All Forum Posts by: Darrell Lee

For your 1st investment this property has several issues. Be sure you have contingencies to back out of the deal if need be. 

It may not be financable because of the bootleg units. Or financable for the amounted needed. The value will be less as a duplex and subtract the income of the removed 2 units, then reassess the value of the property and propose the lower purchase price to the seller. Be prepared to walk away. You may not be ready to tackle all the possible problems this property may have.

There may be other hidden issues as well such as unsafe bootleg plumbing and electrical. You should spend the money to have it inspected or if you have a buddy that is an experienced Contractor take a look at it for you.

There are a lot of other factors not discussed but if the seller cannot/will not work out a new deal, be ready to walk.

Haven't borrowed money from them, but I did buy a house from Econohomes.com their RE company.

2015-2016 I bought 5-6 properties from Auction.com. One by accident when I was just messing around learning how to use the website and bought a Memphis house by accident for $550 which I've just received a cash offer for $5400. I've owned the house for about a year and have still never seen it. I did have to hire a lawyer to evict squatters...

You must be cautious as they make sneaky counter bids just shy of their reserve so that the next bid hits the reserve. It's not like Ebay... they no longer show all the bids. They are allowed to bid against you as shill bidders. So you must learn discipline and determine your price you are willing to pay and stick to it. They relist the properties in a week or so and each month, they lower the reserves. If you buy 5 or more properties from them in one year, you might be offered an opportunity to become a VIP member and the deposit is waived by them. This is very nice when I'm bidding on 3-8 properties at the same time and don't have to tie up $1k-$5k on a credit card for each property while the auctions are ongoing.

I bought a few houses in 2016 from Hubzu as well. One house, my first offer was below their reserve that my offer was $91k. I forgot about it for a month or two and saw it was back on at $79k and I bid $71k... rejected. They kept lowering their reserve and I kept lowering my max bid until they dropped it to $31.5k and I bid $29.5k which they accepted!  A fabulous 7br/2ba Victorian home (pictured above bought from Hubzu I believe)  that has all its original gorgeous wood work and just needs your typical remodel. I plan to add a master bath and another bath using two small bedrooms, so it will become a 5br/4ba and a new kitchen so that it will be worth around $200k or more. I expect I'll probably spend at least $75k on it.

Caveats: You generally have to pay cash and buy sight unseen as is, where is with no contingencies. So expect the houses to be trashed and need everything. I generally will pay a max of only 20% of the median value of similar houses. I've bought many water heaters, furnaces, roofs, full re-pipe, full rewire and more.   

Sometimes you will only receive a quit claim deed and no title insurance. I'd advise that you always get at least a title search to see the liens on the property before you close.                              

In Vermont and New Hampshire, I look for investments with good fundamentals... I've purchased commercial properties at $5/s.f. i.e. $60k purchase price, 24k s.f. market rents around $0.50-1.00/s.f. replacement cost about $3-4 million... Residential properties for $30k after rehab cost that rent for $2k/mo...

Buy low and sell high... My purchases are at record setting lows so I think I'm recession proof as my rental income on the properties are under 2-3x gross rent income.

I generally buy at prices 20% of the current median values. Of course they are REO's or surplus municipal properties and need rehab. I add value by renovation.

There's still bargains around if you have cash and capable of renovating properties.

I have a friend that I've know basically all my life... since 2nd grade... his mom was my violin tutor in the 4-6th grade. I was friends with both of his two brothers. He was selling his house and was in a urgent bind and told me he needed $10k... I wired him $20k, no questions, zero interest, pay me back when his house closes... It got delayed, his buyed dicked him around and I gave him some advice that he took and he closed the deal and paid me back...

In the mean time, I've bought a dozen properties and have doubled my asset value now about $2 million and paid cash for all of them. So my renovations were taking longer and costing more and there was a once in a lifetime deal that I simply had to buy so now I'm short on cash. He volunteers to loan me money and I request $100k on a 1st T.D. at 6%... he counters that the interest rate is too high, so I refuse to pay him any less than 5%. Value of my house to be security is about $150k so we close the deal. No appraisal, no title insurance, I pay all the fees and had my RE Attorney who also is my Title Co. Agent close the deal.

6 months later, he calls me out of the blue and I was getting ready to call him and ask for another loan and he asks if I need more money and I say as a matter of fact... Well, he just bought an airplane and a new home and a couple of very expensive cars... I sensed a little hesitation and offer a solution, as his house was owned 50% by him and 50% by his mothers trust so they each received a bit less than $1.5 million. So I asked what kind of yield was the trust getting... He says it's getting ****... So I offer 6% interest only payable monthly due in 1 year. I want to pay him a little higher rate since it is a investment property worth about $160k and I'll borrow $100k on a 1st TD. Again same lawyer/closing agent. No appraisal or points...

I'm sure I'm paying below market rates but he's getting solid security and we know the title is clean as I did buy title insurance when I bought the properties.

What is your analysis of these deals...

Awesome... Now who's ready to do a flip with my $7k house in Memphis?

That's good to hear. I just rented my newest Vt airbnb for a 30 day rental...

I kept getting poor quality tenant apps so I furnished a couple houses and posted them on Airbnb and earn nearly double previously asking rent and now get upscale Millennials as guests from wealthy places like Boston and Ct.

Quite an improvement over the Section 8'ers, felons, large families on disability with huge dogs...

Best description of a dog... A miniature mastiff puppy... 120lbs and still grpwing! Lol

Most my purchases last year, I found on my own, bought them sight unseen and made the deal with the bank/auction site and would send a Realtor an email that started like... Congrats, you just sold me a home... my name is Darrell... I would have given the deal to the listing broker, but Vt is not a dual agency state and at the time, I was a Californian so I needed a broker to look at the property, handle paperwork and give me guidance as I was unfamiliar with Vt real estate practices.

I've bought several properties that took 5-9 months to make deals with stubborn sellers Government agencies or banks in order to get them to accept my offers. I house took 9 months to make a deal with the bank... My first offer to them was $71k that was declined and I finally bought the house after many offers for $29k. I wanted to teach the bank officer a lesson... My ARV I forecast to be over $200k. I will be add2 baths using two of the bedrooms converting from a 3,200s.f 7br/2ba Victorian house to a 5br/4ba house. I hope I can do the renovation and remodel for around $60k. Point being, if you find a house you really want, sometimes if you are persistent, you might get the house you really want.

It's been over 180 days. It is in pretty good shape and I could do the rehab for under $10k if I was local so that leaves a decent profit for a flipper I think.

@Ryan Pyle I also have a house in Rutland waiting to be renovated.