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All Forum Posts by: Eric James

Eric James has started 22 posts and replied 2236 times.

Post: Seller psychology/ offer strategy

Eric JamesPosted
  • Investor
  • Malakoff, TX
  • Posts 2,281
  • Votes 2,515
Quote from @Isaac S.:
As far as "...create psychological leverage..." goes, it depends on what degree of moral flexibility you delude yourself with to justify being a highly manipulative individual in order to get what you want.

In my experience, it is not a win/win transaction if one party is over selling(being highly manipulative)  the deal.

some sellers and buyers lie and use crude tactics and gross exaggerations  to gain psychological advantage in a transaction, creating a very adversarial climate that occasionally turns litigious.

that being said, most sellers/buyers want to work with other honest, intelligent, and fair/ethical buyers/sellers that can find a mutually agreed upon and beneficial transaction terms, so just being a good communicator(listening especially) and being highly competent and qualified, should be what you use to get it done....IMHO

 Let's face it. Buyers want to buy as low as possible and seller's want to see for as much as possible. The idea of "mutually beneficial" is something to make people feel better.

Post: Having mentor Struggles

Eric JamesPosted
  • Investor
  • Malakoff, TX
  • Posts 2,281
  • Votes 2,515
Quote from @Immanuel Pierre:

I have been real estate investing for about a year now and have ran across a few mentors. I personally feel like I look for ways to bring value to mentor but, struggle with finding the right mentor for me that is aligned with the goals I am trying to accomplish. I guess to get a discussion going is if you have a mentor how did you connect with them? How did you find one in the particular area that you are interested in? Or how did you find a mentor who you truly value and strive to emulate?


 When I see people who are "looking for mentors" I think of the handful of people from BP who have asked to come meet and talk with me about what I am doing/have done in real estate. We set appointments to meet. I have yet to have one of them actually show up. 

Post: New Agent - Should I Americanize My Name?

Eric JamesPosted
  • Investor
  • Malakoff, TX
  • Posts 2,281
  • Votes 2,515
Quote from @Jay Hinrichs:
Quote from @Jim K.:

@Sapir Simply

I would definitely Americanize it. We supposedly live in a new, enlightened era, where people are not judged on their name, their color, their creed, being bald, fat, etc. This is completely untrue, in my experience. Scratch your typical Anglo-American type and watch the prejudices flow out in a torrent. If you're in any job that involves selling anything and ingratiating yourself to anyone, authenticity plays a distant fourth to likeability, likeability, likeability, in that order, and people like people who are like them, especially in Anglo-American culture.


 my Chinese/Asian  clients do this quite often if NOT 100%  


 You mean, all their Chinese names aren't really Jenny??? lol

Post: Are Houses Actually Appraising for These Prices?

Eric JamesPosted
  • Investor
  • Malakoff, TX
  • Posts 2,281
  • Votes 2,515
Quote from @Christian Harris:

Hi, everyone. First time poster.

We're shopping for a home in Los Angeles and are a little dumbstruck by this market. We'll find a house with a listing price of, let's say, $890,000, run it through the automated appraisal services (like Bank of America, Chase, etc.) and see its value estimated around $900,000-ish. But here's the thing: the place will then sell for $1.05M. 

Are houses actually appraising for these values?

Our realtor is suggesting we waive our appraisal contingency and get comfortable offering $100k over the estimated appraisal value. I'm like, "Doesn't that mean we'll pay the difference up front?" But she seems confident that these appraisals rarely come in low.

I have my doubts.


 Put it this way. I've recently had 2 appraisers call me to say they were having a hard time appraising the properties I was refinancing. They asked me how much I had paid for the property and what I had invested in rehab. Let's just say I don't have the greatest of faith in appraisers.

Post: Private Lending question

Eric JamesPosted
  • Investor
  • Malakoff, TX
  • Posts 2,281
  • Votes 2,515
Quote from @Chris Stonestreet:

Hey everyone, 

My current primary residence is financed through a private loan with a family member and does not show up in my credit report. If I go to purchase a new primary residence or investment property, will I need to report this loan or not? My plan is to buy a new primary residence and rent this current house out, but my DTI would not qualify for much of a new loan if this private loan counts. I hope that makes sense and thank you for the help!


DTI isn't some silly technicality to be gotten around. If you have a high DTI you shouldn't be borrowing more money.

Post: My New Construction Journal From Start To Finish

Eric JamesPosted
  • Investor
  • Malakoff, TX
  • Posts 2,281
  • Votes 2,515
Quote from @Douglas Gratz:

Hello fellow investors!  I began a post a few months ago in regards to a new construction project I will be starting soon and after all the great input I thought it would be nice to start a journal in order to help new investors who plan to start new construction projects for their first time.  Here's the down low in a nut shell.

I am building two SFH in Northern Liberties, this is a very sought out neighborhood in the city of Philadelphia. Minutes away from downtown and all major highways. Each home will be as follows: I bought the lots for 720k in total

1. On 2400sqft lots

2. 5800 sqft houses

3, 4 stories , garage parking, roof deck, elevator, and skyline views

Attached are the 3d Renderings of what I plan to build

Last week a home 4500 sqft just sold for 2.1 million dollars in one day. So thats the market as of now and I am told that pre-selling these within a month of breaking ground is very realistic and that I could get as much as 2.3 million per house. We shall see!

Here's how I started. As I am new to the new construction game I hired a consultant to guide me on my journey .  I interviewed 3 builders and 5 luxury real estate agents and their team.  I was told to not use my usually agent as when doing luxury at this level, you want someone who specialized in selling high priced homes.  Someone who has the clientele , know how, and team to get it done.

So I interviewed builders and got budgets from all three. One builder said he could do it for 180 sqft another quoted me at 225 a sqft.  When I compared their budgets I began to feel a bit worried since thats a large discrepancy between the two.  During my interviewing process, I visited projects these builders have done and are doing to get a feel and look at the quality of work they produce.  Both builders have experience in luxury home and the one I am going with just finished a 16 unit project in the heart of covid, which is one of the main reasons I chose him. He will know supply issues and how to circumvent them (ordering wolf appliances the day I break ground because he knows they are a year out, Anderson windows, same deal, etc etc). But back to the budget discrepancy .  The builder I chose has it at 1 million per house and the other is closer to 1.2....That said I am going to build in a contingency and put money aside just incase.

I am using hard money which makes this very risky, but I sold 3 of my 9 duplex's so that I could have a cash reserve of 400k to make sure I do not run into money issues.  I also have a buyer lines up, who is willing to buy the land with permitted plans for 1.2 million which would give me a profit of 500k without doing anything. I lined up buyers as another contingency/ exit plan, incase the lending doesn't work out, or some unforeseen issue , where I need to unload the lots.  So as backup I have some built in exit strategies.

Onto the steps I have had to take :

1. I had to first subdivide the lot from 4 1200 sqft lots into 2 2400 sqft lots

2. I hired an architect to build out the plans, submit zoning permits, do a structural survey of the land, and ultimate after getting zoning approved we just submitted the building plans.  This is a process in itself.  You want to make sure your architect knows the zoning laws in the area you are building, this is very important because, if my architects did not have the knowledge, I could have run into problems where zoning would not approve and I would need to wait months just to get variances IF I could even get them. So make sure your architect knows their zoning!  As a matter of fact, my guys knew their zoning but they assumed I knew it too...The original plan was to build 4 homes on 4 1200 sqft lots, and the architect went along with this (assuming I knew I would need a variance since it did not meet the 1400sqft per lot requirement) BUT I DID NOT KNOW....this set me back another month because I had to pivot.  It turns out it worked out for the better because with my original plan, I would not be able to get garages (which is a huge selling point in the city) After finding all this out, I had it subdivided for a second time into two 2400 sqft lots and looked up zoning laws where I saw that if I put a 5ft side yard on each side, it will be considered a detached home and not a row, which would allow for built in garage by right.  This pivot ended up working out because instead of having to wait another 6-8 months for a variance to sell 4 homes at 800k each, I am now able to build two larger homes for just about the same price but am able to sell each for 2.2 to 2.5 million , so I went from a gross profit of 3.2 million to a gross profit of around 4.4 million with a lower building cost. 4 homes would have been approx 650k each to build for a total of 2.6 million where as two larger homes cost 1 million each to build, maybe 1.2 million, either way it ends up being less to build but almost close to the same amount of profit.

a. the architect gave me schematics of the build

b. we went over them in stages and made tweaks here and there until I was satisfied with the final schematic

2A) Got general liability insurance and preparing to get builders risk, but not paying for it until the building permit is approved

3. While all the was happening, once I got the preliminary plans I gave them to my builder so he could price it all out. I learned that builders or yourself have to give the plans to a supply house and they run whats called "take offs" on all the line items and give you estimated prices of what everything will cost (Wood for framing, windows, siding, and the list goes on)

4. After this was done my builder had a budget which my hard money lender wanted and I needed so I know how much I will need to get a loan for in order to build these homes.  After careful consideration, since hard money is expensive and risky, I decided to build one house fully and one "under roof" which means exactly how it sounds, build just until the roof is on so outside elements cant get in.  The plan is to pre-sell one then have the lender release the rest of the money needed to finsih the 2nd house

5. Now we are at today. I am waiting for the building permit and in the mean time I am working with my builder to make sure we get the budget as close as we can to the actual cost.

I purchased the land in February, but began the process in November, so its taken 6 months to get to where I am now (submitting for building permits) To be continued.....The permits should be approved in about a month from now and we will break ground.


 Very bold. The topic of whether the real estate market will have a downturn is critical for you. Or materials costs should increase sharply again. 

Post: Exit strategy for commercial loans

Eric JamesPosted
  • Investor
  • Malakoff, TX
  • Posts 2,281
  • Votes 2,515
Quote from @Joe T.:
Quote from @H. Jack Miller:

Its really a strategy issue. I am a big fan of buy and hold and dont die. I would pay off over the amortized period, with rates being so low I would not make extra paydown payments, But use that money to invest and buy more. Every month your building equity, if you payoff the loan in 20 years and do that on several, you will be a very rich man. 

The problem is that due to the loan “resetting” every 5 years, it will take much longer than 20 years to pay .


 As Mike said, if you want to pay them off in 20 years, just calculate what you would need to pay monthly, and then do that.

Post: Sometimes Cheap Can Be Expensive

Eric JamesPosted
  • Investor
  • Malakoff, TX
  • Posts 2,281
  • Votes 2,515
Quote from @Matthew Crivelli:

In the real estate business it is so common especially for newer investors to shop contracting, lending, insurance, and all other associated services, merely looking for the cheapest price available. The inherent problem in doing that is rather than accomplishing the necessary task of building an unstoppable team that you can move forward with and replicate success with you are instead just facilitating a transaction. The extra point on a loan or the $500 more for the HVAC system may be worth spending if the few grand spent cumulatively on your project means on the next one and the one after that everyone you need and trust is willing, ready and cares about your success. This is advice worth considering as you are starting out on your journey in real estate! 


 The problem isn't just price. Other problems are getting them to call you back, show up to give you an estimate, waiting for their schedule to clear, showing up to start work, not disappearing halfway through the job because they don't want to lose another job, completing the job in a reasonable amount of time, doing the work they said they would do,  and doing the work competently. I found using contractors, at any price, largely unworkable.  So I hired my own crew that I supervised to work on my brrr's. We have since moved on to doing new build apartments.

Post: How much of your cash flow should you live off of?

Eric JamesPosted
  • Investor
  • Malakoff, TX
  • Posts 2,281
  • Votes 2,515
Quote from @Steven Barr:

How much of your rental property cashflow should you live off of? 

For example, if I cashflow around $30k/month, how much of that should I ACTUALLY be spending on my lifestyle? What percentage should go towards my personal mortgage, toys, travel, etc..

Further, I wouldn't want to develop spending habits that had me on razor thin margins, so what should my OVERALL spending percentage be relative to my cashflow? 50%? 70%? 80%?

I understand the goal is to work to continually increase your cashflow by acquiring more properties over time, and that annual rent increases will give you a natural boost, but I imagine you want some cushion built in to your spending habits for inevitable bad times economically?

Thanks! 


 As little as possible. 

Post: Will New Investors Be Pushed Out of Market?

Eric JamesPosted
  • Investor
  • Malakoff, TX
  • Posts 2,281
  • Votes 2,515
Quote from @Jacob Maes:

Rates are going up and up and it's making it more and more difficult for investors who are looking to BRRRR because rental rates don't seem to be covering the actual mortgage. I work with a lot of investors and a lot of them who are looking for rentals are not looking to buy because of the rates. However, I'm seeing the big investors who are able to pay with cash and sit on it are still buying. Are rates going to push more and more investors out of the market?


What does this have to do specifically with new investors? Dallas didn't seem like a good rental market to me several years ago. Events so now. I live 1 1/2 hours outside of Dallas and for a while was buying distressed SFH snd renting them.out. I've recently switched to building my own small apartment complexes. Still beat 1% rule for rent.