All Forum Posts by: Devin James

Quote from @James McGovern:

When do you believe that lower prices won't help move home sales?

I think lowering prices does help selling homes. But there are some months where sales volume decrease signifiantly (Speaking from a Florida perspective). In these slower months, there are still Buyers, just not as many. So I do believe if you NEED to sell, then lowing the price will eventually catch a Buyer. - If I understood the question correctly.

I’m underwriting some infill projects in Central Florida, and im running into an issue.

I'm trying to calculate the ARV of a townhome with a detached ADU, but there are no direct comps.

How would you approach this?

Im using stand-alone townhome comps for the main unit then calculating a separate value for the ADU based on its rental income.

Curious to hear how other investors and appraisers would evauate these?

Quote from @Chris Seveney:

Quote from @Devin James:

1) Inventory is drying up

- Build-to-Rent developers stopped starting new developments when rates spiked, and that slowdown in starts will hit the market soon, resulting in less inventory.

2) The rent vs. own equation is upside down

- Usually its cheaper monthly to own than to rent, but today that’s not the case in many markets. Because of this, I expect home values to stay steady or drop in some areas, but rents will rise to rebalance the spread.

Im looking for ways to get ahold of some rentals in preperation of this

 I would put word of caution as rents have never historically "shot up" - cannto insert photo so here is link, but take out covid and rents are pretty predictable-only chance rents shoot up is if salaries increase substantially as everything else got very expensive for consumable goods past few years but salaries did not.

Average Mortgage Payment 90% Higher Than Average Monthly Rent | RealPage Analytics Blog

 Lots of good info in that article, thanks for sharing! What do you suspect to happen with the imbalance? A slow rebalance of the scales?

Quote from @Eric Gerakos:

How does one "forcaest" and does it require special shoes?

 Haha! Need to wear size 12+ to be able to forecast

1) Inventory is drying up

- Build-to-Rent developers stopped starting new developments when rates spiked, and that slowdown in starts will hit the market soon, resulting in less inventory.

2) The rent vs. own equation is upside down

- Usually its cheaper monthly to own than to rent, but today that’s not the case in many markets. Because of this, I expect home values to stay steady or drop in some areas, but rents will rise to rebalance the spread.

Im looking for ways to get ahold of some rentals in preperation of this

For the past 4 years, from November through March, the questions start:

- “Why aren’t these homes selling?”

- “What can we do to move them?”

- “Is something wrong with the market?”

Then like clockwork, April hits, and the floodgates open:

- More showings

- Multiple offers

- High buyer activity

It's a roller coaster of emotions. But I've learned this cycle is normal. Seasonality is real, plan for it financially and mentally.

Unsolicited advice to any young professionals just starting their career.

Don’t be afraid to take risks and make mistakes. That’s how you learn.

Most good leaders would rather see you take initiative and mess up than play it safe and stay quiet.

“I’m not a sophisticated investor.” Is what a Seller told me a few weeks ago during a call negotiating his property. 

He wants $1.8M and I told him its worth $1M, but I pitched a JV structure that would be able to get him is $1.8M.

Should he have said that?

I liked the honesty, it was a reminder to slow down, explain more, and prioritize clarity.

If you were the seller, would you have said it?
How would you have responded as the Buyer?

Was he just playing mind games?

Quote from @Justin Manley:

Some things to consider:

1) Its more than 5 times the work. Never consider this anything but a job. You could be doing other things, so lost opportunity cost. Are you qualified to oversee the builders?

2) What if your numbers change for the worse? Lets say you lose money per sale? Disaster
For example, Trump places a 50% tariff on steel and lumber and/or deports all the illegals, a real possibility.

3) What if your builders let you down. Can you sit on those properties for two years?

I have known several investors that took the grow like a virus approach. All of them did well for a period.

None of them are in the business now. A significant event could hurt you. Can you afford to take that risk?

If you can shrug off a 2 sigma event go for it, imho.

If this is your first transaction of this exact nature, maybe a test run of one house would be wise.

Yes, all things to consider, but I would disagree in some aspects. 

I would not consider it more than 5 times the work. If you have a GC you trust, then it shouldnt be much of anymore work on your end. Im not the one calling the trades and making sure they show up to the job-site. But I can see your argument if you take a more hands on approach.

Yes, market risk is always a factor. With leverage, you have less room for failure, but that same principle also works if the market increases significantly.

Quote from @Jonathan Bremner:

I like the sound of that

Considering leveraging to build a few modular homes on a larger tract of land, but probably would have to build one at a time due to capital restraints. Each sale would help fund the next build, in theory. Looking at a semi-rural piece of land in NC for $170k, I could be all in on a modular home for roughly $200k. I have $80k liquid. 

I understand there are a lot of variables but would appreciate any thoughts or feedback you may have on a micro-development like that

 Hey Jonathan how many units are you looking to build?

Theres A&D lenders out there who will fund 80% LTC. 

So in your case $170K+$200K = $370K

$370K X 80% = $296K Loan Amount ($74K equity needed)

But they will need to see that you have avaliability to carry the loan, in other words, that you are able to pay the interest payments on the loan throughout the build.

There's tons of variables, but I would start by contacting lenders. Specifically A&D Lenders. Most people are happy to help.