All Forum Posts by: Jeremy Horton

 See the "average" agents where I'm at are horrible - they are average joes, that became a RE agent in 2020/2021 when houses sold themselves. I have to direct them on what to do...example...I want to know if the house ever flooded - I had to tell him to look at ALL the past disclosures from this house, look at the past disclosures of the neighboring houses. Simple stuff that you would assume they would automatically do to answer my question. 

So simple to pull comps - lets see what sold in the same area, that's the same size and a 3/2. Simple. 

Let's fill out some paperwork that can be downloaded from free on the RE commission website. 

Let's try and schedule a time to show the house. I can do this myself on my own schedule as well. Only person I like is a really experienced inspector, just in case I miss something or don't know exactly what to look for. 

I had an agent that I contacted to put an offer in on a MFH house (this was someone, at the time, I had a exclusive agreement with) - come to find out when I was making my offer he was representing another buyer for the same property! Seems unethical to me. Don't know how he can have my best interest in mind when he has another buyer and he knows what we both offered. Now did he do anything explicitly wrong...maybe not. But he told me this guy had "deep pockets" etc. Same guy advised not to make a offer on another MFH unless it was 15k over ask...the place sold for 5k under ask...I always came up with my offer price, was never advised on what to offer or what might get the house. 

Another reason I won't sign an exclusivity contract. I have several agents that I use now AND it works so much better. They know if they bring me something good, they will get a solid offer. If they can do something for me while I'm working out of the country, they get the deal. I'm tired of most of the BS from "agents" that don't put in the time or effort to make a 4-5k commission several times a year. This is another reason I have turned to off-market properties - because using an agent has proven to be a waste of time. 

Maybe I've just had "bad" agents in the past - but they have offered nothing to me to justify a 3% commission. I am a RE agent myself now and life is much easier, and I save money and time. 

I would love to have a GREAT agent though, I hear about them but have yet to come across one. If I ever do, they will get every deal from me from then on out. 

Now I am speaking for my local agents - I have met some awesome agents out of the state!

 This is the key - Most agents do not provide the value of a 3% commission. I can get an agreement to sell signed and go to a title company and save myself thousands. You need to bring me value if you want commission, I'm sorry but I'm not paying someone to fill out some paperwork when all of it is available on the state real estate commission website. 

Bring value by bringing me off-market opportunities, being more available than I am, scheduling appts faster than I can, giving me more and extra info than I can get myself - you need to do it better than me otherwise you're straight up not worth the time or effort. 

This is a big part of the reason I became a RE agent myself - they aren't fast enough, they don't know more about prices etc etc. The only upside they have is the MLS and pulling comps - but guess what? I can do that now too. The MLS system has really created being a real estate agent as a career - to an extent!

With that being said - there are some awesome agents. They get the properties first, they have awesome relationships/networking you can leverage to help your business, they know rents/prices, they know selling agents, the best lenders, which areas are seeing lots of growth, which may be declining, the best schools etc etc. They do MORE than fill out paperwork and let you decide everything else. 

 Neither your property tax or insurance will go down if it's a rental 

Property tax will go up (assuming the assessed value is the same) because you cannot legally take a homestead exemption (assuming you can in your state)

Insurance will always go up as well - Ins companies feel that an owner occupant is less of a hazard than a tenant 

@Theresa Harris

Wouldn't be hearing from any complaints from me, that's for sure!

Regardless, it can be low taste to do in indoor common areas, but it doesnt tachnically sound like hes breaking any rules. That being said, I do my yardwork shirtless. Have been hollered at by a few cars driving by (nothing negative said, usually something suggestive by the opposite sex). Gives me a tan and keeps me from doing extra laundry tho

 Pretty optimistic on the average occupancy rate in my opinion - I think it's safe to assume you (as well as any newbie) will do worse than what the market shows initially. Now this is not always true, but it's better to underwrite on the conservative side. Now how to underwrite on the conservative side...underestimate your ADR and occupancy, overestimate your interest rate etc. Skew the numbers a bit to make it "harder" essentially. 

2019's numbers are safer to use, 2020 and especially 2021 were outliers. 2022 I believe is somewhere in the middle - but there's lots of people holding the bag, because you could've bought anything in 2020/2021 and it went up, stocks, RE, used cars etc. Now...? Not so much. Those that bought expecting 2021 rental numbers are going to be in trouble, I see it frequently. I'd rather buy at a high interest rate vs a high price all day long - I can always refi that rate, you can't do anything about the price you purchased at (and you likely got a low rate in 2020/2021, so if you ever refi...guess what, yep, your rate will go up significantly, so hopefully you've paid down the equity quite a bit otherwise you're stuck).

I would also be careful in the Smoky Mtns, there are a effing ton of cabins, very popular area. I don't believe it's saturated but everytime I go there is new construction and big players involved. Idk, I like it but I don't at the same time...just feels like a lot on uncertainty. It would be long distance for me too. 

How will you be managing?

I personally would sell - if it's not getting showings at 450k - there could be a few things: bad location, needs work or priced too high (very common these days) - the market shifted pretty quick and it's not 2020/2021 anymore - lots of people still think their house is worth 2021 prices. Lots of areas have dropped 10%+ in price so dropping 40-50k off the price is not unheard of - it's fairly common where I'm at, especially on the more expensive properties. We had a house just down the street listed for 499k, dropped to 449k and sold for 435k

On top of that a $250/month cashflow is a really low return on equity - I'd drop the price, sell it and move that 220k somewhere where it can do some good for you. Even if it did "work" as a rental the ROI will be so low, I don't think it's worth the time, hassle, or opportunity cost. How many other rentals to you have to potentially offset this one? IF you have several, you could keep it as a appreciation play, if it's the only one, I'd personally move on.

IF you did decide to make it a rental, you will likely lose money - at the very best you could break even. Unless the house is in a perfect location (which I have to assume it's not because it hasn't had any showings) I'd keep it. 

Sounds like you'll do fine if you decide to sell it anyways - likely make a nice profit and get to move on with life. You just won't be getting top dollar, which is the case with most things 

I would partially agree 

A $500/mo cashflow on a 100k property is not going to outpace even a 300k house that appreciates highly.

I don't see how it effects the speed of building your portfolio either - the cash flow doesn't matter when I'm buying great deals. Either way I can take money out because I've bought a great deal, renovated the property and it appraises for much more than what I bought it for. The appraisal value is what effects what I can take out. Even my properties that were vacant when I renovated and did a cash-out refi, lenders looked at the appraisal value and market rent. My local bank will lend my 85% of the appraisal value up front on a DSCR loan - before I even start a rehab

Equity is what is really going to make someone wealthy in the long run. I mean how many houses that cashflow $500 a month would you need? Once you subtract out repairs/maintenence/cap ex/PM etc, you're left with half of your "cashflow". 

That being said I don't buy properties that negative cashflow either - I believe you need some kind of safety net and I'm in this for the checks. Unless you have some BIG money and can withstand changing markets I think cashflow is the safe bet as well. But I still believe equity is what is going to make you rich. 

Harassment for what?

This was left really open ended

What's the revenue of the AirBnB? What is it? House? Multi Unit? Location?

First step is funding - house hack maybe since you intend to live in the property? Come up with the 500k downpayment...partner or take some type of loan

Seems like a high risk and big 1st purchase for your experience level - that's just my personal opinion

@Michael Zane

How many mailers do you send?

This is the exact route I'm going to go here in the next month.

I love the strategy, yes time consuming, but targeted at the best properties that give you a better chance of success.

I'm gonna have to send you a PM man!