Broker Check

#012 | Roy Nicaud - Realtor, Flipper, Real Estate Investor

February 22, 2021

Roy Nicaud is a father, husband, leader, realtor, entrepreneur, and formerly a youth minister. Today, he runs a wholesaling company called Boost Homebuyers and a real estate flipping company called Nicaud Properties, inc. He has been active in the Knoxville real estate market for over 10+ years, whether renting properties, wholesaling, flipping homes, investing, or serving as a real estate agent. On paper, he’s in the real estate business; off paper, he’s in the people business.
“My heart initially leaned towards full-time ministry, but I realized my passion was to start businesses and help provide opportunities to people. I like seeing something come from nothing and become something.

When working at Penske truck rental, I met a guy named Kyle. We started talking and decided to read Rich Dad, Poor Dad together.

Then, Kyle and I decided to save up $5,000 apiece. [At that time] it was a hard conversation with my wife because we had only been married for two years and didn’t have any money. When we had $7,500 in our savings account, I told her, “I’m going to take out $5,000 of it, and I’m going to buy a rental property.” To say the least, Mrs. Nicaud wasn't too thrilled.

“Kyle and I wound up combining our $5,000 to put our first down payment on a rental property. It was right before the housing crash [in 2008]. We refinanced the house and got our money back plus another $10k, and we kept moving from there; within a year and a half, I had three rental properties and a 10-unit apartment complex with another friend named Brandon.

That’s how it all started.”
“First step: talk to a mortgage professional. See what you can qualify for. Often people do it backward by working with a real estate agent; then, they see what they can qualify for. As real estate professionals, we want you to qualify first before showing you a ton of houses because you might fall in love with the one you can’t afford.

Second step: talk to a real estate professional that knows the area.
Also, be a little more realistic about what you are looking for. The big joke is ‘I want a house in West Knoxville for $150,000 with three bedrooms and two baths with a large back yard [and blah blah blah].’ You can’t get that. It’s almost impossible.

The third element is you might have a dream home in your head, but your first home will probably not be your dream home. There will be certain elements that you have to have and certain elements that would be awesome to have, but you will have to give and take some.”
“One of the elements you must know is what it’s going to be worth when it's fixed up.” Roy is referring to the after repair value (ARV). “[Secondly], you have to know how much work is going to be required, cost-wise. Based on that, you can come up with your offer price.

Pay attention to the ARV. A lot of people think they can pump a ton of money into a house and sell it for more. I’m a firm believer that the ARV rarely changes if it sells $125 a square foot, most likely not going to change no matter what you put in that house. Unless you’ve done an amazing job, you can price yourself out of the neighborhood. I would go off the conservative ARV every time and hold to your budget.

[Personally], there is never a time in your life that you should not desire to own real estate. They are not making more land, and houses are becoming harder to buy.

I think the biggest fear in real estate is the possibility of rates going up to like 7% or 8% because we have a new pool of buyers that have never seen that before.”
“[People] are so hungry to get in the game that they pay too much for the property. Someone will not anticipate some of the problems that might be there. They are just looking at the fact that is getting into it, buying a house, and thinking they will never lose value on it. Eventually, they wind up trying to sell it and lose money.

The other is getting in a tight spot financially. Sometimes, flippers will sell a property even though they can make money for it, but they have to sell it because they are out of money.

It’s all about managing your budget.

[Furthermore], many people get into flipping properties because they love making a house look pretty. They forget to look at the major expenses such as the foundation, roof, electrical, plumbing, and HVAC.

Where you are going to save money is in the design element. People will pay $5 per tile when you should be paying 99¢ a square foot.

Find cheap, nice, good-looking stuff."
“When working with a buyer, you constantly have to help them to see the potential. You have to coach a buyer to know what’s important and what’s unimportant.

Some of the buyers will walk into the house and say, “I hate the paint! I can’t even do this.” It’s helping them to see that you can paint it. Have an eye for the buyer.

[Conversely], when working on the listing side, it’s highlighting what people desire.” It may be the main bedroom, bathroom layout, kitchen size, curb appeal, storage amount, etc.
“[Currently], people love craftsman-style homes, and they are looking for walking distance to breweries, coffee shops, restaurants, and schools. Anything within Old North Knoxville, you can get top dollar for.”

Some other trends that flippers are doing are the farmhouse feel, granite tops, butcher blocks, and darker paint tones.

Notice trend changes. Notice what people desire.”
“[In a correction] there are three elements to it.
  1. A large buyer pool
  2. Low inventory
  3. Low-interest rates.
Coming from a real estate side, we need more houses that are reasonably priced. If the interest rate goes up, you are going to see an adjustment in prices. The reason houses are selling more than they would sell for is because people can afford to borrow at a cheaper rate.

[When there is a correction], you are going to see evictions and foreclosures. There will be a slew of properties that will come onto the market that people will lose, ultimately driving up rentals.

I have this battle in my head. I want to buy and hold more rental properties because the town area that I’m predominantly in has some things happening in the next 2-3 years that will make it more desirable. At the same time, I want to flip and make as much money as possible at the market's height, so when you see foreclosures start happening, I can eventually start buying houses for half the price.

There’s always an up and down to the market—an ebb and flow.”
“I realized real estate connects me to a lot of people. I enjoy helping someone find a home to create memories in because I believe every story has a home. It is such an honor to be a part of that process and a lot of great opportunities to love on people.”
BiggerPockets – [podcast and website] “if you are starting.”

Rich Dad, Poor Dad by Robert Kiyosaki & Sharon Lechter– “a foundational book. It gets your brain focused on assets and liabilities. He’ll explain the first house you buy and live in is technically a liability until you sell it because you are paying money to it. But, if you have a rental property, you could be making money, paying down your mortgage, and building up your equity, which allows you to sell in the end. It’s the first book I read that got me really into real estate.”

The Millionaire Real Estate Agent by Gary Keller – “if you want to become a real estate agent. It will help you look at real estate as a business and help you set it up.”
Got Questions?
You can message your questions here. We’ll do the homework.

Stay invested, my friends
Authored by: Evan Prislovsky

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