All Forum Posts by: Chris Field

I was going to say grading until I read your last post. The vast majority of water issues are caused by improper grading. Get the water to move away from the house first and your problems will improve. 

Nice! That's my favorite kind of deal hard and a mess but profitable.

This is why I miss the recession you could pick up some wonderful deals like this. Today every idiot in the world would drive the price up and kill the margins. 

That's the way to do rentals lots of cash flow and equity from day one. 

Good work! 

It doesn't change anything, unless of course I missed the post where he said thanks but no thanks and is donating all of the money received to a charity.

While I'm very glad you got them out, I have one thing I want to say about the gofundme page.

When you buy a house with squatters in a state like CA or CT or NY you know very well it might be a bit of a battle to get them out. But you accept that and factor it into the purchase...

Yet your still asking for "donations", which I find to be in rather poor taste. 

Well its your deal, your money, and are you going to donate profits back to those that give?

I lost $60k+ on a land deal last year maybe I should ask for donations?

I act as my own GC, I find the deals, get them approved, finance them, and if they are rentals manage them afterwards. I don't believe real estate is a hands off business and strongly disagree with the hire out everything I don't want to be near the job site approach. Its your money, its your business manage it! Hiring and managing GOOD contractors is a big job as is finding and buyer from GOOD suppliers at the right price.

As a result I deal with quality control, its my money they have to make me happy to get the check. I also understand most of the jobs so they can't really BS me, I grew up doing most of them. A lot of my subs have worked with me or other people I know for years.

As a result my cost per SF is low in my area and my margins are healthy, and surprises while they do happen to not cost a ton. I see a number of new "flippers" at auctions overpaying and I know their costs are more than mine, probably a lot more. They find themselves a GC and do it hands off, well hands off is expensive.

My bankers have said flat out one of the reasons they are funding the larger deals now is because we are "hands on" investors. A lot of guys bring them all sorts of deals but have not the slightest clue on how to actually execute it. Hand them a print, $2m, and a piece of dirt and they are calling random GC's cruising towards expensive mistakes.

YMMV and their are many ways of doing things, but I have always preferred the hands on direct control approach. I still clean my job sites as much as possible because you see more lose ends or mistakes while cleaning. I still jump in the trench and shoot the grades because I want to know if the guy doing the site work is BS me about cost overruns. Rock what rock I shot that footing myself, etc. 

Most flippers and investors fall flat because they don't have a good understanding of the construction side. 

I have no idea how good or bad this GC is, but you really should educate yourself as much as possible about the nitty grity of the business. 

Executing the deal is just as important as finding and financing it, quite frankly its where most new people lose their shirt.

Real estate goes up, and it goes down. Quite frankly I'd love a bit of down right now, but I don't see it happening. 

Most properties other than some questionable deals on the commercial side are funded very conservatively. Cash is cash, if the market tanks it sucks but cash buyers can't be foreclosed on.  If you overpay with cash you lose money when the market tanks, but real estate is a real asset that you can live in or it generates an income. That doesn't change if you lose even 50% of its value.

What I do see is some prices higher than they probably should be because money is cheap. But that's a far cry from the ARM if you can fog a mirror here is $500k days of 2007. A 3.5% fixed loan solidly underwritten is not a risky loan, its not going anywhere even during a correction. The big foreclosure bubble of 2007 simply doesn't exist in 2015, their are no shaky mortgages even at high valuations to fuel it.

What I do see as a possible hiccup is on the commercial side. Commercial mortgages all adjust their rates and right now those loans are cheap! I see a number of valuations based of those super cheap interest rates that barely cash flow. When those 5% loans adjust to 7% or 8% in 5 years those properties will be cash flow negative. 

Their could be some hiccups in the commercial world as the feds ease up rates. But again who cares that could create some good deals. 

The entire interest rate thing is also overblown. They are going to raise the rates slowly, so markets will adjust. In some markets that might cool them off a bit. But we are talking about maybe .5% next year...if a .5% rate change kills a market it has other big problems.

The cheap money party is ending, new investors have never seen "normal" interest rates but they are about to! 6.5% for residential 8%ish for commercial! Here we come!

Over leveraged various depending on what the property is. I see some properties selling for prices that at 70% LTV would put them close to break even, with a 2% rate increase come the mortgage adjust they would probably be negative...

In terms of residential rentals strong cash flow from day one is a given, secondly I want to be able to take a sizable hit in rent collection before I cannot at least break even.

For example right now in my market rents would have to drop 40% before I get to my break even with my current debt service. That has never happened in the history of my area so I don't feel to uncomfortable. I also keep 6 months of PITI on hand in each properties bank account.

This enables me to have a couple vacancies in the winter and not sweat finding a tenant. Mortgage payments that are due cause landlords to make poor screening choices!

I have a commercial portfolio loan on my 9 unit townhouse complex; I live in one. 

Its a bit of a PITA in some respects but financially its very lucrative for you and the complex.

My biggest challenge in 2015 was all the new people coming into the market and overpaying for the deals I typically buy. A whole new crop of HGTV people want to be "flippers" or whatever they call themselves, so all the crap I saw in 2007 is starting again. So until they lose their shirts in the next down swing I have to live with them, again. 

For 2016 I'm going back to my roots in regards to finding deals, stuff I have not had to do since 2007/08 when the market was hot.