The problems isn’t giving the guy a break.  The problem is he wants the entire business to take a break.  My vote would be to replace him and keep the business flowing.  Then when he wanted to return we could plug him back in.  However since he is a principle in the business I doubt that will happen.

The real problem of taking a 2 month break is FHA.  Yep good old FHA screws us again with that 90 day rule.  Remember they won’t finance a property that is inside 90 days of being purchased.   The rule is an anti-flipping rule and quite honestly it is a pain in the ass.

So if we shut the business down for 2 months it could be a total of 5 months before we see another paycheck.  This is a problem.  Were not talking about a 60 day vacation but rather almost half a years income.

Regardless I refuse to drive like a bat out of hell.  Our other driver Rick chooses to drive like a madman to get from property to property.  I can’t count how many accidents he as almost caused.  I figure it’s just a matter of time before he gets in an accident or gets a huge ticket.

I tend to drive just as many properties as he does but with a tad more caution.  It was a traffic jam I recently ran into that made me think of the possible loss in profit.  Not much one can do.

It looks like I will have a full day of driving today. Lots of homes to check and lots of money to make!

Over the vacation I have been getting a few questions about our business. It appears the biggest issue people don’t quite get is why our profit margin is so high. The people I talk with about this business seem to think the property must be in bad condition because of the low purchase price. In fact it is just the opposite.

We won’t buy properties in bad condition. Well at least we will try not to! We do have a few deals on the books I wish weren’t there. But as a rule we try to only replace carpet, repaint, and maybe put in granite countertops.

The reason we make so much profit has to do with picking up a property the bank has reduced their opening bid on. WIth such a low entry price it allows us to make some quick fixes to the property and resell it. The low purchase price has nothing to do with the property itself but rather the banks need for capital.

I hope this has clarified that main question but if not simply send me an email and I can always go into more detail!

I would love to blog more but I have to hit the road and go make some money! Have a great day.

This is a very reactionary business.  So because there is now a property to drive I drop everything and go drive it.  Of course one property turns into 2 and then into 3 and so on.  Guess breakfast is out the window!  Damn, I should have had that coffee last night instead!

So with a short lull in the driving today I figured “hey, im right around the corner from the house”!  I jammed home as fast as I could, walked in the house and checked with my wife on if I was being sent out again.  Nope!!! I was on downtime.  Woohoo now lets make some eggs.

Big mistake because sure enough…  Right as the eggs were getting ready, right as I could predict how they would taste, just as soon as the smell really started to get my stomach hungry….  Yep you guessed it, whammo another property to drive.  Gotta react.  Too much  money on the line.  Eggs get dropped and I am jamming out the door!

So here I am with no breakfast after driven over 50 miles this morning already and where is my next house at?  Take a guess I dare ya. … Ok I’ll tell you.

Of course I get sent into the hood.  I’m not talking about the poor neighborhoods, or just an area hit by foreclosures,,,  Nope I’m talking about a scene right out of Boys in the hood.  I had 2 people sitting on their front driveway drinking beer.  The property I was checking out was right next to theirs.

So as always I ask about the neighbors, if its occupied, owner or tenant…. The usual stuff.  Then I take my picture.  I knock on the door.  Since the door has security door I can’t see through I back up to the driveway.  This usually will bring the homeowner outside or at least open the security gate (so I can see them!).

Sure enough some dumb neighbor from across the street approached me from my blind side.  Really now I am not the guy you want to surprise from behind.  I tend not to choose flight when surprised.

Fortunately he was just outside of striking range and I was able to take step backwards to gain a bit of distance.  He wanted to know why I was taking pictures of the house on his street.  Idiot didn’t know how close he came.

All of this before 10:30 am.  Sometimes you love this job sometimes you hate it.  Just gotta roll with the punches.

In the beginning we had this idea but lacked the capital.  So the main focus was getting investors to invest in our idea.  Well interestingly enough that problem has been solved.  In fact that problem has been solved so well that it has created even more problems!

Last nights meeting was about eliminating our inefficiencies and streamlining our processes.  We discussed our bottlenecks in the business and how to eliminate them.  We have identified 2 slow points in the system.  These are Financing and Construction.

We have a few ideas on how to get around the financing issue.  As I have stated in prior blogs the issue is the 90 day anti flipping rule.  We are considering a marketing campaign to generate VA buyers.  The VA loans are not subject to the 90 day rule.

Really its the construction side that is the tough nut to crack.  We currently have 6 homes were working on but that will be changing with the increase in funding.  Were looking at turning 30 homes per month.  Were going to need more crews.

Again be careful what you ask for because you might get it!  Good problems to have.

This is an overview of how our company is setup.

Each morning my wife and her sister log into a software system to track foreclosing properties.  Both myself and my brother in law leave early in the morning and wait for text addresses to come across our phone.  As the ladies find the properties worth looking at they text them to us.

It is then our job to race as fast as possible to the property (often they are being auctioned within minutes).  Once there we do a simple door knock to try to determine occupancy.  We only invest in vacant properties.

Once occupancy is determined we take a picture of the home with our phones and send that picture to the women.  They upload the picture into the software just in case the property postpones.

When we idenitfy a property we want to purchase, my sister in law calls a contact we have that goes to the auctions daily.  We give him a maximum amount we are willing to bid the property.

If we end up purchasing the property then my sister in law drives downtown, gets a cashiers check for the purchase price and pays for the property.  The same day we go in and switch out locks and get painting and carpet started.  Often the carpet is started sameday.

The property is usually listed within a week (my wife is the listing broker).  What I didn’t go into was all the work that happens before they send us to a property.

The women comp the property and check to make sure we are purchasing the property and not a second mortgage!  They also check to see how much in back taxes and misc leins are on the property (this helps us figure out if the spread is there or not).

It only works because the women have a great amout of experience being a buyers agent in the Sacramento market.  They can tell how much homes will go for and determine which zipcodes to stay away from.

Each part of the business could have its own blog written about it.  I will do this in the future.

I spent the morning driving crap properties. It seemed like every property I drove was occupied or a complete dive. Certainly was off the mark today!

I almost got sent out again but it ended up being a half-plex vs a single family residence. So that meant I got called back in the house just as I was about to pull out of the driveway.

I’m tired and cranky and have a business meeting with our partners. Good times huh?!!! LOL I am pounding coffee now and will put on my happy face.

I have 18 properties to drive today and the day has yet to begin. I am sure there will be more. I think we have another round of funding to spend (we should since we just closed out a few houses). More money = more driving = more listings = more money!

We will over the next week transfer 10k in towards the purchase (but as you know its already purchased).  So normally how a deal works is the profits are split 60/40.  In other words 60% goes towards investors and 40% goes to the house.  So if this house has a 50k profit then that would be split 60/40.

So if there’s 50k in profit and 60% is for investor funds and we contributed 10k towards the purchase, that means we get .1818 of the profit!  See how that works?  Our 10k represented .1818 of the purchase price.  So we get the same amount in profit.

After the 60/40 split we will have 30k towards investor profits.  So I will receive $5454 in profits!  Not a bad return on 10k investment.  In fact I dare you to find better!

The above numbers are of course hypothetical for now but I will certainly update you as to how this all turns out and what the realized gains or losses are.  As of now however we are very excited!