All Forum Posts by: John Jack R.

Post them on Marketplace. Always get a second opinion and obtaining capital on a deal is easy, your biggest challenge is time. People and Capital virtually unlimited supply, TIME, is your most valuable resource.

Originally posted by @Ben Leybovich:

Realtors are going nowhere.  This is one of the strongest and well-funded lobbies in Washington...

 I agree! The general population or citizens will and do, need realtors. There are laws and  regulatory codes set in place to protect consumers from unscrupulous groups and individuals. Publicly traded Stocks can be and are purchased in great frequency even multiple times a day by companies and individuals. How many home transactions does a consumers participate in during their lifetime?

As a professional investor of residential and commercial property, there have been many occasions where I have requested a meeting with the sellers and negotiated directly, even kicking the real estate agents out of the room, until we had a deal. The agents were only around to paper the deals. 

My general experience with realtors, has been not that great, you have to work to find the diamonds, where they become an asset to the process, especially when you are presenting low ball offers. But I am sure we have all eaten a bad restaurant meal from time to time. You don't stop going to restaurants, You just stop going to that restaurant.

Although just this last week, a realtor did tell me that 2.5% is the new 3, and with my favored realtors we do have reduced commissions on a sale if they handled the purchase.

Realtors are good for the general public and they are here to stay. As to individuals like us who make a living buying, selling and holding, property; find a good realtor and negotiate!! We have completed close to a 100 transactions over the last two years. They make money from repeat business, not from one deal every how many years.

Hey Guys!! Thank you so much, you have all contributed some really awesome ideas, which I will implement immediately. On this particular deal we left $5,000 on the table. Ouch! It could have gone the other way. I am still very thankful though.

4913 Nebraska Avenue Las Vegas Nevada 89107

Okay so here is my challenge. Purchase Price $90,000 in a great Las Vegas Spanish neighborhood. Had a tenant for a year, cash flowed positive. Tenant moves out, do a complete rehab top to bottom including a new roof with my crew, no detail is untouched. This house is gorgeous inside and out. As always we pay for an appraisal so we have an appraisal in hand when we market the property. We are in the rehab $21,000, appraisal comes in at $140,000. We list on the MLS for $147,999. Bang within four days we open escrow with an $143,000 FHA deal. Then again bang two days later, we get a second offer, FULL PRICE Conventional offer. In less than a week we have two offers but because we took the first offer and escrow is open we are looked in and $5,000 shorter.

So, the question is, "How long to market before we even look at offers?" I know with many Bank REO's (HUD) we had to wait until they had listed for 30 days before even submitting an offer. Should we perhaps follow that philosophy?

Maybe not 30 days, perhaps on the MLS, "hey we are taking all offers and will review them but will not respond for XXX days or by a certain date"

Has anyone done this or had any experience in methodologies of maximizing the offer price? Any input on this would be greatly appreciated.  Don't get me wrong, I am very happy with what we accomplished. It's just that $5,000 covers the unexpected new roof for the house. It hardly ever rains in Las Vegas. We had inspected the roof it looked okay. But after we had painted the interior and of course it rained a few days later, I noticed a slight discoloration. We could have done a patch job, but in this instance it would not have been the right thing to do. 

So do you take the first offer (assuming you still make money) and run? Or, do you at least wait 30 days and see what walks through the door?

Originally posted by @Vincent Crane:

I think the quality should be driven by 2 things, what comps have, and also the value add of what you're putting in. Knocking down a wall to open up the space, tiling the bathroom, adding another bath, staining the cabinets, new flooring through the kitchen and living room, definitely new paint/ painting the trim, even some landscaping. But the things that might add quality but not value could be, more expenses appliances or material than what the neighborhood justifies, a pool, a massive deck, too much landscaping, new cabinets when really the existing ones would look fine with a touch up. It sounds like you've done a great job so far though. If you're adding more value than the other flippers around you, your houses are going to sell for top dollar and turn faster.

 You know what? They do! The challenge is the balancing act between the real value and comps or appraised value, so as not to over rehab.

Wow. The nugget here is that you did do the right thing with all concerned although you took a hit. I think the bigger issue here (apart from the due diligence component) is "contractors" After multiple flips with independent contractors, I decided to start our own crew in the third week of June. So instead of relying on others, we now carry the load ourselves. It means more work managing and digging through finding the right guys but at the end of the day I believe it is worth it. Payroll versus paying a contractor is a wash some savings not much. But we get our projects done in a timely manner the way we want them in terms of finish and attention to detail. Does anyone else run their own crew?

Originally posted by @Ryland Taniguchi:

Best approach is star rate the comps.

1-star - Teardown 2-star - Ugly home 3-star - Middle Class Home 4-star - Nice Neighborhood 5-star - Luxury

Rate with stars and go plus or minus. Your rehab should always be one plus over the comps. No more, no less. The goal is not to make a beautiful home, but to make a home one-up from the comps.

New flippers tend to make the mistake of over rehabbing the property for the area and making it their dream home. That can waste tons of time and money.

 Ryland, I really like your approach. Will definitely keep it in mind. Thanks. At the end of the day it still needs to translate to dollars and cents. Have you ever gone back at broken it down to dollars per square foot? For example a three star home is $x a foot, One star home typically $Y a foot and so on?

Originally posted by @Account Closed:

"At the end of the day I believe that you still have to deliver VALUE" @John Jack R.

Homes especially for the under $200k crowd the value is transitioning the clients from renters to owners.The average rent in Vegas of around $900 a month makes the competition for $150k and below homes fierce,based on the simple fact this is that their rent payment could be the same or lower than their mortgage payment.

Hey Steve you are absolutely right! First time home buyers can be a great market, but it is a very competitive market. I am not too sure if its the realtor or the banks banging on the seller for concessions. Anyway how do you feel about the, the growing family "it's now time to purchase our second home" market? We have had quite a lot of success in that area, the numbers are bigger, more risk and like anything buying at the right price has its challenges.

I just spent the last two days in meetings with potential flippers and maybe guys who have flipped a few years ago and want back in, or perhaps some want to be flippers. I don't know. But here in Vegas everyone wants the $180,000 to $250,000 family house in a decent neighborhood that they can spend $10,000 on fixing up and in less than three weeks rehab it and sell it. Excuse me?

Okay I know that there was once a time when you could pick a deal up from the street, do a mop and glow, sloppy paint, cheap carpet, the cheapest granite in the world, keep everything original including the gold light fixtures and gold trim and sell and make money.

But like everything else, all good things or what seem to be good things, come to an end. The MLS is littered with mop and glow houses with more than 180 Days on Market by these get rich quick flip artists.

At the end of the day I believe that you still have to deliver VALUE. Which means making the home within reason, the best that it can be with attention to detail and giving the home creative fixtures and touches and finishes which the potential home buyer would not see anywhere else. This by the way, takes money, creativity and thought. More importantly thought and time. Personally, I could and would never do, a mop and glow. Where is the value creation in that?

Hey when I sell a house and its a skinny deal at least I know that the buyer is now living in an awesome home that I, my crew, and the new owner can be proud of. One thing that I can say, is that even if I go over budget, our flips sell fast! And we get top dollar. There is still the balancing act of price versus appraisal versus what we have in the project. 

I am not sure about other parts of the country, but Las Vegas is notorious for people spending zero dollars on their homes after they buy them. Good News for me, because the 1988 Family House still has the same white tile counter top. Plastic one piece bathrooms with tub and shower, original carpet and tile and thirty year old toilets, sinks and water stops. Which by the way in our rehabs are completely replaced.

Why would you rehab a $300,000 house and not put in a new toilet? What the $98 is going to break you? Yet I see it all of the time. And then you wonder how come it's not selling?

So, if you really believe that you can rehab a 1900 square foot family home with $10,000 dream on, but people do and it's always, what I call a basic mop and glow.

To make a point, I took a 1292 square foot cement brick (built 1964) house in a predominately working class neighborhood. We had purchased it for $90,000 last year, and it was a cash flow rental. When the tenant moved out, at the end of May 2015, we decided to rehab and flip it.  So we spent about $18,700 which included a new roof (that's another story). My partner kept saying this should only be an $8000 rehab!! We started the rehab in third week of June, finished the last week of July and went on the market that same week on July 29th. We always pay to conduct our own post rehab appraisal. The appraisal came in at $140,000 and the house just went under contract on August 3, 2015 for $143,000.

At the end of the day this rehab came in at about $15 a foot. So I have two questions;

1. What is the best formulation for rehab estimate?

2. Should you not have enough upside in the deal do to more that a mop and glow? In another words if you cannot deliver a value product why even do the deal?

3. What are your thoughts on quality versus profit or no profit?

I have attached the final virtual tour so that you see the final product. I should really post some before picture so you see what it looked like before.

Anyway I would like to hear your input on the questions I posed and also please let me know your thoughts on the project. Just click on the virtual tour below. Thanks :)

Nebraska Virtual Tour

Hey guys thank you so much. I am in total agreement, sometime it's nice to do a self check and get some validation.