All Forum Posts by: Larry Turowski

Don’t do this. You’re already giving yourself a bad reputation. Stop now. Find your own deals. 

You do not need to get “creative” for this. Just find a local bank or credit union who will do it—assuming your finances are in order. They are out there. 

@Veronique Leroy I have 40 units and self manage. I don’t do any of the maintenance and I usually don’t place the tenants. I have 1099 people that do all that for me.  But I like having my finger on the pulse. 

Quote from @Dwayne Poster:

When asked 'do I need a Realtor', I will typically say yes, because you dont know. If you told me you dont need a Realtor and this is why, I might say, good for you. 

This is a good answer because the truth is it depends on you and your goals.

Let me just tell you about my experience.

Early on (2009-2010) I used a couple of investor friendly buyers agents. They could alert me to deals and pocket listings. I did buy a foreclosure that way. And I missed out on a home run deal because I wasn’t emotionally or financially ready for it.  But I wanted to flip, not hold rentals and most of the vast majority didn’t make sense, even back then.

Then I stopped using buyers agents and reached out directly to listing agents. My thinking was I wanted to get on their list of cash buyers when they had pocket deals and if they had anything, even though their responsibility is to the seller, not me, because they would get both sides of the commission they would want me to be the successful buyer. Usually this just meant that they would indicate where I would need to be to get the deal. This was before agents could freely share what other offers they had. I would ask, “Would it be a waste of my time and yours to write up an offer for $X?”

That was a different market, though.

Now I pretty much never buy listed properties. They are just not good enough deals for me. That doesn’t mean they wouldn’t be good enough for others given their goals

All in all, I agree that you are probably in a place in your investing journey where a buyers agent makes sense, and that may never change. That’s fine. We all have different goals. 

(These links don't work for me.) If you look at the listing price of those comps I bet they were much lower. In this seller's market (slowing down now) it hasn't really mattered that houses have been listed at 2021 or even 2020 prices. They've been getting multiple escalating offers driving the sales prices well above asking.

This may be changing as we speak.

Nice!  That was a quick turn around!  It might have been even quicker if you priced it a little lower. In this market people are bidding them up anyway. Congrats!

Do a projection with a likely worst case scenario. For me, when I had a job, likely worst case scenario was probably losing my job and 33% of assents not performing (people not paying, vacancy, whatever), and then some big bills—maybe a major repair needs to happen.  How long can you keep your head above water in that scenario?

Now, as @JD Martin said, it is largely depends on your personal risk tolerance.  Financial advisors recommend being able to pay your bills for six months after loss of income. That should also give you time to adjust your life if you see the situation is not going to improve, maybe sell some assets.

That last point is why I only like to buy properties at below market value. I don’t ever want to lose money if I have to or want to sell suddenly.

I flip as well as hold rentals. What I love about this business model is that I keep cash for flips, so not only do I have that working for me, but my worst case scenario is I have money tied up in free and clear flips, which, unless the sky is falling, in which case it doesn’t really matter, I could sell and have plenty of liquidity. 

@Tina Wicks I love how you have 15 units, working on two right now and are acting like a newbie with this question, haha!  Most people would consider you big time.  And I know how it feels.  I always feel like a newbie.

As the others have said, this is a personal decision, since you already know the numbers make sense.  You sound like you are a mix of cautious and bold.  Given that two at a time seems to be hardly stressing you, you are probably ready to stretch for three.  Be ready for some stress and don't do it if you think it will be too bad for you mentally or financially.

Not to mention that banks are going to want proof of funds. If you can't get transactional funding to actually buy it yourself this is going to be difficult. I generally don't like to wholesalers trying to sell me properties off the MLS. It's just bad form. That said, I have paid a wholesaler a finders fee for telling me about a great deal on the MLS that I hadn't noticed. You have to have a trusting relationship with your buyer, though.

But to answer your question, the best way to find buyers is to get lists of cash buyers and to go to your local REIA meetings.

@Julie A. You've gotten some good replies here, especially from @Nick Cooley who offered responses to all your questions, and @JD Martin.  Oh, and shout out to @Greg Franck for pointing out that you actually mean cap rate.

I'll go along with Nick's numbering.

1) 9% cap rate is doable in lower end homes or homes where you would have that 20% forced appreciation.  In California I'd imagine that is going to be very difficult.

2) 20% forced appreciation?  This is a little difficult to answer because I'm not sure what you mean.  For instance, you might be able to force 10k appreciation by putting in 10k of improvements.  But you wouldn't have gained anything.  If you mean can you rehab so that your appreciation is 20% higher than you total acquisition and rehab costs, that is tough, more so the more expensive the home is.  I can do that here, but I'm dealing with sub 200k homes mostly.  I wouldn't count on this if I were you, not until you can prove it to yourself.

3) 5% appreciation?  Okay, if you are expecting this you are definitely thinking about your area in California.  It may happen, but you shouldn't plan on it.  I don't plan on appreciation at all.  I've benefited a lot from it, but I don't plan on it.

Other comments, yes buying with cash and refi-ing out is a great strategy.  And leverage is a great thing.  Don't expect all of your money back, though--you'd likely need that 20% to 30% equity position over cash invested to achieve that.