Sometimes you just have to do things to make progress It makes you uncomfortable.
“Get out of your comfort zone”
“You can’t steal the second with your foot on the first.”
“It’s better to try and fail than not to try at all.”
We have all heard all these expressions.
But when was the last time you did something TRUE Scary to do – know that when you succeed, you will not only make money, but will give you money Genuine Satisfaction?
Honestly, I talk a lot about horror here at Bigger Pockets..But it’s been a long time I felt a really unpleasant horror I’m doing something far outside my personal comfort zone. It was about two months before I entered the modular home house flipping business.
Experience or knowledge: which comes first?
When you are afraid, it is usually due to one of two causes: lack of knowledge or lack of experience. If your fear comes from inexperience, how do you get experience?
To overcome fear You have to do what you are afraid of – To gain experience so that you are no longer afraid. Follow me about it?
So you have to go to do what you are afraid to do so that you are no longer afraid to do what you are afraid of (Is it just me, or am I starting to sound like this? Casey Stengel?? )
Anyway – I and my team have the following expressions: No excuses. Don’t make excuses, just get things done. Just take action and do it. Don’t whine or complain, End.
Interestingly, with this modular house flip, I didn’t even try to do it – It just happened that way.. Right now I’m very focused on expanding my business and this was a logical step for me to do it – by learning something new – at the same time my business goals We are working towards.
Modular flip deal in 12 minutes
To be honest, I wanted to do a modular home someday, but I never had the chance to do it. As I’m talking many timesI usually buy a bad property, repair it and then sell it … but this is not the case.
There was a house in the tax auction town of Bournetown that I wanted to buy. It’s a house in my comfort zone, suffering and perfect for rehab.
However, the bid for the property quickly became unmanageable and out of my price range, so I stopped bidding.
Next was a land built in a village on Sagamore Beach, not far from my office in Bourne. I’ve never seen the land before, but from the documents I saw at the auction for a minute or two, I realized that it was a good potential deal in a really good place.
A few minutes before the land was auctioned, I met builder Billy and started chatting. At that time, we noticed that both were trying to bid on the same land. So instead of bidding on each other and raising the price, we proposed to partner.
So with a handshake, we thought it would be a good idea to go just 55 for a deal.
At the bottom of my heart, I knew my best Hard money lender Heartbeat will fund this 100%. It had all the characteristics of what he loved: good neighborhoods, good builders, and good numbers. I didn’t even call him because I knew he would fund him without any problems.
A few minutes later, the bid started. Billy and I ended up getting a lot for $ 55,000.
Total time from partnership to acquisition: 12 minutes
Who does what in a partnership?
When I decided to buy the land on the day of the auction, there was no document at all, but I had known Billy for 10 years. Even if he makes me crazy, I trust him. Anyway, I don’t recommend doing this with anyone.
So, when we left, Billy suggested doing it as a modular home in order to maximize our profits and build the home as soon as possible. Without thinking again, I agreed.
At that time, I became a modular home Man turning home…
Every partnership has its own role and responsibility. Billy and I knew each other well, so we quickly planned who was trying to do what to make this happen.
Therefore, if you do this kind of transaction with a contractor, you can share your responsibilities as you like. But for Billy and I, here’s how we decided to take responsibility:
- Financing – 100% Financing
- National Association of Realtors Relationships – Hire National Association of Realtors Members and Manage National Association of Realtors Relationships
- Conclude a business contract with a lawyer *
- Oversee the operation and hold him accountable
- Contract with a modular home company
- Develop Land – Get a constructable lot, but had to apply for all permits to build
- Schedule home delivery
- Handle subcontractors
- Two of us were equally responsible for the repayment of the memo
* We created a partnership with a handshake, but to keep things perfect, we put together a partnership entity to buy a property. It was a trust that we both created to be 50% beneficiaries of the trust. Profit goes through two beneficiaries of the trust. In this case, my side was my company and his side was his company.
How to Fund Modular House Flip Without Money
There was actually a hard money loan Private money rate – But from a hard money lender. We have a lot of transactions with this group, so we have a very favorable rate. That said, the deal was so good that it would have worked with a 12-15% rate note. If this is your first time, don’t expect to get this kind of loan rate normally.
Also, if this is your first time trying to get money from a hard money lender, I don’t expect to raise 100% from one source. Most hard money lenders want their games to have at least some skin. For example, about 10 to 20%.
You can do the same by getting $ 20,000 from another private moneylender. In this case, you may want to give up a percentage of your profits to your other lenders in exchange for getting the cash you need. Or maybe you don’t have to give up on your profits.
It really is all about how you negotiate it.
Also, in most cases, you usually get money for rehab (or build in this case) in small chunks called “draws”. This is usually distributed to set points during the rehabilitation using what is called a “drawing schedule”. In this way, the lender will not get burned by lending all the money at once.
In order to do what we have done, it takes time to establish some kind of relationship and trust with hard money lenders … but to reach that point, you have to start. not.
Modular flip structure
To fund everything, we received a total of $ 185,000 in loans at one time. It is 100% funded by hard money lenders.
Next, we talked to another member of our team, a real estate broker, and decided to put a conceptual diagram of the house in MLS and “pre-sell” the house. The house hasn’t been built yet, so I took a picture of it when it was completed.
Remember I haven’t built it yet. Then we waited for the buyer. I didn’t wait long …
I sold it in a week.
yes, one week…I hadn’t started building a house yet.
To be honest, it actually sold for $ 269,000, but the price went up to $ 285,000 because the buyer wanted to perform the upgrade they agreed to immediately.
And at the time of writing this article, we did it $ 285,000… And two other backup buyers are ready to raid if for some reason this buyer becomes the default for some reason.
Do the math-after all costs and 50-50 splits Billy and I will each make a profit of about $ 35,000.
How to flip a moneyless modular home in 12 minutes Conclusion
As I said, it all came together so fast, I had little even enough time to think of the fear of doing things I’ve never done before … but I then I was pretty worried.
It may not have looked like that, but it may have looked calm, but I was sweating inside. The partnership with Billy, who probably built about 100 homes, has never been modular, but at least relived some of my fears. But still, it was a new experience for both of us, and in his honor he was doing something he had never done before.
Would you like to redo this in the future exactly like this? It’s rare because you know how to buy land at auction, build a modular home, and pre-sell to new buyers.
But I’m glad he partnered with a good friend like Billy to help him with something he hadn’t done before.
No excuses …
If you go this far, Please leave a comment below! What have you recently done to be completely out of your comfort zone? Or just simply Ask the question you have I am happy to answer that in this deal!