Know your market. By that I mean, educate yourself on your local area. Spend time studying property values. What’s the market value of a property that needs a complete renovation? What’s the same property worth once it has been completely remodeled? This is critical knowledge. A buyer cannot afford to overspend. Purchases must be made wisely.
Shows like Flip or Flop and Fixer Upper with Chip and Joanna Gaines have really glamorized the creativity and enjoyment that comes with buying a rundown home, fixing it, and then selling it for a profit. Some amateurs have ventured into this industry and have made a lucrative career out of it. But others, particularly when a market is stagnant, have lost their shirts. As a part of my series about the ‘5 Things You Need To Know To Create A Successful Career Buying, Rehabbing, and Selling Properties’, I had the pleasure of interviewing Ryan David.
He’s a real estate investor, businessman, and founded https://www.WeBuyHousesInPennsylvania.com, a cash home buying business helping the good people of northeastern PA. He serves on the board of directions for his local Real Estate Investors Association advocating to better educate the public and loves working with the people of the community. His wealth of experience in real estate provides winning solutions to those in need.
Thank you so much for doing this with us! Can you tell us the “backstory” about what brought you to the Real Estate industry?
I had been laid off twice and was on the verge of it happening a third time. It was very discouraging. I had a family to support, was nearly broke, and had no direction in my life. About this same time, my brother-in-law gave me a book that ended up changing my life. I read Rich Dad Poor Dad by Robert Kiyosaki and its nearly 300 pages in a matter of days. It was at that time I realized I’m at my best when I’m helping people. It’s always been a passion of mine. At that moment, I set my heart on creating a real estate business that would serve others and at the same time provide me with the sense of fulfillment I had been lacking
Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you share the lesson or take away you took out of that story?
You’ll find this amusing. During the contract negotiation for the sale of one of my flips, the buyers requested the house cat be included. That totally surprised me. I did end up including the cat in the sale, but it taught me never to overlook even the smallest details during negotiations. I still can’t believe that cat helped me to close a deal!
On a more serious note, earlier in my career, I was selling a property by means of a double close. The real estate attorney I was working with made a mistake and sent the closing documents to the original owner before we closed the deal. This meant the original owner knew the exact price I was going to flip the property for. The whole point of a double close is to prevent this from happening. When I told my attorney he jeopardized the transaction by sharing sensitive information to the wrong individual, he said he doesn’t like doing double closes, and he quit. Thankfully, I was able to find another attorney to complete the transaction. I learned the important lesson not to work with just anyone. It is fundamentally important to interview any professional you wish to work with to ensure they understand your goals and objectives.
Do you have a favorite “life lesson quote”? Can you share a story or example of how that was relevant to you in your life?
My life quote is “Always deal hard, never deal sharp.” If you let others take advantage of you, then you’re doing yourself a disservice and you won’t get very far. At the same time, no matter what situation I’m involved in, it’s paramount to keep in mind never to take advantage of others or take more than what is considered fair. It’s a principle that has served my career well. The most important asset a business owner can have is not money, it’s credibility and integrity.
Are you working on any exciting new projects now? How do you think that will help people?
Yes. I have a few creations I’m working on. One of them is a service designed to help people get private funding for their real estate deals. Experience has taught me the number one reason people fail to close a real estate transaction is due to funding problems. Banks say no to many good, responsible people. It’s my goal to help those people close more deals by providing them the financing they need to make their dreams come true.
The other exciting project I’m working on is called Hunting for Homes. It’s designed to help out novice real estate investors, wholesalers, and flippers. Carving out a real estate career can be a challenging task, so I created a business to show people where to begin and build their confidence. My partner and I provide education, training, and walk students through transactions, so they understand the processes, learn it, and begin to feel confident enough to do it themselves. At the end of the day, real estate is all about helping people. In my career, there’s no greater joy than to know I’ve been able to help people.
What do you think makes your company stand out? Can you share a story?
Anyone that visits my business website will notice there are pictures of me and some of my family on every page. There are even photos of actual properties I’ve purchased. The reason I did this is to provide complete transparency. People can easily see who I am and know who they will be dealing with. My goal is to build trust and familiarity before someone even picks up the phone. When I receive a lead from a new client, it’s comforting to begin the conversation with them knowing who I am and calling me by name. I don’t see many business providing this kind of personal touch.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
Early in my career, I found my real estate mentor Steve, who took me under his wing and taught me. Without Steve teaching and training me, I don’t know where I would be today. Meeting him has opened up more possibilities in real estate than I could have ever imagined. We’re still friends and now even business partners for one of the projects I mentioned earlier, Hunting For Homes.
You are a successful business leader. Which three character traits do you think were most instrumental to your success? Can you please share a story or example for each?
Honesty is key. All the years I’ve been involved in real estate there’s nobody that can pick out anything I’ve ever done, said, or implied that could be considered a lie. Every piece of real estate has a person attached to it. People with a career in real estate don’t just deal with buildings, but with lives. Ethics matter too. Just because something might be legal, doesn’t mean it’s something that should be done. People must conduct business in honesty and truth. There’s simply no alternative.
Creativity is also important. Sometimes it takes quick thinking to get something done. I define creativity as “adapting to find a solution by doing whatever it takes to get a deal done”. I have a tenant at of my rental properties that gave notice she was going to move out. Instead of just accepting her decision, I asked her why. It turns out she needed a first floor apartment because she had difficulty using steps. I immediately thought of another apartment I had that didn’t have any steps and offered it to her. My tenant was overjoyed she could just transition over to this new apartment quickly, without hassle. As a bonus, her son ended up moving into her old apartment when she moved into her new one. In the end, I saved a tenant and also saved money by not having to fill a vacancy, just by asking questions and thinking ahead.
Being humble and having a willingness to help others matters. I recently had a client that was hit with some terrible tragedies. He fell at work and shattered his spine in many places. His accident prevented him from being able to finish renovations on a home he bought for his son. This man’s son was serving in the military overseas. He had plans to live in his dad’s house once his tour of duty was complete. About the time my client recovered from his fall, his son tragically lost his life while on duty. His poor father was crushed. I got a call from the father asking if there’s anything that could be done to help him save his house. Being out of work from his fall, he ran out of money to finish renovations. He owed his contractor thousands of dollars and was looking to me for help. I surveyed his situation over and over. It just wasn’t possible for me to purchase his home at the price he needed. Then, all of a sudden the solution hit me like a ton of bricks. If I could get this man private funding to finish his home, he could pay back his contractor his back debt, then pay him to finish the renovations. Once completed, he could sell the house on the market for the new After Repair Value (ARV). This would allow him to finish the renovations, and turn a profit once it was sold. I was able to locate a private lender and provided them with all the details. My client got the funding he needed and made the repairs, sold the house, and made a profit in the end. He was so thankful. What did I get? On the surface, not much. Just a small fee for the work I put in to find, coordinate, and finally get him closed with the funds to save his project. But the real reward was the gratitude he showed me, his thankfulness, and knowing that if it wasn’t for me, he would have lost his house, along with thousands of dollars and been left with nothing. That experience was incredibly satisfying and I would do it again in a heartbeat. Every day I get opportunities like this to make a difference in the lives of other people. I couldn’t be happier.
Ok. Thank you for all that. Let’s now jump to the main core of our interview. Can you share 3 things that most excite you about the Real Estate industry? If you can please share a story or example.
Rising home prices. It’s exciting to see my local housing market here in Scranton/Wilkes-Barre transition from what was a depressed area and now it’s teeming with life. Houses are selling at a faster rate than ever before. This offers an excellent opportunity for me to get top dollar for the properties I’m about to sell. They have increased thousands of dollars in value in a very short time. Who wouldn’t like that?
The relationships I establish with real estate is exciting. I can walk into a store wearing my business polo shirt and walk out with a few leads on properties. People will come up to me sometimes like I’m some kind of celebrity and just want to talk. It’s a good feeling. By meeting lots of people it leads to more deals getting closed. I’m finding contacts when I’m not even trying. This has led me to meet some wonderful people in various industries and established life long friendships.
The advent of technology is also exciting. It makes my job so much easier. Manual processes can now be done automatically. For example, rental properties can now be managed remotely by a camera if need be without having to travel large distances that would otherwise take up large chunks of time. I can even sell properties remotely out of state. DocuSign is a great tool that allows you to sign a digital contract online and is a wonderful tool. Buyers now have the ability to see 3D tours of properties. Using drone technology, it’s easier in some instances to survey a property without having to drive out to it. The drone can fly over every foot of the property and even into areas not normally accessible. Those 3D tours are becoming more popular every year. Investors can invest in property that’s far away, and people can even relocate to other areas without having to travel just by the use of the real estate technology.
Can you share 3 things that most concern you about the industry? If you had the ability to implement 3 ways to reform or improve the industry, what would you suggest? Please share stories or examples if possible.
Some things that excite me also cause me to be concerned. For example, the downside to a booming real estate market is that inventory is getting harder to come by. It’s not just like that for me, but for everyone. There’s only so many properties available to purchase at any given time, but more and more demand from people than what the market can support. I’ve witnessed people offering crazy amounts over the asking price of properties that simply are not worth what they are paying for them. This could easily lead to another real estate crash and it’s something that concerns me. It’s setting up current and future owners and buyers for failure. At what point will prices get so high that younger people just starting out and looking to buy a starter home will have great trouble being able to afford it? Or perhaps the rookie investor who’s trying to buy his or her first rental property but simply can’t afford to do so because prices are starting rise beyond what they can feasibly spend? I fear that a lot of people are going to be in need of help if another housing crash comes. Who will be able to help these people? In my opinion, the banks shouldn’t fund these type of transactions. They should try to curb them or put a stop to them altogether. I blame the banks as much as the people overpaying for properties.
Another cause of concern is the current mishandled policies in place for landlords. As a result of the pandemic, it’s becoming nearly impossible in some areas of the country to evict a tenant. Now, don’t get me wrong, most of the time landlords want to protect their tenants by avoiding a vacancy at all cost. However, if the tenant tries to “game the system” by refusing to pay rent even if they have steady work and are not enduring financial hardship, this forces many landlords to go without rent. How are these landlords able to pay critical operating expenses like the utilities, insurance, taxes, and whatever repairs are needed without any revenue coming in? In many cases landlords also carry a mortgage on the property too. If I needed to evict one of my tenants, there’s a good chance there would be a very long delay and perhaps I wouldn’t have the right to take any action at all. There needs to be common sense policy reform that helps the tenant, but also the landlord.
As much as I love advances in technology, it also comes with a price. Unfortunately new technologies can make it much easier for novices and less reputable people to think they are qualified to suddenly become real estate professionals. I’ve known a few people who watch some of the shows on television that involve house flipping, and they think it’s pathetically easy. If people are not careful, this can put a preconceived notion in their minds that there’s nothing to it, and they can flip a property very easily. The truth is, it takes work. In fact, it’s lots and lots of work. If you’re a notice, simply invest the time to learn how to use technology correctly. Search out a real estate mentor to learn from.
Unfortunately, I’ve seen people get in over their heads by not spending the time and investing in themselves and doing things the right way. I once held the acquaintance of an unscrupulous individual who tried to take advantage of a client. He was trying to buy a property to flip from an elderly man that had dementia. I don’t think there was any jail time, but there were hefty fines to pay once the elderly man’s family reported the incident. This wanna-be flipper had to pay some hefty fines for breaking the law, not to mention his credibility forever tarnished.
The most important thing a person should do if they want to pursue a career in real estate is to educate and train themselves. I believe there should be required training or education in place on a national level that everyone must take in order to even dabble in real estate. While something like this will probably never happen, if it did I think that would improve things drastically. The unscrupulous people probably wouldn’t put in the effort and the overconfident novices out there would get the necessary training they need, and they might actually become successful. Unfortunately, I’ve seen many people get in over their heads by not taking the time and investing in themselves and doing things “the right way”. It only takes one bad experience from someone who “thinks” they have a clue what they’re doing. But then they make a mistake and it could cost their client thousands of dollars, or perhaps leads their clients to lose their property or some other serious penalty. I’ve run across good people that have been victims of these types of situations. They lose their confidence and trust in reputable people that run legitimate businesses that could otherwise help them. I’ve spoken to people I know for a fact I could help, but they’ve become jaded because they trusted someone else who burned them and never should have been allowed to do so.
What advice would you give to other real estate leaders to help their teams to thrive and to create a really fantastic work culture?
I would ask them to talk to their respective teams and ask their personnel why they got involved in real estate. Do they have right mix of individuals who truly want to help people? Or are they involved for selfish gain? Once the right mix of people are on a team, a thriving culture can be cultivated to form friendly competition in the office. Create programs with an established rewards’ system. Who can help the most people? Who can set the best example for others? I would reward those who best demonstrated a caring and selfless ability towards others, and I would reward those individuals accordingly.
Ok, wonderful. Here is the main question of our interview. Can you please share with our readers your “5 Things You Need To Know To Create A Successful Career Buying, Rehabbing, and Selling Properties”? If you can, please give a story or an example for each?
First, Know your market. By that I mean, educate yourself on your local area. Spend time studying property values. What’s the market value of a property that needs a complete renovation? What’s the same property worth once it has been completely remodeled? This is critical knowledge. A buyer cannot afford to overspend. Purchases must be made wisely.
Once you have an understanding of property values in your local area, the next thing is to intensively study the terminology of real estate. For example, what does the term ARV stand for? What about ROI? What’s a comp? Anyone considering a career in real estate needs to build an understanding of basic terms. This is critical. Why? For example, if you hear a property has an ARV of 200,000 dollars, but don’t know that it means After Repair Value, then its useless information to you. If you are buying a house you’ll need to develop a formula to calculate the profit you want to make when you sell it. Here’s the simple formula I use: After Repair Value (ARV) — Repair Costs — Holding Costs — The profit you expect to make = the offer you should make for the property you wish to purchase. The beauty of this simple equation is no matter where you live, you can plug in numbers based on your local area and just subtract one from another until you arrive at the offer price that should get you the profit you wish to make.
Next, you’ll need to determine a budget. A flipper, wholesaler or investor only has so much funds to work with, especially when starting out. Knowing your budget will determine what and where you can purchase. This is very important. The most successful individuals stick to their budgets and they let the deals come to them. Patience and perseverance lead to more deals and long term success.
Will you be rehabbing the properties yourself or will you be hiring a crew of contractors? Why is this important? If you hire a contractor crew, you need to be absolutely certain your crew will be able to finish on time and on budget. The pros of a contractor crew usually are the work generally gets done very fast. The cons are that it can get rather expensive. On the flip side, it’s a big plus if you are rehabbing a property yourself because it will be cheaper. But the biggest disadvantage is that you could spend a very, very long time rehabbing your property making your holding costs go up each month you have you pay utilities and other expenses. In the end it’s all a strategy. A crew or a one man show. Either way you will need to think things through and form your own plan.
Finally, you’re ready to sell your rehabbed property. If you purchased at a good price, and were able to rehab and stay at or below budget, you’ve set yourself up for success rather well. But, are you ready for a curveball? Nobody saw COVID-19 coming and that changed the landscape of real estate. While none of us have a crystal ball, we can plan accordingly the best we can. For example, if changing market conditions lead to a decrease in your property’s value, do you have a Plan B strategy in place? For example, can you rent out your property and turn a profit every month until it is more favorable to sell? Perhaps you could seller finance the property with a higher interest rate and turn a profit. These are just two examples by making back up plans if your master plan goes awry. You can still be successful.
It doesn’t take a rocket scientist to understand these steps. There’s nothing magical about them. In fact, they’re pretty basic and fundamental. So few people actually make the effort to prepare, plan ahead, and put in the work but if they do these things, I have great confidence anyone can be a successful flipper, wholesaler, or investor. In the end, the greatest upside real estate provides is that you can be young, old, rich, poor, man, woman, short, tall, etc. it doesn’t matter, you can still be successful. It doesn’t get much better than that.
What are the most common mistakes you have seen other people make when they try their own hand at house flipping? Can you share any stories?
The most common mistakes I see flippers make is offering too much to initially buy a property. Profit is made when you buy a property, rather than selling one. Why? Because if you buy a property at a good price, there’s often various exit strategies you can utilize if the flip doesn’t end up working out. Perhaps the flipper can wholesale the property or turn it into a rental property and make back their money. But if they overspend when they buy the property, it can back them into a corner. Getting back to my example, when I see a flipper pay too much when buying a property, they are really happy and excited. Once their offer is accepted, they close on the property and celebrate. They think everything is fantastic because they bought based on emotion. Then they suddenly realize they don’t have the budget to cover the necessary repairs. Now it becomes panic mode for them. If they can’t get the repairs made they will never make a profit from the flip. All too often I’ve seen this happen. The best case scenario is they put the property back on the market and are lucky enough to break even. The worst case scenario they put the property back on the market and end up taking a loss. I made this same mistake when I purchased my first rental property. I bought it based on my emotions and I overlooked some important issues that ended up costing me many thousands of dollars. Had I only been more patient and waited for another deal to present itself, I would have been much better off.
Another mistake I’ve seen investors make is buying a rental property in a bad neighborhood. Maybe there’s a lot of crime, or maybe they forgot to research the area and it happens to be next to a landfill site. Whatever the case may be, they don’t do their research and end up buying a property that becomes very difficult for them to rent out. If you can’t get someone to rent your property, then you’re not going to make any money.
From your experience, what can be done to avoid those errors?
If you have a budget simply stick to it no matter what. Make a purchase based on sheer common sense, not on emotion. Be patient and willing to sit back and wait for the next opportunity to present itself. This is what the big real estate tycoons do. They never get excited, they never panic, and most importantly, they seldom make a mistake by purchasing the wrong property. It sounds like an elementary solution, but remember fighting human nature is often more difficult that it seems.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. 🙂
I think the greatest inspiration for a movement would be if all of our schools across America came together as one voice and made a pledge to teach all children in school to build and mind their own businesses. Why is this important? If more people believed in themselves or knew it was even possible for them to start a business themselves, you can imagine how different the world might be. Imagine revitalized neighborhoods with low crime. Busy downtowns. Booming, local commerce. More jobs. More growth. More opportunities. I truly believe entrepreneurship should be required curriculum for all children to study from elementary school to high school.
How can our readers further follow your work online?
Readers can view my Facebook business page by visiting https://www.facebook.com/WeBuyHousesInPennsylvania
Thank you for your time, and your excellent insights! We wish you continued success.