All Forum Posts by: Chris Calabrese

Jon, isn't this effectively the same as charging a late fee? Either way it will cost them more to pay on the 2nd than the 1st. I only ask because I'm wondering if you think there's a psychological difference where the incentive of a discount is more effective than the penalty of a late fee.

We have recently started going to the courthouse auctions and were thinking about this for auction properties if we could get them really cheap. The thought was to buy and get them gutted or cleaned out and ready for rehab. Then sell to another rehabber for maybe a $10-15k profit, instead of maybe spending $30k and a bunch of time in rehab to make $25-30k. I think it could work well because so many investors are buying rehabs off the MLS that the prices are going up, but very few attend the auctions.

It would only make sense in a few cases, where the "wholesale" profit would be relatively high relative to the full rehab profit. Otherwise, it's probably worth the extra effort.

1 - If you got your license just to save on your own projects, you need to find a broker who doesn't charge a lot of monthly fees or overhead. Since you won't be acting as a full-time agent, it would be a waste to pay desk fees, etc. Almost every agent in my company is part-time or an investor, so my broker's business model is set up based on that. These are usually the smaller firms. You should also interview brokers and make sure they're flexible with you being creative with commissions, and if they will charge you a flat fee for listings instead of a %.

2 - It will work the same as if you're not licensed, but you must disclose your licensed status to all buyers and sellers, and if you also become a Realtor, you will have to abide by the NAR code of ethics. As long as you are an honest, ethical investor, I don't think it will affect you at all.

I would look where the commercial investment is going and where the town or city is spending their money. Neighborhoods around new sports stadiums, city parks, and "town center" type developments become desirable very quickly. Also find out where the municipality is upgrading infrastructure, adding sidewalks, etc.

We try to give them as much information as we can, such as all warranty information and manuals, contact information for key subs who provide labor warranties (i.e. roofers), pest control/termite bond info, etc. We also make sure to leave touch-up paint with the colors labeled. I also try to leave some small samples tile and wood flooring, with the brand written on the back, so they can take them to match paint, furniture, etc.

We also like to walk-thru our rehabs with the buyers after doing inspection repairs and explain various features, much like the new homebuilders do. It is comforting, especially to anxious first-time buyers, to meet us and see that we are professional and thorough, and not just the stereotypical greedy investors.

I know my lender requires a signed lease agreement, but they don't require any history or proof of payments. They will use the income (actually 75% of it) immediately after the property is rented. Most banks will probably want more than that, at least copies of rent checks. Is it a big national bank or a local bank? The locals banks will probably be more flexible and work with you based on your history with them.

Do you have your boarders' leases documented or is it an informal arrangement? If they pay cash, issue receipts, and if they pay by check, make it a habit to make copies of their checks before you cash or deposit them. If you haven't filed your taxes yet, go ahead and get them in, so the bank can verify your return.

The range is pretty wide here. I'd say most distressed properties go for 90-100% of the final list price, but after price drops that represents 50-100% of the original list price. In the last 6 months or so, the banks have been more aggressive with their pricing, so more houses are now going for closer to list price.

What is your purpose for doing this? Knowing that will make it easier to give suggestions. Robert's answer is very good, especially if you are looking at your entire market (i.e. all of San Diego county). For investing purposes, you will need to get more specific. In a rising market, there can still be neighborhoods in decline, and vice versa.

Your local real estate association probably compiles a lot of this data on at least a monthly basis. If they won't release it directly to the public, you could probably find an agent who will help you. They should be able to report on specific zip codes, subdivisions, or even streets.

This whole thing seems so backwards to me. The government has favored home ownership for so long, and these government entities have been forced to cater to owner-occupants first, and now they're completely switching gears. There must be some political motivation here - I guess anything's possible in an election year. With the news that BoA is selling fewer mortgages to Fannie and Freddie, maybe Obama is trying to slowly get them out of the mortgage business to cater to the moderates.

Also, wont' this hurt home values by adding rentals to neighborhoods that may otherwise be mostly owner-occupied. Or are they only selling the ones that would probably go to investors anyway?

I deal a lot with 70's houses, and I've never had a buyer request a lead-paint test. There is a specific section on the state P&S contract for it, and even as a realtor I've never heard of anyone not waiving the right to test for it. I think most people realize that it's not as dangerous as the EPA would lead you to believe.