Law School Discussion

Home Ownership and Wealth Building

Burning Sands, Esq.

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Re: Home Ownership and Wealth Building
« Reply #370 on: January 15, 2006, 02:36:47 PM »
If you can turn a profit on a new condo in 2yrs you're doing really well. I go for the older ones w/renovation in mind.

do you renovate yourself or call around for contractors?

We had a the carpet installed (seeming is tough), but we did everything else, tile, cabinets, countertop, paint, sink, dishwasher, vinyl floor, drywall, doors, electrical etc. In the past we've done many other types of work. Typically we contract for heating and carpet and do everthing else ourselves.

Nothing like hanging drywall to make you feel like Tim Allen on tool time. lol  I can appreciate the independent moves on the home improvements.  This is ultimately what I want to end up doing on a large scale after graduation so that I can give Big Law the finger.

Ed

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Re: Home Ownership and Wealth Building
« Reply #371 on: January 15, 2006, 03:03:34 PM »
I have several good friends who swear by the buy-and-flip real estate business. However, when they describe the effort they put into the projects, the time, the risk, and their profits, I find myself wanting to learn more about the details of their expenses and revenues in order to evaluate their businesses better. The business also seems as though it would be more competitive if the profits they tell me about were true and accurate accounts of revenues minus expenses. Yet, I never push too hard, because I don't want to offend them by making them think I lack respect for their businesses. I respect all entrepreneurs in all forms and at all levels. However, I like to know which entrepreneurial ventures are most and least profitable as well.

Have any of you calculated the profit per hour that you have been able to achieve, on average, via your buy-renovate-sell residential real estate investments/businesses? Has anyone achieved more than $100 per hour profit, taking into account all expenses including taxes and opportunity costs, on average, after buying and flipping more than ten residential properties? Is this business lucrative in rapidly growing markets only or in all markets?

I'm just trying to gauge how lucrative investing in renovations of residential homes is? I know there are big profits to be made in speculation and development, commercial and residential. I would like to hear more details about average per hour profits for the buy-and-flip businesses if anyone would be willing to divulge that sort of stuff.

Burning Sands, Esq.

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Re: Home Ownership and Wealth Building
« Reply #372 on: January 15, 2006, 03:35:19 PM »
I'd like to know my self.  I used to help my frat brothers out with this back home by doing the contracting for them for free.  They wanted me to go in on a few houses but I declined b/c I knew I was about to start law school, but I keep up with them and their progress as a means to see where I would have been had I stayed behind and gone that route instead of being here. 

I think it depends on the market of your city.  I got one bruh who rents out to section 8 housing b/c it is guaranteed money every month, and then I got another brother who does that but also flips the houses.  They are not ballin out of control yet but they are definitely doing well for themselves.  But as far as hard figures I'm not sure.

Re: Home Ownership and Wealth Building
« Reply #373 on: January 15, 2006, 03:59:34 PM »
wish I knew.. I haven't really been interested in the buy-flip option myself.. I feel that it's a better option to buy-renovate and rent...

Ed

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Re: Home Ownership and Wealth Building
« Reply #374 on: January 15, 2006, 04:21:24 PM »
wish I knew.. I haven't really been interested in the buy-flip option myself.. I feel that it's a better option to buy-renovate and rent...

I have found that tax benefits and equity gains (the equity game is very important when it comes to working with banks and partners to finance other business ventures) from the buy and hold strategy do make multi-unit residential properties smart investments in cities that are growing quickly. Do you target single family homes or multi-unit properties primarily?

Additionally, I would guess that pooling resources and buying larger complexes, with more units per acre and in more concentrated locations, would be even smarter investments due to the benefits gained through decreasing the per unit maintainence and property management expenses. Blk, do you hire out property management or do you manage it yourself? If you do it yourself, approximately how many units (I know this will depend on a lot of factors) do you think you'll need to own before you make the move to property management in order to keep your costs per unit down?

Re: Home Ownership and Wealth Building
« Reply #375 on: January 15, 2006, 04:48:56 PM »
multi-unit...ie brownstones 3 flat...6 apts (roughly 1500 sq ft (maybe a little more) each apt 3br 2ba)...however since I'm in Houston now I've begun to take interest in single family homes especially after the Katrina Hurricane...

I hired a management company recently and they only require a small percentage of the monthly rents... which actually works better because I don't have to deal with the tenants which was very very stressful for me while I was in law school...

Freak

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Re: Home Ownership and Wealth Building
« Reply #376 on: January 16, 2006, 11:36:55 AM »
Been busy folks, sorry.

No, we don't achieve anywhere near $100/hr more like $20-30/hr except the condo in Chicago that was serious money (easily $100/hr).

Of course, there's a learning curve (dry walling for the first time easily takes 10x as long). That partially explains the condo. The key is to buy at the right price and we didn't do that a few times.

The risk is minimal; we have never lost money even on our first renovation and we've never held onto a property for more than 10-11 months.

We always target single family homes; the muli-unit properties take longer to sell; I'd never buy any more than a 4 unit w/o a management company and long-term investment in mind.

Burning Sands, Esq.

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Re: Home Ownership and Wealth Building
« Reply #377 on: January 17, 2006, 05:00:52 PM »
The key is to buy at the right price and we didn't do that a few times.


It seems no matter how much you know about the business this would be a hard thing to predict or ascertain. Outside of what the appraisers value the place at how do you know if you truly are buying at the right price or the right time?

Freak

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Re: Home Ownership and Wealth Building
« Reply #378 on: January 17, 2006, 05:19:49 PM »
It depends on how well you estimate renovation costs mainly.

Also, my Dad is a real estate agent and has access to information most people w/o an agent don't have. He can look at how long it has taken for comparable dwellings to sell and at what price they sold. Furthermore, a huge margin of error is built into our analysis, in the neighborhood of 30%. If we feel confident that a 30% mistake will still result in a profit then we feel confident in the purchase. Generally we need some of that margin.

Burning Sands, Esq.

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Re: Home Ownership and Wealth Building
« Reply #379 on: January 17, 2006, 05:25:59 PM »
Ah, I see. Thanks.

So you pretty much make the good ol' SWAG. Sounds good to me.