About Me
To my readers:
As I’m laying out my entire investing strategy and the progress of my business in this blog, I guess I shouldn’t be too shy about giving some more background about who am I and where I came from.
I’m originally from the East Coast, and up until Spring of 2008, I resided in Silicon Valley (California). I earned my degree in Electrical Engineering back in the mid-90s, and spent 14 years working for several prominent technology companies managing product development and technology innovation. I’ve worked for, and held management positions at, such companies as DirecTV, Microsoft, and eBay, and after nearly 15 years in the corporate world, I decided it was time for a new challenge. That’s why I dove into real estate investing.
My wife also spent much of the past 15 years in corporate management positions, and as of last year, she too was ready for a change from the 80-hour work-weeks. After taking some time off to get married, relax, and enjoy a bunch of free time doing nothing, we moved back to the east coast and took up the challenge of starting a scalable house flipping business, with the target of purchasing, renovating and reselling 15-25 houses per year.
We’ve achieved that goal and are now focusing on building new construction and educating others. Thanks for following our journey, and hopefully we can help you as well, if you’re looking to enter the real estate game…
Thanks,
J Scott
Hi J. Scott,
I met you on BP, I am a great fan of that site.
I admire your enthousiasm and skills in flipping those REOs. I have been trying to do the same here in Northern CA without much success. Most have multiple offers and if not, they are not cheap enough to make a profit. I would like to know if you do these flips for other people, clients? Could there be a way so we could both profit? Let me know if you have any suggestions. Thanks for all your input on BP.
Rolly Dupree
J. Scott,
Hey I just wanted to let you know that I really appreciate your help the other day with my tax questions. My father and I are about to make an offer on a home. This would be our third home. I have installed tile and hardwood floors for 6 years now and am ready to move out of that and try the remodeling of REO homes. We have remodeled 4 homes already(that includes ours as well and have never had a problem with selling the 2 that we sold. We have had success but I am ready to crank it up a notch and have a career change myself. I know we can be successful, I just am trying to get my ducks in a row for this flip and the ones after.
I stumbled onto BP about two weeks ago and it has been a godsend for me with everything I have learned so far. We did well with the first few but I see we can do so much better with the purchasing aspect of the deal. I am sure if you don’t mind I would love to ask you a few questions if I ever need some good knowledge.
I am getting ready to purchase your e-books, don’t normally do that but you seem like an honest guy. Thanks Again for the help the other day, much appreciated.
Jason Ballesteros
J Scott,
I am retired from being in business for myself for over 30 years. Have started three businesses in that time from scratch. In the last busienss I imported used large graphic arts machinery from all over Europe and sold it all over the US. Sometimes a single sale would be $50K to $70K but most were in the $200k to $400K with the highest being $900K. All business was done using OPM. Finding a goood machine to fit a customers needs , setting up the payment system, loading, shipping, delivering to their floor and making it run properly was about a 100 times more complicated than flipping houses. You don’t need to move the house!
For quite some time I have been looking for a service like yours, So very glad I found you. And look forward to your training and guidance.
Bob K
I would like to talk to you about some deals I have and that I get. Can you email with your contact info and a time to call you to discuss??
Thanks
Will
713-444-6852
J. Scott,
Very nice to see a fellow EE from Silicon Valley in the RE business(I am a VP level manager at a public company). I also do RE as a side, fun activity I have flipped 3 houses over the last couple of years in the Silicon Valley area, and bought another 3 in the FL area, which I currently rent. I saw one of your posts in the Bigger Pockets forum, with a link to this site (the introduction to RE investment analysis). Finally, a post for folks that are a bit more math inclined and can handle slightly more complex analysis (which I have been looking for, but couldn’t find). I know that you have purposely watered down the analysis (for example there are no sensitivity analysis of various factors, or graphs of the bands of potential returns given various scenarios, etc). I think that if one can distill all the math, rules of thumb, etc. into an app that shows in a graphical way all the scenarios, it may be possible to make better decisions… this can be a simple and fun project to do (of course, I know that for most of the cases, the analysis is trivial and can be done in one’s head in a matter of minutes, but there is something appealing to be able to use the powerful visual and pattern analysis mechanisms of the brain, which happen to be the most advanced for us humans). It would be great to chat with you about that little project…
I am curious as to why you decided to do your RE investment outside of the SV area? While the deals are more expensive, it is possible to make much larger profit on any single deal here than in other parts of the country (for example, my last flip, was a SFH in Campbell that we bought for 445K, put 70K on rehab, and sold for 679K. The entire project was less than 5 months)…
Good luck and hopefully we can chat one of these days,
Luis
Hey Luis,
I actually moved from Campbell, so I was right in your neck of the woods. Our decision to move to the east coast was independent of our decision to jump into real estate (we moved back here to get married, start a family and be close to our families on the east coast), so investing in California wasn’t really an option when we first moved. That said, we miss California tremendously, and I wouldn’t rule out the possibility that we’ll move back one day — perhaps even one day soon.
As for the analysis tools, I agree that there are a lot of tools that can be used to better analyze deals, but what I’ve found is that when rehabbing single family homes, there are often a set of unknowns that prohibit investors from getting too much more rigorous. In other words, more precision doesn’t generally translate to more accuracy.
That said, over a large number of projects (or for rentals, over a large number of units), there’s certainly a place for more rigorous analysis and detail. Now that I have 20 or so projects under my belt and feel as if I have a good bit of insight into the process of analyzing and completing deals, creating better tools may be an undertaking worth considering…
Perhaps we can chat at some point…
J. Scott,
thanks for the quick response…
It would be great to chat with you one of these days… (let’s exchange phone numbers via private email)…
In terms of the tools, I wasn’t necessarily thinking about being more rigorous, but to be able to visually see the lack of precision that you mention via graphs with a range (for example, to quickly know your potential profit range depending on a series of factors like duration of the rehab, interest rate, comp values over time, etc). I think quite a bit of the data can be obtained automatically through web API’s (for example comparable sales within a short radius, that is sales with similar sq footage, no. of rooms, etc.; expenses due to loan amortization, etc). Imagine, for example, a plot of profit vs time, where you plot a band (not a single line) of potential profit for, say, month 1, month 2, month 3, etc and having the graph update as new information becomes available (which it obtains automatically through web APIs or calculations, or you enter manually (for example, rehab costs).
The idea is to enable the investor to codify his experience and patterns in a way that he can quickly make decisions (lower sale price, decide to wholesale, limit rehab) by getting a summary view, instead of keeping the entire set of inter-related factors in his head. As the number of properties increase, it maybe too hard to do this without a tool…
However, as I mentioned, this project would be more for fun than because it is really, really needed…
If you come to the Bay area, you can give me a call and we can get together for a quick chat and a cup of coffee..
Good luck,
Luis
Hello J,
I was admiring your site and the resources you offer. I would love to correspond over email to see if there is a way we can collaborate on the real estate education and analysis tools front. Please drop me a note.
Thanks, and Happy Holidays!
Sincerely,
Bruce Kirsch
Founder
Real Estate Financial Modeling
703-577-4110
Hi J and C Scott,
Thank you so much for making time to share your experiences with others like myself. I will follow your journey and absorb your educational material.
I too am from Silicon Valley. I moved to the beautiful Arizona sun to help my aging parents during some difficult life changes. I belong to a great church with great spiritual uplifting. And, God led me to the love of my life.
I have 20 years of professional business experience. I have been here for 2 years. I miss California and all the great socialites (me included) and great places to eat. The town we are in has 1 Starbucks (WHAT! LOL). I ended up depressed for a while, but the last year has been uplifting. The slower pace of life was hard, but it afforded me the opportunity to learn a lot of my spirit along this journey.
I have helped complete partial remodeling on 5 homes in this area, which were flipped by investors. They sold on the average of 30 to 45 days. A couple things I have paid attention too is the houses are bought in considerably nicer neighborhoods (sales 100K-130K), near the busiest areas of town. There are homes here that sell for 300K-700K, however they are 10 to 20 miles out of town and the market for flipping them is petite. The home purchased for flipping need some TLC and get it. All or partial interior paint, new flooring, new bathroom vanities and mirrors if needed, new interior and exterior lighting, new ceiling fans, yard cleaning, and interior house cleaning. A couple required the garage floors to be cleaned and painted with a non skid paint for garage floors. I enjoy working on these homes and making them right for those moving in (I take pride in all work I do), and getting a home off the unoccupied list.
In the 10 years prior to moving here, projects required having multiple project resources, strategies, close out, and lifecycle.
There are many foreclosure homes and properties available in this area. What do you recommend I read to get started?
If I may comment from the peanut gallery. If you’ve absorbed everything on this site and have assisted with several rehabs, you’re now at the point of getting to know values better than anyone else in your area. You need to know values in your target price range better than the appraisers.
Some might recommend visiting all the model homes for new construction in your area to see the look that sells. You already know that the hot paint colors in the Atlanta area are different than those in the painted desert.
Those are two important sets of skills that you may have a hard time finding in a book. Otherwise, IMHO, you’re ready.
Just discoverd your site. Great info. I own a rehab business in Minnesota. I have been doing this full time for about 4 years and have rehabbed and sold about 25 houses. While 2009 was my best year so far, 2010 has been a challenge since the tax credit expired. I slowed down my buying in May expecting a lack of buyers and was glad I did. I had 2 homes to sell in the fall and had to discount them heavly to get them sold. I would say our biggest challenge in my area is being able to determine ARV values now that the market has slowed so much. Also, REO prices have been slow to come down due to the BPO’s using comps more than 4 months old. So, it’s been challanging. I hope as we move through the winter REO prices will start to come down. I am starting see this now. The big mystery is what will happen this spring and summer. Another important change coming is more REO’s are HUD, Fannie mea and Freddi mac. These have a 15 day waiting period for investor offers. One thing I have learned, is this business is constantly changing and to be successful one must adjust. What other challenges do you see for 2011?
Hey David –
Agreed with everything you said…
I think 2011 will be a slightly better year than 2010. Unemployment numbers should come down a little bit and interest rates should rise a little bit. While normally rising interest rates aren’t good for home sales, generally when they start to rise after a long period of being flat, it entices buyers who have been on the fence to act (they don’t want to risk missing the low rates).
As for challenges, I think the biggest in 2011 will be on the buy-side. With home sales likely to increase, investor activity will increase, and there will be more competition for people like you and me. Seasoned investors will start moving money from the sidelines and new investors will decide it’s time to jump in. It certainly won’t be like it was back in 2004-2007, but I have a feeling there will be more competition than we’ve seen in a couple years.
That’s my biggest concern for 2011…
Hi Jason
Sorry but I haven’t figured out how to send PM through Bigger Pockets yet so I’m contacting you via your website. So far I understand that you check item 6B in the GAR Purchase and Sale Agreement and then you ask for time to do the due diligence of getting the private lender on board in the Special Stip section. If I may ask, what exactly do you say?
Hi Jason,
Let me start off by saying that your website is awesome! I’m 23 and will be graduating in December and flipping houses (and doing business in real estate in general) is something that I would really like to get into once I’m out of school. I just love real estate! Right now that is. lol.
With that being I am currently in a class constructing a business plan for a house flipping compny. A couple of question for you since you have experience.
What are your biggest hang-ups and how do you solve them?
What marketing tactics do you use to quickly move your properties into the hands of consumers?
What business metrics do you us to make sure your operations are productive? Both effectively and efficiently?
And what are the best markets for foreclosures and bargins in GA? I currently have my business based in the Virginia Beach area of Virginia (since I reside here) but feel that GA might be a better market for this type of business based on the properties I’ve seen friends of mine own in GA for such low prices.
Appreicate the help and thanks for the wonderful site!
Hi I just signed up for your newsletter and wanted to see your business plan for flipping and rentals but neither link opens up. I’ve tried other links and they seem to work fine. I am preparing to submit a business plan to the bank and discovered your site by googling house flipping bus plan templates. Any suggestions on getting your links to open or would you mind emailing me the two plans mentioned. Thank you, Scott L
Scott –
Just sent them to you. Though they appear to be working for me. If anyone else is having difficulty, let me know!
J Scott,
Thanks for the great info on this blog. I’ve been following for almost a year now and really appreciate your insight. I’m in the process of buying a fannie mae property that has a 90 day deed restriction on it, and in doing research about this I found a few threads on biggerpockets that looked liked you had participated in. A few questions:
1) When was the last time you had success in getting this clause removed? I understand that some verbiage has changed, and want to find out if it’s still possible to request this clause to be removed.
2) Just to clarify, the deed restriction doesn’t stop you from listing the property or getting it under contract, it simply restricts to closing of the sale in which the deed is transferred. Is that correct?
Thanks for your help, and good luck with your current projects!
-Tom
Tom –
It’s been nearly a year since we’ve gotten FNMA to drop the restriction, and they don’t seem to be accidentally forgetting to put it on anymore. In other words, we always expect it to be there. But, as you pointed out with your second question, it does NOT restrict you from listing, marketing and putting it under contract — just set the closing date for day 91.
The deed restriction is not a big deal if you are planning on rehabbing and selling the property. You can put the home on the market for sale before the 90 days and accept an offer. If accepted the lender moves forward with the appraisal and title work. After the 90 days are up, the buyer and you, sign a new PA with a date past the 90 days and close soon after. I have done this many times.
Ok – Thanks for the help guys. Looking forward to getting this rehabbed and sold!
David –
There is no reason to have to sign a new PA after 90 days because of a FNMA deed restriction…the deed restriction says nothing about when the contract is signed, only when the deed is transferred. My guess is that you’re getting confused with the FHA restriction on resales, which USED to require a new PA after 90 days. Though, these days, you can resell to an FHA buyer without time restrictions (I.e., in under 90 days), so there should never be a situation where you need to sign a new PA after 90 days. If your lender/broker is making you jump through these hoops, find a new lender!
Hi J. Scott, I am just wondering, since you did not take any courses or seminars, how did you learn rehabbing and how long did it take you to become this successful?
Hi, J Scott, What do you think about using this 7 to 12mm imitation wood, floating floor.
in a city townhouse, all rooms have tongue and groove flooring but some of them are pretty rough and will take a lot of work to get them in shape
J Stoll –
Personally, I like engineered hardwood better (nail down or glue down). The cost isn’t that much more expensive than the laminate wood, but the look is much nicer and you don’t have to worry about “bounciness” issues with a floating floor.
Just my personal preference though…
Hey Derek,
If you read through the old blog posts, you’ll see that I started to get really comfortable around House #5 or so. This is about when I felt like I had learned the process, understood how to manage contractors, understood the basics of renovation, and was getting good at determine the cost of various renovation tasks. Also, it was around this time that I started to solidify my contractor crew and really found a group of contractors I could trust.
All that said, if you take the time to read through everything I went through on all the houses, my guess is that you can probably be where I was after just one or two houses (you always need some hands-on experience, regardless of how you’re learning)…
Thanks J. I am going to devour everything on this site. Thanks again for doing it.
Good website J Scott. Keep up the good work. It’s great to see somebody restore credibility to a real estate game that is often overrun with scammers. Consider yourself bookmarked. Thanks again!
Howdy J
Man what a great site. Just found it through BP. There are lots of sites out there that claim to provide knowledge but yours really delivers. You have specifics and details and is up to date.
Thanks for taking the time to help others kick off their investing careers!
Chas
howdy J Scott,
Great, informative site. You really have to had looked through hundreds of gimmicky sites full of fluff to be able to appreciate the information you post here. Kudos, that there’s someone out there keeping it “real” With that said, do you mind if I inquire how you started your first deal? How did you finance it? I’ve been at the sidelines observing astutely for a while now but always hesitant to jump in. If you can shed some insight that got you over the initial hump, I’d appreciate it greatly. Thanks!
Frank
Hi Scott,
I mentioned to you that I’m interested in finding my first property to flip in Georgia (I live in Dacula (Gwinnett County). I saw a property that looked like it had potential on FMLS in Braselton, GA and I believe there is a lot of negotiation room. The owner is an agent who bought it for $38,000 a month or so ago and is trying to sell it for $54,500. Before I went over to look at it, I was going to offer $44,000. I think the guy wants to get rid of it. It is a really cool property but needs too much work $20,000-30,000. Too much for me as a newbie. I thought I’d just pass it along to you in case you were interested. #5030982. 31 Kings Road. Have a great day! Beth
Thanks Beth! I’m up in Milwaukee this week, but I’ll have my team take a look — if we buy it, I’ll make sure you get a referral fee and you can work with us on the project!
New to investing. Kept jumping back and forth and information overload. Looked into mobile home investing “lonnie deals”….found your site!!!!! I love you! Thank you for sharing your journey. I will be up all night reading all your blogs 😉
I also saw your postings on BP…great job!
This is the best site i have seen in a long time. I really appreciate the insight givine here.
Its crazy how we the universe works…. You found me!!! lol
J Scott,
I’ve been researching financing to purchase residential REOs in Orlando, FL for the past 10 months. I have come across many scams! I have also been in contact with hard money brokers. Unfortunately after their points, the lenders points, fees, fees, & more fees my potential margin on a property is very slim or knocks out any deal.
I would like to target actual lenders or investors. I do have “skin in the game” ($30-40k), but need the financing for the initial purchase. I will listen to suggestions from other’s on this board!
Thanks in advance
Terry
I came across your website while doing a Google search for an explanation on the 90 day Fannie Mae restriction because my son is purchasing a home with that and we didn’t quite understand it. You certainly gave great information about that on your education page. So, I had to go further and look at more on your website. I just had to write you to tell you that I’ve saved your website to my favorites because it is FULL of information and exactly what we need! Thank you very much for the amount of work you’ve put into your blog, photos, results, etc.
Good evening to everyone,
my name is Marco and i’m writing from Italy, and I’m interested to invest in the USA some savings (80.000 usd around) due to the slow and not profitable real estate market of Europe
Thank you J.Scott for all the information you privide, is definitely so helpful, and I believe and I feel in this blog there are honest guys.
Terry
or any other investors if can help-join together to buy and do this business, i’m available to discuss and get in contact.
Marco P.
J Scott,
I discovered your site on BP and want to thank you for offering your goodies, great real word advice, and updated flip information. I live in Southern California and have been an Ironworker for 25 years. In 2008, at the age of 40, I sustained an injury at my work place and I have been unemployed and on disability ever since. I am nearing my the end of my case and hope to settle soon. I too, have been tired of the workforce and want to do Real Estate Investing with my wife who is a Preschool teacher for 25 years, but has a passion and unique eye for interior design. I plan on flipping and building a portfolio of rentals for cash flow. What are your thoughts about tackling the California Real Estate, it’s much higher in cost and I always did believe in homes priced on the lower end for affordability. However, I live here in Southern California and need to make good on it. Anyway, I appreciate your willingness to offer great advice, unlike Real Estate Guru’s that what a ton of money upfront. I have been researching entering the Real Estate game for about two months. Thanks again.
Can you email me about possibly investing with you, thanks a lot
David
Hi David,
You’re welcome to email me at jscott@lishgroup.com…