All Forum Posts by: Christopher Brainard

Yes, It did and the card is listed under its EIN. Only thing that showed up was a soft pull on my credit report.

Bank of America is. 

Granted, I have excellent credit but a few weeks after I created my LLC, they offered me a rather large credit card. You just have to personally guarantee and you can start building the business' credit.

On the amusing side, they will not, however, consider giving me a mortgage. My question to the banker was "So you'll give me an unsecured credit card that I could buy this house with, but you won't give me a secured loan for the house?". His responded, "Yep, that is just how it currently works."

-Christopher

@Rachel Trimble

Hi Rachel and welcome to BP.

On the surface, Property A looks like the better deal, however, the location of the properties is very important. Depending where Property B is, it may have the chance to appreciate significantly more than Property A, as the downtown areas of Austin have been appreciating rapidly for years, with many of the homes being renovated by investors. Typically, properties that are closer to downtown are also easier to rent and being near the airport is undesirable, depending how close you are. 

Just a few items for you to think about. You need to speak to someone local who knows the precise location of the properties for a better evaluation of the locations. I haven't lived in Austin for several years now :)

-Christopher

I said I wouldn't post again, but how can I resist responding to the best post ever on BP. 

He even had to change his forum photo, so you can't see it isn't him.

This made my weekend. Cheers

-Christopher

@John Jack R.

This is done with reasonable frequency in Las Vegas, but it usually isn't 30 days and it doesn't always work out for you. I put in an offer on a condo for $67k some months back and the owners played this game - waited a week, asked for highest and best. In the mean time, I found a comparable condo in the same complex for $65k and bought it. Two or three weeks later, the 1st condo realtor approached me and said they were interested in the $67k now. Too bad, I said, I'm not interested in pricing games. During this time, I met another investor and he told me he put in an offer on the property at $64k and I told him I wouldn't bid against him. Their greed ended up costing them $3k + a month of holding costs. 

So the lesson here is - price the property right and accept the first qualified bidder that comes along. Enjoy your profit and move on to the next sale.

-Christopher

@Frankie Baca

As @Billy Runyan already stated, the house was most likely postponed at auction. I've been to the auction a couple times on 4th street recently, but it was mostly a waste of time. The last auction I was at had 30 or so properties for sale, about half of those were postponed, and most of the remainder were bid on by the bank at the amount owed. There were half a dozen regular investors there, which proceeded to bid up two or three properties to levels that were unreasonable, and they proceeded to joke around about bidding each other up after the auction. Was like watching a sad episode of Storage Wars. 

You should be especially careful about other liens (tax liens, utility liens, HOA liens, etc), as not all liens are wiped out in the auction and people who go through foreclosure rarely pay their bills. There were a few title companies on hand at the auction that would tell you what they would and would not provide title insurance for. You shouldn't rely on this information either and do your own due diligence before the auction, but I use it as a final check for any red flags I missed. You should never trust the reports from auction.com - they are highly inaccurate and usually out of date.

The MLS is a great resource, especially for selling your property, but is very unlikely to have wholesale deals for Las Vegas. Hundreds of investors and realtors (including myself) check the new listings that interest us daily and pounce on things we want. Margins are thin, even for principal buyers. If you're looking for a deal to flip or wholesale, you're likely going to need to pound the pavement and search for that off-market deal.

-Christopher

I am also a licensed real estate agent and this is not an attempt solicit your business.

@Alex Hoang

I have an engineering degree and I'm a six sigma master black belt. I worked an engineer for 10 years and then decided to become a global quality manager for another 5. While I did save a significant portion of my earning, especially when I was living overseas, the majority of my investment funding has come from previous deals. 

The first property I bought was a FHA Loan, the next couple were conventional, I paid cash for the next two and the last flip I FHA financed again, mostly because I didn't want to lay out $400k in cash for two years and they offered the best deal at the time. The last five rehab rentals I've purchased were all cash.

Wealth snowballs.

-Christopher 

The answer, in my opinion, to that question is yes and no. I understood what you meant on your original post, I assumed you were talking about a Cap Rate on a SFR and phrased my answer accordingly.

Cap Rates are very useful in commercial real estate, because direct comps aren't always easy to come by and commercial real estate is generally purchased by investors based on the cap rate. While you can find complexes that are of similar size, units, class, or location, there is almost always variation that needs to be taken into account. Cap Rates are good to compare two properties that are similar, to determine which may be a better investment. Additionally, when you go to sell the property, it is going to be purchased by an investor (not an owner occupant), so the investor is going to be focused on NOI, and the purchase price is likely to be set by the cap rate. Cap Rate to Buy, Cap Rate to Sell.

Everything you said is true and an investor can look at the Cap Rate on a SFR, however, the value of the individual investment in residential is not based on the cap rate, as the value of the property is set by market comps. Since most homes have comps which are very similar to the subject property, an accurate market value can be determined. Since you have that data and you can easily ascertain the other important data from the property (repairs, taxes, maintenance, etc), you have a complete picture of the investment. I would never buy based on a cap rate, because when I sell, I'm going to be selling according to market value. Market Value to Buy, Market Value to Sell.

Example of my thinking: If I buy an apartment building at a 10% Cap Rate and Improve the NOI by $10,000; I've effectively increased the value of my property by $100,000; If I buy a house at a Cap Rate of 10%, when the market value of the home is $100k, and I improve the NOI by $10,000; The value of my property is still based on the comps. If the comps haven't moved, the value of my property hasn't gone up. Why? Because if I try to increase my price, the investor can purchase the same property two doors down for market value. Cap rates can also easily hide a lot of repairs/deferred maintenance as well and can be very misleading. Basically, if you don't take care of your property, your cap rate will be higher . . .. temporarily.

-Christopher

P. S. I hope my math is correct and this information helps - I'm not always the best at doing numbers in my head.

@Lari A.

You haven't found any information because Cap Rates aren't generally used when looking at residential properties. The cap rate doesn't take into consideration the repairs that need to be completed on the property or the area the home is in. Usually, an investor is more interested in the comparable properties, the condition of the house, and the projected Return on Investment (RIO) the property has to offer. 

-Christopher

This sounds like a bad idea. 

Scenario 1:  I was going to buy your house and you have it at list price, which is fair market value. I am a cash buyer, therefore, I will get 20% of the down payment (which I will list as the full price of the house).  I'm assuming that you're going to reject this offer, even though it is a full market price for the house, simply because you can't afford the commission. 

Scenario 2: I'm working with a client that only has a FHA down payment capability. So your offer is to give me 20% of 3%, which is 0.6%. Needless to say, it isn't worth the gas to drive out to your property for that amount.

My best advice is simple. Find out what the fair market value of the house is and list it for that. Pay a fair commission. If a seller submits an offer that requires an owner carry, you can always counter at a higher than list price. Most people who need owner financing have issues, so they know they will pay more for your cooperation.

-Christopher

P. S. I'm not a fan of flat free brokers. They don't charge much, but generally speaking, they don't do much work either. They're good if you're in a hot market, but if your property needs aggressive marketing and/or personal care (like an open house), you're unlikely to get good results.