All Forum Posts by: Christopher Brainard

@Bao Nguyen

While it is good to see you're trying to think outside the box, the problem I foresee with your suggestion is that all people are different. Different people have different skills that are more or less valuable. Some people are far more greedy than others. Some people work much harder than others. Is a licensed Realtor more valuable than your general contractor? How about someone who is new to investing, but is very driven? How does everyone get paid? I don't want to start a political debate, but this is the fundamental reason why socialism doesn't work. The issue isn't with the idea or the system, its people and their nature. Additionally, there are a finite amount of deals at any given time, which is why investors compete for those deals and occasionally cooperate when it is in their best interest. 

If you are able to get a large group of people and work things out, I'd be very interested in hearing the details and seeing if you can make it a successful venture. Personally, I'm more of a 'hands on' type of investor and I think the real value you build with real estate is directly proportional to the amount of work (or money) you're willing to put in. While you can be a passive investor, there is a high cost to being passive, as you are paying others to do work you could be doing yourself. 

-Christopher

@Michael C.

I suppose that depends on what your job is and how you are compensated. 

Before retiring, I was managing ~250 people at three manufacturing facilities and if one of my employees was taking calls during work hours and I felt it was negatively impacting his or her work, it is highly likely that I would discipline that employee and eventually terminate them if the behavior continued. If I allowed that type of behavior, it is likely that my other employees would think it was acceptable and do the same. Its like dealing with a bad tenant, you need to set a firm example.

If you worked a job where it would not negatively impact your performance, availability, or the work environment, I probably wouldn't care as much, but those jobs are few and far between.

-Christopher

Hi @Matt Mortensen

I think the biggest differences between SFR and Townhomes is the impact the community has on the ARV. Clean, quit communities are going to sell much easier than ones in disrepair. Also, CIC fees tend to be much higher, so you need to be careful not to overvalue the property. Your repairs are also going to be subject to approval from the CIC Board, which can delay things more so than in SFR's.

If you want to PM me the specific properties you're looking at and what type of finishes you intend to put in during your flip, I can run comps on them and tell you what I feel the ARV would be.

-Christopher

@Mark Hoffman

The problem is, you're putting the cart way before the horse. Before you buy any piece of real estate, you need to know what the value would be after it is repaired. You need a good estimate of the repair costs (you can't just guess based on looking in windows). You also need to know how long it is going to take to repair and how long it will take to sell, so you can estimate your holding costs. Once you know this information, you can determine if it is a good deal and how you would go about structuring said deal. The offer price of the owner is irrelevant, because that needs to be driven by the after repair value (ARV) and the cost to repair.

If you have no money, you aren't going to be able to get a bank loan. Hard money is a possibility, if the property meets ARV requirements of the lender. Private money is also possible, if the property is appealing to investors. Owner financing is always an option, but is pointless if the deal isn't sound and if you don't know how to flip a property. There is a ton of resources available on this website to learn the basics, but you need to learn before you try to grab that first deal. Leaping before you look can be very disastrous and put a swift end to your investing career before it even starts.

-Christopher

@Kim Oceguera

In Nevada, the EMD goes directly to the title company or escrow company (via broker if you're an agent), so what matters is what they will accept. The title companies I've worked with will accept certified funds (money order or cashier's check) and will also accept personal checks, but they have a hold period on the account (I think it is like 5 days).

Banks are open on the weekends, as are various places you can get money orders, however, real estate contracts generally have a place where you can commit to putting an EMD at the title or escrow company within X days, to account for weekends or holidays or what not.

-Christopher

P. S. While it doesn't say either way in your post, I get the feeling that you are preparing to hold money from a flip or wholesale deal where you obtained the buyer, but you should be very cautious and research prior to accepting any money. I would never EMD funds into any of my business or personal accounts - I know for licensed individuals in Nevada that it is expressly illegal and I'm guessing that it poses a problem for non-licensed individuals as well (commingling funds).

Hi @Patrick Toy and welcome to BP

Seems normal, I checked into a few companies when I first moved to Vegas and they wanted 8% to 10% and then I think the rental fee was one month's rent ($750 to $850 for me). I believe this cost will vary by property type and location, as the lower class the property the more work involved with the management. Until you have several properties, I don't believe you're going to have the bargaining power to really negotiate a much better rate. Ultimately, I decided to manage my own properties (I currently have 5) and they require a minimal amount of time. 

I'm curious to know why you purchased a new house to lease and if there is any cash flow in it for you? I wouldn't think a new SFR would cover the debt service on the property.

-Christopher

Hi Tina and welcome to BP.

I actually moved from LA (More specifically, Anaheim Hills) to Las Vegas this year. 

There were two main factors in our decision to move here, with the first being cash flow. While the cash flow on properties in Las Vegas isn't like Ohio or Michigan, it is going to be a lot better than what you find in California. As someone stated in a previous post, the trade off for that is the lower projected appreciation, however, I think the LA area has fully recovered from the downturn and the risk of betting on future appreciation was just too large for my personal taste. If widespread real estate appreciation continues, Las Vegas will likely see a rise in home prices, just at a slower pace.

The second reason we moved was simply the cost of living and cost of running our business. Everything we personally buy (gas; food; etc) is significantly cheaper here in Las Vegas. Additionally, all our business expenses (State Tax - 0%, Property Tax, Permits) are all much lower here in Las Vegas. I should also point out that the government here is far more efficient than California, so when you visit the records office, register your car, pay your property taxes, or get something recorded, it is so much easier here. I actually enjoy interacting with the government.

-Christopher

A 12k renovation budget seems low, given the pictures we've seen. Have you checked out the comps in your area to see what type of finishes they have? 30k is a big spread and it may be the finishes which are dictating the final sale price.

In your photos, I see nasty carpet, ugly linoleum, old laminate counters, dated kitchen and bath, poor landscaping, and porch that needs redone. If you put in like-kind materials, you may be able to squeeze into that budget (if you're doing the work yourself), but you need to see what competition has to offer. While I don't know your area, if I did a typical rehab (for me) on the house, I think you may be closer to 25k. With that being said, 35k gross profit on a 150k sale will probably net you something a little 20k, which is an excellent start to your real estate empire. 

-Christopher

@Felix Sharpe

Twice the budget - I'm thinking more like triple or quadruple. I doubt I could flip a non-historic 4400 sq ft century old home with decades of deferred maintenance for twice their budget.

Also, there is no such thing as a partial renovation/flip when it comes to real estate. When you do a partial renovation, you end up spending a bunch of money and getting absolutely no return and often a loss of your original investment. While You should keep elements from the previous design that fit well and are in good condition, when one fully renovated room sits next to a sub-standard or incomplete one, all the buyer remembers are the bad room.

-Christopher

Not enough information here to really make a comment. It depends how low your income is, how much debt you have, how big of a loan you need, loan to value ratio, and how good your credit score is. Same things will apply for the co-signer - if they are in a bad financial position, they won't be helpful as a cosigner.

-Christopher