the project. That means for 50% or $10,000 they are working 40 hours or $250hr  
  
   Developer-this is the most efficient of all options. Usually better management ability and once the project has been vetted thoroughly from the start with the right contractor, realtor team in place the oversight becomes very minimal. This person is usually the one organizing, finding the money or has the money and deals with all individuals initially before delegating their duties once the project starts. Requires 3-5 hours/week and allows ability to take on multiple projects. At 32 hours for the project(4x 8 weeks) this person makes around $625/hr.   
  
   Hope that helps! Feel free to message me if you have other topics you would like to talk about!
©2018 Lancemanywounds.com


Powered By ClickFunnels.com