All Forum Posts by: Jesse T.
Jesse T. has started 5 posts and replied 1198 times.
Post: I am dumbfounded by the high prices investors are paying for property.
- Herndon, VA
- Posts 1,231
- Votes 324
Originally posted by @Account Closed:
This happens to me time and time again. I just got off the phone with a seller of a house in Florissant MO who told me that 5 other people made offers on his house and that my offer was less than half of what the next highest offer was.
I offered $20k on a house with an ARV of $100k. It needed $41k in rehab (and I know I can get my rehabs done for much less than most too.)
This means that someone else offered more than $41k. But why, how on Earth can they do that? Maybe my comps were off, but they can't be that far off.
Here is what the numbers look like with a $41k offer. And they accepted an offer higher than that.
$100,000 sales price
-41,000 purchase price
-41,000 rehab cost
-12,000 other cost
-----------------------------
= $6,000 profit
This is not a good deal. I have seen this happen hundreds of times in the last several months. Am I missing something? Why are so many people paying so much for properties now?
It looks like the property would support a 29K price according to the 70% formula. With a slightly higher ARV - the 80% formula could support a 41K purchase price.
Does your estimate include items that don't have much resale return? It maybe an investor left out some items that should be done, but won't increase the resale value.
A buy and hold investor with their own capital could have lower other costs and may end up all in around 85K and renting out at $1000/month.
An owner occupant who is all-in around 80K could refinance in a year and get "100% financing".
Post: Petition for BP to Discontinue Wholesaling Discussions...
- Herndon, VA
- Posts 1,231
- Votes 324
Originally posted by @Jon Mason:
I think it's funny to hear "real" investors say that if they have too much going on they'll occasionally wholesale a deal and they feel they're justified in doing so, but if you're a wholesaler and you do this repeatedly, you're clearly morally bankrupt.
The party who generally is damaged by incompetent wholesalers is the seller. For the most part a seller doesn't care who ends up buying their property as long as they end up with the amount they agreed to sell for at the time they agreed to sell.
Post: Petition for BP to Discontinue Wholesaling Discussions...
- Herndon, VA
- Posts 1,231
- Votes 324
Originally posted by @Jay Hinrichs:
However from a real world and practical matter I can attest that wholesaling is a very large industry on the sub 100k markets in most mid west and deep south areas that I work. My average deal flow is right at 200 files active at anyone time. out of those 200 I would say that about 30% of what my folks have bought has been brought to them by a wholesaler.. And I see fee's from 1k to 10k with 3 to 5k being fairly common. And I am just one little guy sitting in his home office in Orygun. Being the one who funds all these deals I am privy to the HUDs so In essence I am the one paying the wholesale fee's since its our money.
How do the fees compare with typical real estate agent commissions at those price points?
It seems if they are generally in line with agent/broker commissions - the argument that wholesaling as a primary strategy is anything other than unlicensed brokering gets even weaker.
Post: Explain it to me like I'm 5: How do you get rich in real estate? Seems like it takes many many years to get positive cash flow.
- Herndon, VA
- Posts 1,231
- Votes 324
The entry point is what turns off a lot of people to real estate investing. It usually is a lot of work for not a ton of returns. However if you buy a property with the potential for appreciation, rental increases and pay-down the debt - the numbers look a lot better in a 5 to 10 year time frame.
Post: In Maryland (Should I Buy and renovate or Rent?)
- Herndon, VA
- Posts 1,231
- Votes 324
I agree a duplex or house hacking would be a good way to get started. If you haven't owned you may even be able to take advantage of a first-time homebuyer program. Just make sure the residency requirements match your investment plan.
Post: Petition for BP to Discontinue Wholesaling Discussions...
- Herndon, VA
- Posts 1,231
- Votes 324
Originally posted by @Account Closed:
A person that markets for purchase, markets for resale and signs purchase agreements is involved in REI. Just like an agent, a property manager, rehabber or landlord. There is no one way that people are "wholesalers". The idea that all wholesalers use weasel clauses is ridiculous. The idea that everyone who wholesales doesn't have cash to close isn't based in fact. Not all wholesale deals close via double closes. There are also options and assignments. Some wholesale deals involve serious problem solving (title or lien or code compliance), some involve very difficult tenant situations. Some involve very challenging seller scenarios that cannot be met by an agent listing. If you've never encountered one, I have tons of examples.
I think most problems with wholesaling are based people starting out as wholesalers and not having the ability to close properties. I think the examples you provide are where someone uses their experience and connections to connect a property to a buyer at a higher value than the original price. With most new wholesalers they are really just throwing offers against a wall and seeing what sticks and then repeating the process with mark up on the sell side.
I think wholesaling/assignment can be a very useful strategy for investors/flippers who may have too many properties under contract.
Post: Newbie looking for advise on how to market a home
- Herndon, VA
- Posts 1,231
- Votes 324
How much do you owe on it? What has it been renting for? How much could you bring to the table to close?
Post: Niche as marketer for real estate - how to structure the deals legally?
- Herndon, VA
- Posts 1,231
- Votes 324
Are these properties listed by an agent?
You might try approaching the broker and seeing if they would be agreeable to some type of arrangement. Maybe you offer the first property for free and then offer it to agents at a flat rate - paid at closing?
Post: Cash-intensive house flip
- Herndon, VA
- Posts 1,231
- Votes 324
Couldn't you buy it for cash and then take a cash out loan after closing if you are living in the property?
Post: seller financing to home occupant - Dodd-Frank
- Herndon, VA
- Posts 1,231
- Votes 324
What will prevent the tenant from qualifying for traditional financing?
It looks like the Ohio First time home-buyers program only requires a 640 credit score:
https://ohiohome.org/homebuyer/first_time.aspx
How would the payments on a 15 year loan compare to the current rent? Even if they started at 100% LTV(at a 4% interest rate) they would be close to 30% equity at 5 years and hopefully able to finance conventionally.