All Forum Posts by: Jay Hinrichs

@Zoran M. 

last thing I want is more rentals out of state.. I sold my 350 SFR's in Oct one the happiest days of my life along with selling the boat and the Airplane.. WEll the airplane was a tough one.

My point is there are performing assets in every market especially multi family.. Were you can get tax returns review leases and get a inspection report that is truly 3rd party and an appraisal if your financing.

As I stated The Aussies got so taken advantage of from Marketing companies and shady TK companies that the ones left in business won't put their clients into anything that is not already rented as well as rehabbed etc...

And of course every one kind of dances over the MASSIVE theft issues in these areas.. People on the west coast that can afford to buy these homes don't live in those kind of neighborhoods ( like the original poster says Beverly Hills  I don't think they are cage their condenser units there or barring up the doors and windows  LOL.

I can pretty much 100% state this as fact.. Most of the folks that venture into buying TK out of state that is lower end C and D class will not achieve anywhere near the returns that are stated on the marketing materials. and would in fact do much better investing with a very reputable hard money lender in LA or Bay Area over time.... Like Norris group and other premiere lenders that take in private money and pay 7 to 10% returns.. those are real they are semi liquid and far safer than trying it on your own.. And are truly passive.

@Mike McKinzie 

  Exactly Mike why buy something with no history... especially multi family deals. there are thousands of them up and running.. why the need to buy SO CALLED turn Key.. Its really just a rehabbed vacant unit with no history to back up the performance claims..

@Joshua McGinnis 

  One of the issue you may have been running into.. is that the upper mid west large cities have really funky rules about utilities.. In many cases you need to have a water or sewer cert from the city before you can close escrow.. back utl bills in Detroit attach as super lien. etc etc. It can take a lot of effort to get utls turned back on... But then again these guys should know this and have this done before presenting the product.

The other major issue you have if this was C or D class Is THEFT  in most cases the TK guys I finance will not put major appliances into the homes until the tenant  moves in.. See the thread of the lady in Memphis who keeps getting her house broken into and things stolen during the rehab process. Most Australian TK marketers will not sell a home anymore unless the tenant is already in and they can review the lease and get an inspection. Buying prior to tenant moving in is a HUGE risk in my mind in these areas. One because a vacant unit has such a high probability of being robbed or trashed.. And or negative cash flow to start. 

Its a slippery slope with these properties for the TK or rehabber.. put everything in to satisfy the buyer and the buyers inspection only to have them stolen in a the next 2 or 3 days.  There is not one person in  this business in the mid west or out east that has not had this happen to them.. stealing condenser units is a sport in those areas just look at the product and you will see the units are caged.. Bars on windows and doors etc. Its just the reality of trying to buy properties that have very high rental returns.. RISK =REWARD 

I don't understand if you want to buy multi why you would not simply employ a good Commercial broker who specializes in this field.. look at units that are all tenanted and up and running.. So you get 2 years of history at least.. Buying these units based on the nice TK or worse yet the marketing agent has no skin in the game is in my mind counter intuitive.

There has to be hundreds of multi in Cleveland listed on MLS and up and running... Just go about it like you were buying a multi in LA and or any other investment.. Have your realtor show you them.. Get third party appraisals and do your inspections review the past financials and review the current leases.. When you buy a property with no history how do you know how your going to do its all blue sky at that point.

@Curt Smith 

  who cares what the broker makes... If its a deal its a deal.. bottom line.. And he is most likely worth it... Its not like your paying him a retainer up front.. If he brings you a deal that pencils and if its off market it could be a much better deal than you could get yourself....

I think back to my days of selling dirt in N CA. during the early 80's and 15 to 20% interest rates... It was darn tough to sell anything and especially ranch land with little or no financing.  But I specialized in it and that's all I did.. I charged between 15 and 25% for each sale.. Most people would not list with me at first ( actually no one did) but when they had a year with C 21 and their 6% with nary an offer.. they would give me a try... I also facilitated these deals because I worked out terms to get it sold.. the other brokers would just take orders from the clients I would sit down with them and explain the benefits of owner finance.. and that I could get them more money for the property than listing with another broker who only offers the property for cash.. So then I would give 80% of the downpayment to the seller and we would split the monthly payment until my fee was paid. Many of these commissions I made took 5 years to pay off but it was great residual income and I earned my 25% fee's.. I was selling 40 to 250k properties back them.. Sonoma Napa Mendecino and Lake Co/s... when the pot growers started in the late 80's we then could sell for cash.. And I was one of the few that knew how to deal with those guys

too complicated for me... its always asking for passwords I can't remember LOL.. for me I like the direct action reaction you get here if you want to talk about real estate.  I do like it when some old acquaintances or friends endorse me... that's nice.. And its really weird who looks at your profile.. and scary..

@Jolynna Mccune 

  the advice of talking to neighbors is also a very strong one.. As well make sure you check with insurance and make sure your covered.

On a follow up to last post on my Madison MS rentals I self manage those from Oregon.. The class of renter is so vastly superior that I do not need a PM.. I run a craigs list add. and Have a realtor right up a lease for 500 bucks... then I collect the rent and I have a killer handyman.. Killer handyman is one very key component if your self managing.. IN this instance PM does me no good as a matter of fact my performance is much better than when I had them with PM... I react quicker to maintenance and stay right on top of them.

@Martin Scherer 

@Rob Cee 

Martins rentals are in the northwest.. what I am talking about is the mid west north east grimy cities southeast... Basically larger towns and C class neighborhoods were houses are 20 to 70k and have life long renters in them... What Martin is talking about is a completely different kettle of fish... Coeur d' Alene does not have hoods and ghettos. The point is most out of state investments for low end rentals are in areas that have 50% or better rental populations in the SFR product.. this is not he case on the West side of the continental divide per se. And its ASSET class. I have 11 rentals in Madison MS Ridgeland MS that I bought brand new for GoZONE tax benefits. paid 150 to 225k each for those SFR's they rent at 1400 to 1700 each... some of my very best rentals. Then you go to Jackson MS and buy 30 to 60k homes and your right back in that rental demographic that is very tough to manage even a PM has a very hard time with it.. and your turn over uncollected rent maintenance kills you... To top it off my Gozone's I am now selling and I am getting what I paid for them back in 07 and 08 which I think is a huge win.. Any turn key houses bought prior to 08 in the mid west I highly doubt anyone can sell those for what they pay for them.

Plus in a place like N Idaho the properties are bought like CA.. basically from brokers on the open market with some wholesaling nothing like the mid west were most transactions are off market.. FAct is the local investors are just not going to pay what a CA person would pay for the same house... Because they KNOW how tough it is.

@Micheal Waldrup 

  If your going to go cheap just make sure you have a great team and you can be right on top of them. But your still subject to the type of people that live in those types of homes.. Can't get away from that.. Your not going to get superior tenants that want to live in such low end areas.   If I was going to go back into low end and I was fully immersed in it until last Oct.  when I sold my company  I had 350 of these house's in 4 states all mid west and I live in Oregon.. you can contact me personally and I can tell you how I set this up so we succeeded.

thanks for the responses, I will have to delve into the following not following and what the extra items folks can see. I will be more weary of just accepting colleague requests in the future as well.

@Steve B. 

Since you brought up Detroit lets take that as an example... Full disclosure I started my out of state HML in Detroit in 2003... and stopped in 05... during that time I did at least 200k deals... We did hard money loans at 40 to 60k rehabs were 20 to 40k investors were paying 80 to 100k plus per home they would get a rate and term refi and refi my HML out in 90 to 120 days... everything was great...

Well lets fast forward to today.. were do you think those investors that paid that amount are today.. everyone of them put no money down and bought the 100 a month cash flow dream...well I would bet 90% of them defaulted to the banks over time.. and the 40 to 60k wholesale prices are now 2k to 10k... with a new batch of investors coming in and pay 50k to 60k...

Same type of numbers are true in many other markets but just not as bad as Detroit.

The best rebounding market I have seen is the BETTER parts of Atlanta,,, PHX and VEGAS along with of course West coast.. All other MId west or upper east markets are stuck where they are with no hope... Follow the hedge funds that's who is making markets now..

when the hedges went into Atlanta wholesale deals doubled in price in a year.. WE made a killing beating them to the market.. but exited once they ran it up...

there are some great under the radar markets out there were you can buy direct and cut out the over zealous mark ups.. I but you have to find them.

Just look at the LA based Marketing companies.. ONe day they like Atlanta then they like Philly and don't like Texas  now they love Texas and don't like Atlanta .. Can you say they only like were they get paid !