All Forum Posts by: Barney Trader

Hello everyone. Okay. Here are the details. 

Im a realtor. I've done over 6000 BPOs (HUD houses which are then checked out against an appraisal, and if more than 10% off I had to justify and support my numbers), and have helped other investors, and retail homebuyers and sellers. In other words, I don't know everything, but I do know values. As is, and ARV. I've also flipped houses, and renovated houses, and owned a few rentals, on which I did 90% of the repairs and renovations. So I have a pretty good idea on repair and renovation costs, but they are NOT perfect by any means. So now to what I don't know.

House is in one of the best school districts, and in one of the better neighborhoods. it is a 4/3 with 3200 square feet, on a full basement that is not finished but stubbed for bath. 

If this house were in perfect condition: with new flooring, paint, landscaping, appliances, fixtures, it would sell for between 400-420K. 

To get it in that condition would be roughly (and I've estimated high on all of it)

Upgrade to hardwoods on second floor, and refinish first floor. 12K

Paint interior 5K

Upgrade appliances and plumbing fixtures. 5K

Upgrade electrical fixtures (some have been upgraded to stylish black wrought iron look which is popular here) 2K

New HVAC first floor (second floor HVAC replaced already) 5K

Landscaping 5K (this may be really high, but I figure it pads the other numbers in case something comes up)

Total rehab 34K

So we've had some investors come and look at the house and offers range from 290-300K. Payoffs are about 280K.

The house is currently owned by my girlfriend and her ex-husband. She has to refinance, or sell before November 1. They were to split the equity in the house, but apparently in the condition it is in, to an investor, there is no equity. 

So my questions are these:

1) Since other investors are interested in the house at 290-300, should my girlfriend just get a hard money loan to "buy" or "refinance" the house? Then she and I renovate the house and sell in march-April next year when the school district buyers heat up? 

2) A regular investor would have to pay Capital Gains Taxes right? So since my girlfriend is currently on title and has owned the property for 16 years, we could save a big chunk of change versus an investor right?

3) With me being a realtor, I can list the property at a discount rate (still have to pay the brokerage a little fee) and we save about 12K in listing fees (still have to pay the buyers agent, unless I sell it personally). 

4) Should we try to get the hard money, or should we be looking for a cash investor that might see a benefit of not having to pay capital gains taxes or listing agent fees, and partner with us?

Thanks in advance. 

Best!

Barney

The issue I see with another investor taking it over as a rental, is that it doesn't really cash flow at the price it is currently worth. We are getting 875 per month. It will feel about 140K. Rent could be increased to 1000 but even there it doesn't seem like a good buy and hold to me. At least I wouldn't buy it as a buy and hold. But it has about 70-80K equity, and I can take that cash and make more investments in properties that would have a better ratio. 

Originally posted by @Account Closed:

@Barney Trader Talk to a lawyer and I don't think you can evict anyone unless you are the owner and if the tenants took you to court they will win.

Yes. This is my fear. Having my license makes it even more scary.

So I got a divorce. My ex-wife (and myself but I am not on title) have a rental house. It is titled under an LLC owned solely by my ex-wife. She will not quitclaim the property to me until I sell or refinance the house. I can't qualify for the mortgage.

The tenants are awesome. I love them to pieces, but I need the cash from this house. They are elderly and minority. There is no current lease on the house. I believe 60 days notice must be given to the tenants on GA. 

I am a real estate agent. So I am worried about trying to get them out of the property, because really I am not the owner as far as title goes. But I was granted the house in the divorce. Ex-wife and I are not on friendly terms. 

How do I get them out? Can I sign a one off management contract, even though I'm not on title? Can a management company get the tenants out in a kind and legal way?

Oh. And last thing. We bought this property as a 1031 exchange. The original property was gifted to my ex-wife. We then bought this house 4 years ago for 52k. I did all renovations myself and spent 12k. Now property will sell for 145k. Since this was awarded to me in the divorce, usually assets gained in a divorce settlement is non-taxed, but since She bought it as a 1031 exchange, do I get stuck with the capital gains taxes?

Any help would be appreciated. 

Best!

Barney Trader

Hey Trey. Seems weird as a new person to welcome you, but I'm one of those , "long time listener and lurker, short time poster" types. I'm an agent and investor here in Atlanta. Live in West Cobb, property in East Point and Henry County. Let me know if you ever need any help. 

Best!

Barney Trader

Here in Georgia, we have the option of charging buyers or listing a retainer. For investors that I've worked with for many years, there is no retainer. For new investors (new to me), I charge 500 retainer up front which is refunded at closing. Why? Because just because someone shows you a bank statement with proper funds, and they may fully intend to purchase real estate, but that doesn't mean they won't use you to run all over town inspecting houses with or without them, running comps, doing a whole BPO and then either going directly to the listing agent, bank or owner cutting you out of the deal. Or they expect you to make countless ridiculous offers, which hurts our credibility with other agents the next time an offer of ours comes over their desk. I love working with investors. Cut my teeth, crawling under houses that were less than 30k. Those clients were and are loyal to me. But I've also driven around for two weeks compiling condition reports, running comps and giving estimates on repairs and ARV on 120 houses for groups that had liquid assets North of 8-10M (buying 60-80k houses) and made nothing because they decide that Memphis is a better location than Atlanta at that time. So it's 500 bucks up front for new people (unless referred to me by one of my regular investors) and that covers me physically going to 10 houses. It probably covers 15-20 quick comp evaluations, and I simply don't make blind ridiculously low offers, the exceptions being HUD, or FHA which just get thrown into a computer in 5 minutes and no real agent is on the other side, which would damage my reputation with other agents. So I guess what I am saying is that it is most important to have an in depth conversation with your agent. What are your goals? What are you looking for? Does what you are looking for exist or are you hunting unicorns? What are your expectations of your agent? To get you into houses? To run comps? To estimate repairs? Will you listen to them? (For mostly regular retail customers not investors)I can't tell you how many times, I've been looking for a house for a regular retail buyer who wants a 4/2 in updated, move in condition, who isn't handy and doesn't want to do any work to a property, want to go and look at some ugly, dated, 3/2 but is 50k cheaper than everything else in a neighborhood. Then they get there and list off all the reasons they don't want to buy the house I knew they were never going to buy, but they insisted on seeing. On the investor side, that scenario plays out more like: ARV is 100. List price is 80k. Pics show it is torn up and will need a lot of repairs. The investor is strict with their numbers, and needs to be in this house at 70k minus repairs so figure 30k at least. Wants to Go look at the house? Why? Offer 40k instead and if you get the thing (very unlikely being that everybody and their brother thinks themself an HGTV flipping star here in Atlanta, and when the highest and best call comes will be throwing out a near list price offer because "they can do a lot of the work themselves" and they lose their butts and are gone after a few failures. (Unless they find themselves here and educate themselves. 😊