All Forum Posts by: Jay Hinrichs

@Derek Moya 

  if you can get to the sale you should go its at the Washington county sherrifs office in Hillsboro and see if an investor actually buys it.. If it reverts ... then it will be some time before you hear anything.

@Account Closed 

as K says and others the Oregon law is on your side in this instance.. Its why many in the bizz will not buy an occupied house in this environment. And why they have  contacted you and threatened you.

Recording a lease in Oregon though is a powerful tool, I know that first hand. .If I was leasing a property it would be the first thing I did

@Account Closed 

  agreed.. you have those in the bizz and those that are passive and the returns are far different for each class of investor.

The reason company's and marketing people hammer on CA for sales is simple this is where there is a lot of money... And who would need a marketing agent sitting in LA to sell Memphis or Philly properties they would not they would just sell them local. But the locals know the values and if the markets were devoid of outside influence's IE CA or off shore investors the values would reach a true fair market value ( much lower than it is being offered to CA investors).. As the locals would be using the 2 to 5% rule. When you have out side influence's creating sales that would normally never happen you get a false market values... the huge difference is you can put a property on MLS on the West coast and actually sell it for Appraised value.. Very tough to do in the mid west.. were the buyer pool AS IS is only wholesalers and TK vendors I learned this one first hand and at a huge cost for the pleasure of the learning curve. Why anyone in CA would think some LA based marketing person is an expert in markets they are not licensed to be in and or live in is befuddling

@Dustin DuFault 

  Correction on my weirder transaction.. What I bought at sale appeared to be a first but was in fact a second according to the bank as they said the first was reconveyed by accident. hard to fight in the courts with the big boys they can just out spend you.

@Dustin DuFault 

since the junior is a LOC there is the potential that the amount out on the LOC is small or maybe ( since your due for some good luck here) there is no balance it was paid in full. And a simple release is all that is needed.

I have gotten in this situation with Juniors on the west coast, but mine were weirder  bank said the junior was reconveyed by accident and is still valid.. the bank brought suit and we settled but what was a great deal became a break even deal so at least we did not get hosed.

Auctions from what I can see out your way are far more complicated than our auctions on the west coast.

@Matthew L. 

  in most areas once they turn rental predominantly they are rental  they are pretty much done. you may have the odd Owner occ purchase but that's pretty rare from what I have seen. With credit being a major challenge and comps.. can't have all these investors buying at the 2% or better rule  then say hey my house is worth double because that's what it appraised for.  Its a falling knife in that regard.

And when you look at folks buying housing.. at least in my experience as a home builder and retail flipper for many many years. People buying homes will generally do this.

1. get pre approved... and they need good credit as we know and DTI say 30 to 40% and they can afford a 1000 a month lets say. So they are approved to 120 to 180k or more.

2. they will shop for and buy at the very high end of their approval. I have yet to see many that get approved for 150k home and then buy one for a lot less... they always max out their approval.

3. in many of the 2% rule markert or lower end price points.. when you jump to 120 to 150k and up you can find new construction owner occ neighborhoods better schools etc etc so that is were they end up going.. They don't go to the rental areas and buy in areas that are over run with renters..

4. redevelopement of the inner cores is where this can happen but the low end gets displaced and new money comes in.. these are great path of progress plays and are happening in many if not all of the big cities across the US at this time.

@Matthew L. 

  or if Hedge funds come in and back into their cash flow using 1% or less rule and you have bought at the 2% rule  But Hedges tend to be pretty particular were they buy they do not buy ( by and large)  on the low end of the rental markets. I know when I sold my Atlanta portfolio they had very specific requirements regarding age,, Bd BA garage or not roof HVAC age etc etc.

@David Moore 

  Do you buy local? I see your in Minn.  were there are thousands of 2% deals to be plucked.  Do you buy direct? or are these all teed up for you as in your buying from a TK operator just providing funding and sitting back.

Or are you following the sage advice of J. Scott and doing it yourself and cutting out all the middle men and keeping those profits for yourself thereby creating a better buy for you that will move you up in asset class by the virtue of you getting the better deal.

Do you self manage or do you flip that to PM

these are important distinctions vis a vi other investor that don't have the benefit in living in the Mid west like you do. by just doing it yourself in all of the above you pick up 1% of the 2% rule right there. 

@David Moore 

  The point of the thread is not if you can find a 2% rule property,, of course you can any one can they are out there by the thousands...actually hundred of thousands.

My contention is that with this metric being a guide line and in investor heavy markets price's will not rise when the enlightened use this rule for backing into purchase prices. It will hold values down.. and especially as it relates to mid west and south east were there are a predominance of rental properties compared to other areas of the country.

then you tag that on to those that live in markets were the 2% rule for all intense and purposes does not exist, the buyers get frustrated because they think is not a good deal if they can't hit that  metric.. they then end up look far afield and taking risks they don't realize they took when they buy in areas were by the time the wholesaler the marketing company PM contractors and in some case's TK operators have all taken their cut.. they end up with a property in a pretty tough part of town that on paper gets 2% but reality is another story.. This is why the top echelon  TK operators chimed in on the thread and were talking that 1% was more in line with market and would in their opinons keep the west coast investor in a better asset class with more reliable cash flow.. There is no arguing that the lower end rentals in ANY market are management intensive and have sporadic performance at best.

@J Scott 

  I agree with your point about smaller rural towns in America that one can get in on the 2% rule, there are thousands of them from the Mississippi river to the east coast and pretty much anything in Rural Oaklahoma for example. Or rural farming towns that values are stagnant. And in the crash I hit the 2% rule myself in suburbs of Atlanta but no more with the hedge fund competition and of course with a highly organized mechanized capitalized business one can pluck out the gems.

The However is though that the average investor does not have those benefits if they are just starting out have limited capital can't just hop on a plane and spend a few weeks months checking all these place's out.. So they gravitate to what they can find on line and that usually leads to marketing people "TK companies etc etc.  And as Chris Clothier mentioned being a premier TK company they don't sell anything that can get to 2% and most TK companies don't.. When you take that same metric and try to get 2% you end up square in the Hood in most of the big cities people would consider investing in.. They don't think to fly to a major hub then go find homes out in the country or little 30 to 50k satellite cities in the mid west and east coast.. Nor do they have the ability to source at wholesale etc.  I know the locals do and do it all the time. But the locals are not going to pay more than what would derive a 2% rule or better thereby keeping values in check and not rising which was my point of the thread in the first place.

As you know there are many bad areas of CA having lived there like you did for years and me living in the bay area for 40 years I can tell you were they are.. But when you compare apples to apples these bad areas have values and rents substantially higher than many if not all bad areas across the country and real appreciation bad area or not.. and the flip side is these areas in the CA also depreciated in some cases tremendously like Atlanta did and other markets.

@Account Closed 

  made some of my best foreclosure buys in the good times.. 03 to 06... pay close to retail by the time I get done rehabbing the property went up 75k  ...Always deals but its crazy competitive as you state.