All Forum Posts by: Account Closed

@Nathan Gesner

You are welcome. As far as scale goes....according to Spencer Rascoff, CEO of the Zillow Group here is a quote from him on the Bloomberg story....

"By the time Zillow began buying homes last spring, Rascoff had concluded that the new business would play to the company’s strength in valuing homes and could be profitable in its own right. If the company were the buyer in 5 percent of transactions in the country’s biggest housing markets, the business would generate more than $1 billion in annual profit, he said during a call with investors in May."

@Ike Ekeh @Nathan Gesner @David Sisson

The current test markets for Zillow Offers which are alluded to in the Bloomberg story via a map but not expressly mentioned are clarified on Zillow's website. For the TLDR's among us, here they are:

1. Houston, TX
2. Raleigh, NC
3. Charlotte, NC
4. Denver, CO
5. Phoenix, AZ
6. Atlanta, GA
7. Las Vegas, NV

@Nathan Gesner

They are not making "low ball" or even low offers from what I read in the story. They are actually offering close to retail with a pretty moderate discount for the house in it's "as is" condition.

They are basically dealing in pretty houses in suburbs that need some cosmetic upgrades.

Their average profit on the flip is 2% more than they bought if for locking in a profit of roughly $6,000.00 according to a December 2018 study by Matthew Brooks, a senior analyst at Macquarie Capital USA Inc. This is pretty modest just for the flip since they estimate a 4 month turnaround from purchase, rehab and resale. 

The 6%-9% fee seems to be where the money is.

@David Sisson

Yeah most likely since they are overpaying on the buy side. Their margin on the actual flip profit in one of the examples in the story from a house in Chandler, AZ is pretty thin....and actually was a loss selling for $1,800.00 less than they bought it for. 

The strategy seems to be a win some-lose some approach BUT by the sheer volume make some money from the actual flip. If they lose money on the flip, the 6%-9% paid by the homeowner will be their up-front cushion.

The full story is on Bloomberg.com here: Zillow wants to flip your house should you want to read all the details.

For those with TLDR syndrome the gist of it is:

• Zillow has now joined the ranks of high tech real estate flippers (called iBuyers) that use algorithms to buy properties at a massive scale. The other players are Opendoor , Offerpad and Redfin . Implied in the story, my understanding is that all these players are using technology and a healthy dose of Silicon Valley Venture Capital to accomplish this.
• Essentially a homeowner enters some basic info about their house and I believe Zillow will make a fast cash offer on the house "as is". 
• At some point, Zillow sends out a "human" house inspector to look the house over. Not quite sure if the offer or the inspection comes first but it sounds like the offer comes first and may be adjusted based on the inspection.
• Zillow then buys the house, charges the homeowner a fee of 6%-9% for the convenience of the quick no hassle cash offer and proceeds to do a minimalist bare-bones cosmetic upgrade.....essentially what we call "paint and carpet" in the biz.
• Zillow then proceeds to sell the home for a profit (maybe).
• Don't worry about Zillow or the iBuyers upsetting the house flipping market any time soon. They only operate in a couple of States mostly in major markets e.g Phoenix, AZ. They mainly target suburban boxes which are easier to value since there are quite a number of them on the market at any given time. Zillow plans to be buying and selling in 14 cities by the fall of 2019.

@Liz Cole

Ever since BP updated their search, it seems to me to be more cluttered, confusing and not as relevant and accurate as it used to be even if you use multiple filters.

I can't figure it out.

They seem to have "fixed" what was not broken.

@Liz Cole

Here is a good summary of the typical cash flow property that most Investors go for in South Bend and Mishawaka that I posted in a thread about 6 months ago.

https://www.biggerpockets.com/forums/517/topics/50...

Note: I specifically pointed out cash-flow not appreciation.

There is room for more Investors in this category (C-/C/C+). You just have to be a cash buyer and be able to move fast. You also need a good, strong reliable Property Manager to handle the tenant pool in this category.

You can upgrade to B- and/or B areas but the property taxes kill the cash flow and double digit returns however you will get more stability and modest appreciation.

@Liz Cole

Hi. 

Please refer to my post in this thread from about a year ago to get a good grip on the rental markets in South Bend, IN and Mishawaka, IN.

https://www.biggerpockets.com/forums/81/topics/360...

@Aaron Linden @Greg Carrier

Thank you both for the mention. Not sure if you realized that the question from the OP on this thread is from 3 years ago and was resurrected by a Wholesaler reaching out to him 5 days ago.

I guess the bottom-line is the "City" (Code Enforcement, Building Department etc.) is made up of human beings who just want to have a good day at work with as little stress as possible and go home to their families just like you and I. I think most investors take the wrong route by viewing these people as enemies to be avoided at all costs. True, if you are an investor that likes to work in the shadows since you have things to hide, or one that simply does not care about doing things right or one that is just a straight up slum-lord or any combination of the three.

If you change that mindset and engage them (within reason without opening up a can of worms).....for example find out who the Code Enforcement Officer is in the area you own properties or intend to purchase properties. Call them and introduce yourself. Let him/her know that your intentions are to improve the property (or properties) you own or acquire. Ask them what if any violations are listed against your property or those you intend on acquiring and that you plan to address said violations to the best of your ability in a reasonable amount of time and then follow through and do so. Most if not all Code Enforcement Officers will respond positively to this approach and will be on your side. 

If you are doing renovation work that needs a permit, find out who your building/electrical/plumbing/HVAC inspectors are for the area you are working in. Take a similar approach and engage with them....again within reason.

90% of the time, if not more I bet these people deal with angry, rude, impatient and unreasonable citizens who are mad at them for a citation or just because they exist. You will be a breath of fresh air to them making their lives and yours much easier.

@Brian Horwitz

Sorry for your pain. Unfortunately, this happens frequently in this business. 

The main thing here if you decide to move on is to cut ties cleanly with the Contractor because he and/or his suppliers can put a lien or liens on the property whether justified or unjustified which can complicate and delay the sale even if you fight the lien/s and win. In line with this, did you have a signed contractor agreement for the project? Did you get signed lien waivers for what you have paid out so far?

Feel free to give me a call to discuss some of the options you may have based on how I have dealt with similar situations in the past. Just note that I am not giving legal advice or acting as your attorney.