All Forum Posts by: Jared Viernes

Thomas S. thanks for your insight.

Alex Deacon awesome man. Thank you for your input. I really appreciate it.

Alex Deacon you don't have criteria you use to define the differences?

I have been listening to show 61 with Ben Leybovich and he said something that rang loudly for me. Paraphrasing he basically said you need to buy a C property in a B location and fix it up to a B property to bring in better rates and tenants. I am moving soon and plan on becoming an expert in an area nearby where I will live by driving for dollars, attending every open house and learning that particular market in any way I can. However, I have yet to actually decide on the location yet. I want to know how you would define a "B Location"? What tools do you use to help you to identify your criteria for B location across a zip code? I would like to define a particular zip code and become an expert there. Any other advice in figuring out first what market to become an expert in is welcome. Thank you all for your time and input.

Aaron Phillips let me preface this by saying that I am also very much a newbie, but the formula you are using doesn't seem right. ARV = after repair value Which is essentially an estimate for what the price will be at market value after repairs are made Since you are buying a distressed property that is currently worth much less than the average value for a similar house in the area, the repairs the rehabber is going to make will ideally bring the value of the house up to the ARV. The formula you want to use is: ARV x 70% - [repair cost] - [your fee] = your offer price The difficulties you will have as a newbie is correctly identifying the ARV and the repair costs, since you have no real experience figuring those out. The rest of the formula is easy. The best suggestions I have seen/heard is to the following: 1) find a motivated seller and give them an estimated range you may be able to pay for the house; but tell them it is dependent on actually seeing the house and set up meeting to see the house. With a great lead you can then easily bring in an experienced investor to help you close the deal for a piece. He or she will get an easy close and you will get to see how the process should go with an experienced investor. Make sure to make those relationships with your local investors beforehand. 2) if you want to do it all on your own, then the best way I have heard for a noob to estimate ARV is by developing a working relationship with a real estate agent in the area. Using the MLS and checking out Comps and previous sales the agent should be able to do it easily. You can provide value to the agent by providing them with leads that don't work out for you (for instance if you find someone with no equity and the real estate agent is experienced with short sales). You can best estimate cost of repairs by using a general contractor to give an estimate. Find that general contractor through other investors and you might be able to get the contractor an easy job by having him bring you the buyer he normally works with (win-win)! With an expert providing the ARV and the estimated cost of repair all you need to do is figure out what your fee is. Let's say: ARV 70% repairs fee 100,000 x .7 - 30,000 - 10,000 = $30,000 You make an offer of $30k; this is fair because the house requires repairs and the current market value is most definitely not $100k. As for your other questions with respect to contracts and title. Those would best be answered by your title company and the experienced real estate attorney you use to check the wording in your contract. Also, ensure you contract has an out clause which will enable you to get out of the transaction if you cannot find a buyer (something about dependent on agreement with your partner). That's my two cents. Which comes from listening to a lot of the BP podcast and reading books and the forums.

Josh H. Let me preface this by saying I am a total noob and am still in the learning phase and I don't know all the specifics of your deal. I personally would not be too concerned about appreciation as you will still be earning through cash flow and equity building (assuming you are leveraging with a mortgage). The only thing I would be concerned about if your property historically lost value. In your position, especially since your strategy is buy and hold; I would definitely purchase. Especially since the history of the property as a rental is so solid.

Kathy Johnson interesting. I wonder how different the rules are in each state. Thank you for sharing.

Dylan Brauner I'm also quite interested in this as an MBA student down in Wichita.

I came across the Federal Weatherization Assistance Program, while researching LEED construction this afternoon.  If you haven't ever heard of it, it is basically a program which pays to make homes more energy efficient by fixing smaller less expensive things like drafts etc; it is aimed at assisting those with lower incomes and who are more susceptible to changes in cold/heat (elderly or children).  Has anyone had any experience with renters getting this assistance?  According to the Kansas Housing Resources Corporation (see FAQ link below) the program is available to people who rent as long as the landlord signs off on it.

http://www.kshousingcorp.org/frequently-asked-questions.aspx

For anyone who has tenants who meet the income guidelines in the below links (Kansas and Federal guidelines), they could apply to get the updates.

http://www.kshousingcorp.org/income-guidelines.aspx

https://www.benefits.gov/benefits/benefit-details/580

It seems to me like a win-win especially if the tenants are paying for their own electricity/gas usage then it helps them out with their other bills making it more likely they will be able to continue paying rent on time, additionally it should bring more value to your property since it is more energy efficient.

Does anyone know the legal implications of encouraging tenants who qualify to apply?  It doesn't seem like it would be anything shady, but you never know.

Thanks gentlemen!