309 – J Scott–Professional House Flipper–Part 2 (Replay)

This week I'm sharing part two of my most downloaded interview ever--last year's interview with J Scott.

J Scott is a full-time real estate investor who specializes in rehabbing single family homes and building new construction “spec” houses.  J and his wife, Carol, started investing in 2008, and since then have purchased, rehabbed and resold nearly $15M in residential real estate.

J started in real estate fairly late in life. He earned an electrical engineering degree, and then got into corporate life.  He worked for a number of tech companies early in his career, such as Microsoft, DirecTV, and eBay. He worked for companies like these for 15 years. He met his wife in 2006, and by 2008 they knew that they wanted to get married, but they were both  working in the corporate world and putting in tremendous hours. They rarely had time to spend with each other. They reached a point when they decided to quit their corporate jobs and figure out another way to make money so that they had more time to spend with each other and eventually start a family.

J’s wife one day approached him and suggested that they flip the house. J thought she was joking so he jokingly replied “okay.” They ended up flipping a house, and then flipped another four houses over the next couple of months.  According to J, what started as a lark has turned into their business and livelihood over the last six years.

J and his family have recently moved to Maryland from Atlanta. When they made this move, it was very disruptive to their business. Although J grew up in Maryland, he had not lived there for over 15 years, which  means that he basically had to start his real estate investing career from scratch in a new city.

I asked J to outline some of the steps that he has taken so far to start building his business back from scratch in a new city. Two of the most important things you should do when building a real estate investing company according to J:

Build a network

Find a realtor

I discussed with J the formula he uses to qualify leads. In other words, how does he calculate what is a good deal and what he is willing to invest in? Here is the simple formula that Jay uses on all of his deals:

ARV — Rehab costs — Fixed costs — Desired profit = Purchase Price

Example: (ARV)$200,000 — (Rehab Costs)$50,000 — (Fixed Costs)$20,000 — (Desired Profit)$30,000 = (Purchase Price)$100,000

When I asked J about the biggest mistakes he sees new investors making, his answer was pretty simple – they need to jump in and start investing after spending a reasonable amount of time educating themselves. You should never wait for the perfect deal, because the perfect deal rarely comes along. You have to get off the sidelines at some point and get in the game.

When I asked J how he’s able to get so much done and still spend time with his family, he gave me some great tips. I am not going to detail those here–check out the interview on my podcast to get his method!

Links

133flip.com – J’s personal blog where he documents his deals and give tons of knowledge away

The Book on Flipping Houses: How to Buy, Rehab, and Resell Residential Properties – J’s book on how to get started flipping houses.

The Book on Estimating Rehab Costs: The Investor’s Guide to Defining Your Renovation Plan, Building Your Budget, and Knowing Exactly How Much It All Costs - J’sbook on estimating rehab.