Originally posted by @Jay Hinrichs:
Originally posted by @Account Closed:
Originally posted by @Jaron Walling:
Growing up in the mid west I'm pretty good at seeing things at face value. I understand the difference between assets and toys (most cars, motorcycle, boats, RV, etc). I started my investment journey about 4 years ago so I consider my self young in the industry, but I'm seeing property sales that make no sense. Maybe it's a gut feeling or inner defense mechanism but I don't know how some of these people are affording these homes. Neighborhoods that I considered VERY cheap are now priced to the moon. I always try to keep emotion out and let the numbers direct my decisions. The numbers are leading me to SELL EVERYTHING> I don't want to sell> I want to buy and hold!
I have a few single families with an average of 6.75% ROI. They're at market level and fully remodeled. One of my properties is free and clear. How would you fund the next deal? Would you put a mortgage on it and wait for this eviction moratorium to pane out? Are you even buying right now? The chart below is set to the year I was born.
If it cash flows don't sell.
I am not what most would call a conservative investor, but underneath the differences it is actually pretty conservative. I don't take out loans to buy a property. I never pay cash. I take over existing financing. I'm picky about the property, the location, the size, the condition, and so on. It has to cash flow or be able to be flipped. Pretty simple. It's just a different allocation of resources. It has worked through every up and down cycle since 1995
I have four properties in Phoenix that I'm currently in discussion with regarding Taking Over Their Properties. Rents pencil out vs mortgage payment and the condition of the houses is good. One couple is moving to a smaller house, another is moving out of state, and two can no longer afford their payments.
They all won't put their properties on the MLS for a couple of reasons, minor repairs, they don't want the "great unwashed COVIDIANS walking through their house, they don't want to pay real estate agent fees (I'm not an agent so no fees), or some other reason.
It isn't about what You want, it's about what the Seller wants, be flexible. Or, you can be a conservative investor wondering what to do in this market.
Always cracks me up where wholesalers talk about not having to pay a commission then talk the person into selling for FAR LESS than what they would net if they let a good agent market their house.. I have no issue with willing buyer willing seller but the save the commission to me only works if your pretty naive or get talked into it or just plain miss representation of the facts.
1. No, actually I'm not a wholesaler, I buy and hold or flip. I am the buyer and the only other principal involved.
2. On a $400,000 sale the agent fee at 5% is $20,000. Does an agent provide $20,000 worth of value taking a listing? Certainly not. That my friend is the scam. Especially in as hot of a market as we are in.
3. A lot of agents will "over sell" the buyer to get the listing then reduce the price when it doesn't sell. How honest is that?
4. My method is to provide 3 comps sold in the last 3 months and pictures of the condition of the remodel that was done and we sit down and go over those. If the seller wants to upgrade to that level, spend the money, the time and discomfort, and on top of that pay an agent $20,000 to list, that's up to them. I present the facts and the numbers and contrast the experience.
5. Typically we agree to reduce the sale amount by half of the $20,000 saved by not using an agent and I get to buy the house for a small discount and they get a deal on the fees and have a sure sale. Agents hate that because it cuts them out. Well, the agents need to do a better job then. ;-)
6. I advise the seller to get an attorney who goes over the agreement, we go through title, escrow and closing just like any other transaction.
I am not sure how that could offend anybody unless it's about the agent's fees
