All Forum Posts by: Lesley Resnick

The calculation is the calculation.  It has been the standard for as long as there have been mortgages.  They are disclosed along with a huge list of other items no one reads.  How many people have actually read what is in the folder you get at closing?

The biger issue is what is the real cost of the money?  After tax deduction and inflation, the current cost of money is almost ZERO.  

Interest rate 5% 

30% tax bracket

net interest after tax 3.35%

Inflation average 3%

Net interest cost.35 

Futher, this does not take into account, leverage and appreication.  

Unless someone is going to lend you money as a gift, it is just a cost of doing business no different than the cost of materials.  

It was a cash purchase and was able to cash out after 90 days.  IT IS EXPENSIVE, but can be worth it.  Shop the loan, there are so many different programs.  Some will offer 90 days seasoning ,but require 5 years minimum commitment. 

Sounds good.  Feel free to reach out.

Is that an individual plan or a group?

I think we can all agree that it has become more competitive and margins are tightening.

Profitability is determined by the 4 horsemen

Roof 

Plumbing 

Electric

A/C Heat

They don't necessarily sell the house, but will keep it from getting financed and ultimately closing.  Further, the system prices continue to escalate at the same pace as home prices.  

Thanks James.

Sadly, you are the only response.  A post about Home Depot paint vs Lowes paint would get more interest.  lol 

Thanks everyone.  I need to make some time to update more of the process.  I will ty to get to it next week.

One of my biggest expense as a self employed Realtor/Investor is health care.  I do not have a company sponsored plan.  I am looking into setting up my own plan.  I can get a small business plan and include my 1099 employees. 

 Has anyone done this?  

Is it a better option than just buying HC on the open market?  

The ibuyers as they are called are a product of later cycle RE.  They are burning VC money and will eventually run out.  The model does not work in a flat or declining market.  It requires a HUGE volume of cash.  Buying at market and reselling does not provide for a strong margin or a going concern.  Buying below market and improving the property is far more viable.  The carrying costs are going to be their death.  If days on market go to 90 days, then they will be in real trouble.    They have the same fixed costs insurance tax, interest, materials as everyone else.  They have the same labor problems as any RE investor.  Finding and managing trades is difficult.  They may have a lower labor costs, it is not enough to make them profitable.  While they advocate that they have scale of magnitude and volume, I question that statement.  If they are willing to pay more for a property and the other fixed costs are the same, then the model does not work.  Further, they have a team of highly paid executives and accounts on staff.  VC do not care about profitability in the short term and only growth.  

As they advocate they are changing the market, but are they improving it or just burning VC cash?  They will change the market values as they push values up artificially.  

A lot of good advice.  I have come to learn it is actually called a sandwich lease and people do use it as a strategy.  It strikes me as something a motivated seller would take on, an alternative to wholesale.  It is not a fit for me and I am still not convinced it isn't shady.