All Forum Posts by: Michael Lee

@Jonathan Pflueger Appreciate your response. All good points but the 'waiting' part really hits close to home as I'm very impatient and this is def one of my weaknesses. Thanks

@Mike Cumbie Gotcha -- our market is doing fairly well but def nowhere near 96%, at least not for the type of properties I'm talking about.  The first one was about 70% but again, I think this one is significantly overpriced (it's been on market for over a month and agent told me they haven't gotten much activity on it so far). So if it was more accurately priced, my offer would be about 77-80%...same for #2 as well.

@Will Gaston @Andrew R. Lucas Any thoughts?

Hello all,

It's been a frustrating couple weeks for me as I've been making offers to try and purchase a 2nd rental property so thought I'd ask for some feedback and/or tips on how to get better at this moving forward.  Any suggestions are welcome!

Offer #1: SFH in 'A' location for my market (Columbia, SC). List price, in my opinion, is about $20k too high based on comps and talking to other experienced RE professionals that know the market well. I think ARV is 135-137k max and it needs apprx 15k in repairs. So I offered 105k purchase price, As-is (I'll omit other relevant terms but fairly standard on those) while also sending a detailed chart of recent comps as analysis behind my offer (not in a pushy or know-it-all way). Well I feel like the other agent didn't do a great job explaining the context of the offer to the seller, and it was implied that they were very upset by the 'lowball' offer and countered back at virtually list price. I said that was fine and would circle back at a later time but when I asked the agent for details on how they got to their current valuation, I didn't really get a good/logical answer.

Offer #2: SFH in 'B+' location. This is a property that's been in a family for long time but two siblings now want to sell. Priced well for the area but does need about 20k in repairs/updates. Also, it went under contract almost immediately after listing (I'm assuming for full price) but recently came back on and based on context, I think it got ripped apart during inspection/termite report. ARV is about 145-150. I offered 92k purchase price, As-is, and was countered at 115k. No way I am comfortable paying anywhere near that with the risk involved so this one doesn't seem very promising at this point either.

Again, I realize I'm not exactly making full-price offers and most sellers would/should turn them down. But the fact that I'm getting shut down has been disheartening a bit. Do I just need to chalk it up to the game, move on, and keep swinging away or can I work on my approach to get some better results?

@Staci Kou I feel like @Will Gaston's advice is pretty solid here. One lease is much stronger for a variety of reasons (many of which you prob already know) than individual leases but mainly for students, it protects you from a tenant bailing on the house bc of an issue that you have nothing do with, i.e. roommate drama.  

From a bigger picture standpoint, I would just say to go with your 'gut feeling' which is already telling you to hold out for the right group. I just went through a similar experience with my first student rental and also thought I needed to lock in the first group that stepped up. But with students (and their parents), it's so crucial to lay out your rules/policies bc once you acquiesce at the beginning, it makes for a loooong year

@Will Gaston Yup -- either time works depending on the day

@Zack Clopper Congrats man! Sounds like you got a solid property...very exciting for it being #1. I too bought my first rental earlier this year and posted some of the details a few months ago. Hope yours goes as well as mine has been going so far (fingers crossed haha).

What do you think it's worth now? Would you try to BRRRR it to get your cash back out for #2? That's what I plan to do in the Spring.

@Will Gaston Understood...makes sense

I went with First Palmetto Bank mainly bc I knew the commercial banker and met/talked to him several times before I was even ready to purchase. He gave me some good initial advice on what they look for on investment properties as well as the steps I should take as I got ready to purchase, e.g. opening a business checking account with the bank, which is obviously minor but still established the relationship. From that point, I just found the deal, got it under contract, and he took care of the rest. It was (surprisingly) a very smooth process without any real hiccups.

I'll add onto your advice about investors constantly seeking out new lenders and say that for any new investor, even if you're not necessarily ready to purchase in the immediate future, take the small but necessary steps on the front end so the actual process is that much easier.

Great info @Will Gaston you are crushing in these recent posts

I, too, went with a commercial loan from a smaller community bank for my first buy-and-hold and had a positive experience. You're right in that they def value each client/loan more and have more flexibility. Since you touched briefly on the difference(s) between commercial and traditional financing, can you elaborate further on your thoughts which is better/worse for an investor looking to actively grow their portfolio?

Excellent, well-written post @Will Gaston 

Not sure if/when there will be an oversupply of the student apt complexes but I'd def agree that there will always be a strong market for SFH or basically any non-apartment style housing right around USC. Just looking back at my time there as a student and talking to my friends who rented off-campus housing, I think juniors/seniors truly 'love the idea' that they're living in a house (albeit for one year). It makes them feel independent and grown-up almost; not to mention the bragging right they have amongst their peers. But this obviously leads to the above-mentioned pros and cons to student rentals as well.