All Forum Posts by: Jon Reed

Renovation cost are very specific to your region. It cost me much less in Missouri to do a bathroom remodel than it does in California or New York. 

I would say start networking with local contractors and partner with them to help fill this knowledge void. 

Is the boyfriend on the lease or is it just in the ladies name? 

Is the issue that SHE wants him to move out but he refuses to? Sounds like that is their personal issue and not your issue as a property manager. If she is still paying on time and abiding by your lease terms then I would have her work it out with her X in a civil court... or she can put in a restraining order and then he has to move out or get arrested.

In your example.. that would not be a good BRRR deal if your goal is to get all your cash back out.

You want your Purchase Price + Renovation Cost = 80% of Market Value

and you use a hard money lender for 100% of the purchase price and renovation cost (if you have no money to put in yourself). Or you can purchase an owner financed property with 0% and get a hard money lender for just the renovation cost.

So back to your example.... a 100% money out BRR would be 

Purchase for $94K + Reno $10K = $104K to refinance (80% of of market value) 

After refi take that money and pay back your hard money lender. Boom! Property owned with $0 out of pocket.

It all depends on the price and how much room you have in your budget for renovations. If you are wanting a quick/easy flip then I would avoid leaking windows or roofs.

A leaky window can actually rot out the base of an entire exterior wall and lead some major structural rehab work... also... mold... there will probably be mold behind everything. 

Where do you plan to make your money from a rental? Short term (monthly cash flow) or long term (what does that even mean; appreciation upon selling out) ?

I say that you create wealth in the long term but you make money in the short term. We are currently in year 2 of our 10 year plan to own 20 doors free and clear. So for the 10 years we make a minimal cash flow since the money earned is being re-invested in the properties to pay down the notes. At year 10 all units will be owned free and clear and our net worth (our wealth) will be significantly higher. So our long-term goal is not selling out but having a multi-million dollar portfolio with zero debt.

Is it still practical to continue acquiring rental units later in life? If a person is over 50 years old, are long term rentals still a good vehicle for investment?

Yep! I would say from age 50-60 a person could acquire a huge amount of wealth in real estate. Then at age 60 start selling off the properties and migrating the wealth into more stable (and low maintenance) investments such as bonds.

@Eric Denton Google "1031 Exchange".

Thanks for that call out Kevin. I did miss speak.. if the seller asks you (as a RE agent) how much their home is worth.. and you tell them that you agree that 50K is the honest market value (when you know it is 100K) then you can get into legal issues. By answering that question you created agency with that seller. 

If you do not answer any of their questions and direct them to another 3rd party then you will not create agency and be safe. 

What this did do is help point out just how tricky you must navigate working with un-represented sellers as a Real Estate Investor/Agent.

Just had a full conversation about this topic a few minutes ago:

https://www.biggerpockets.com/forums/12/topics/787809-is-it-worth-it-to-get-a-real-estate-license?

Moral of the story: A good full time realtor can make you more money than you could ever save in commission.

@Stephen Beckwith

Yep, lets say you came across a nice older couple who wanted to sell their home for $50K and they ask you how much you think the house is currently worth. If you know that home is worth $100K as-is but did not tell them that then they could take you to court since you are a real estate agent. If you are not an agent in that situation you do not have any legal consequences... you would just be bit sleazy haha.

As for making an extra 2-3% per deal for just 2-3 homes... I would say it is still not worth it. Even if you sold three $250K properties per year and got 3% seller side commission that would only gross you an extra $22.5K... half of that would then go your RE broker so now you are down to $11.25K.. Now half of that will go to taxes.. now you are down to about $6K net per year. So for $6K a year would you want to do all your own open houses, property showings, property photography, mls listing, phone call screening, contract writing, real estate agent banter/negation, and so on? I would hope not.

A good full time realtor can make you more money than you could ever save in commission.

@Tyler Bobo

Listen to the majority of people on here..

Keep the deposit and move on. It is not worth the work, and additional cash, to chase after netting a few extra hundred bucks.