All Forum Posts by: Michael Hayworth

Garmeon, it's not that we mind all you Californians, New Yorkers, Illini & such moving down here. (I interview several folks every month from those states.) It's that when most of you get here, you start voting for the same big-government crap that f-ed up your own economies in the first place.

• No, we don't have a state income tax.
• No, you don't need a license to be a painter.
• No, you don't even need a license to be a GC. Yes, our construction quality is just fine, thanks. And yes, we've seen some of the rickety **** built by y'all's licensed GCs.
• No, most small construction companies don't carry workers' comp. No, there's not an epidemic of people dying or being maimed on jobs.
• Yeah, you do require a permit to remodel a bathroom, but no, we generally don't get too bent out of shape if somebody does it without one. Just don't be obnoxious about it so the city or the local inspector feels like he has to roll up on your job.
• Yes, we have big job growth here. Yes, there are reasons for that.

Texas works really well. We'd like to keep it that way. All y'all are welcome here, just understand we don't want to be California. :)

@Sam Epstein, with respect, you're probably overthinking this one. It sounds like you've locked in on this one property and are researching the hell out of it. But odds are, it won't even get auctioned. I buy nearly every month at the trustee auction in Tarrant County (Fort Worth & suburbs). About 60% of the houses on the list don't end up getting auctioned. (January, for example, 290 homes on the list pre-auction, 102 actually got auctioned).

Buying at auction is a tricky thing. I try to go with around 15 properties in mind that I want to compete for. Of those, 8-10 will get pulled, another 2-4 will sell to the creditor because their bid is higher than anyone would realistically pay, and there might be 2-4 that I can actually bid on. Hopefully, I win one of those, but some people get crazy at auction and homes - that need repair and that you can't get inside to see - will sell for 80% ARV.

It can be a great way to buy property, but you can't get too locked in on one propery.

Good luck!

**** like this is why my company doesn't take investor business anymore. 

Seriously, good contractors are busy. I have 8 crews, and they're all booked for the next 3-4 weeks. My competition is in similar situation. If you waste contractors' time like this, you'll end up not being able to hire anyone except the guys who have no work. There's a reason they have no work.

If you buy houses in need of serious rehab, your contractor is the most important relationship you'll have in the process. If you want someone professional, you have to treat them like professionals.

Are you doing this yourself, or working with a direct mail company for it? It sounds like you're buying the wrong type of list. (NOTE: I own multiple businesses, one of them a direct mail company.)

SATURATION LIST gets you valid addresses per the post office, usually without names connected to them - this will be "Current Resident" type mailings. Lately, some list companies have started offering names attached as well. This gets you the cheapest bulk postage, but mails everyone on a particular mail carrier route.

CONSUMER LIST (called by different names by different companies) gets you names and a wide variety of demographic information on the resident of each address. However, this includes renters and is not what you'd be wanting to use for this. 

HOMEOWNER LIST should be sourced from county ownership records and will include both the address of the house AND the mailing address of the owner. So it will show you 123 Elm St., Columbus, as the address but have fields for the actual homeowner's mailing address in Dublin, for example. This is the most expensive type of list, and will be the most expensive postage (because it's the least "saturated"), but it's really the only type of list that's appropriate for reaching actual owners. Most direct mail companies that focus on mailings for investors do absentee-owner lists and specifically pull a list of houses in ___________ (your territory) whose owners show a different address from the house.

Hope this helps.

There is definitely a lot of agent bias on this thread.

Is St. Louis a hot market? Then you don't really need an agent. But it may still benefit you to have one.

I'm in Dallas-Fort Worth. Very hot market. Always multiple offers on my houses. I could stick a sign in the yard and sell 'em. In fact, I've recently had offers on houses I haven't even finished renovating yet. I do my own staging and photos. I don't really need an agent.

I still use one, but I don't pay 3% to the Listing Agent. I found an investor friendly RE agent who does listings for 1% LA commission. We pay standard buyer's commission. 1% is enough to comp her for handling incoming offers and phone calls from incoming buyer's agents (many of whom are, frankly, idiots - since real estate is hot, everybody thinks they can be a real estate agent....when the market crashes, they'll go away and the good ones will stick, but right now, there's a lot of idiots out there). Having my agent handle that stuff saves me a lot of time and effort. And when I was brand new at this, an agent's advice was pretty useful.

All that is worth 1% to me, even though I'd do fine using a $300 flat-fee service and having my assistant handle all incoming requests. It definitely wouldn't be worth 3%.

I would suggest asking around at a local REI meeting for an investor friendly agent you can work with similar to what I have. I know a half dozen agents in DFW who work this way; surely there are some in your area, too.

I've studied 1031 Exchanges several times. Even went to a continuing ed class on them. I just don't see it. And I'm in the 44% tax bracket. (And before someone pedantic says "there's no 44% tax bracket...take the top bracket and add the lovely 3.8% Obamacare Supplemental Tax on top of it.)

The tax deferral is not worth the limitations of having my money so restricted and having to have an authorized agent do every step of the transaction for me.

I disagree with both the responses above. You'll never be able to grow your book of business if you're doing everything yourself. But in the same way, you're spending too much money if you're calling a specialist tradesperson for everything.

You really need to do one of two things:

1) Find a property manager who'll do it for 7-8%. They're out there for people with multiple properties to manage.

- OR -

2) Find a decent handyman who can handle most general purpose repairs. Make him your one call when anything goes wrong, let him evaluate it, and then only if it's beyond his capabilities, pull in a specialist. Not only will he save you money because handymen are cheaper than electricians and plumbers, but he'll also become familiar with the properties as he's in each one from time to time and can give you feedback on how things are looking at each place.

Lots of answers here, but none seem to have hit on the real point. (However, note that this may be different depending on your state laws and contract.)

The option period gives you a time to cancel the contract should you so choose.

During the option period, you may propose an alteration to the contract. Your proposal does NOT actually alter the contract - the implied threat is "if you don't accept my proposed changes, I will exercise my cancellation right." But you have not yet exercised that cancellation right.

If you send over a repair amendment and the seller simply ignores it, the original contract remains in force unless you actually send over a termination notification.

Unless laws are significantly different in FL, your seller's realtor is an idiot (there are lots of dumb realtors out there who think real estate will be an easy career) and your contract remains in force.

You should not really need to engage a lawyer. In most states, the real estate commission or MLS board would handle such complaints and would be your first line of recourse.

A couple of points to note here:

1. You're an agent, so creating these offers doesn't waste anyone's time but your own. Problem is if dozens of people on here who aren't agents start calling their agents and asking them to send out 40 or 50 lowball offers, they're going to create a lot of frustration and wasted time.

2. This is very market dependent. It may work in your market. Here in DFW, it wouldn't. Yeah, you might find the occasional overpriced stinker property that's got 120DOM and float 'em a lowball, but as an overall strategy for non-stinker properties, it doesn't work in a market where nearly everything is selling above ask. I talked to an investor here who sent out 40 offers last week with no response other than a few FUs. He does this pretty regularly and always seems pissed off at this "insane market where people are paying way too much." Not surprisingly, he keeps burning through real estate agents because none of them are "responsive" enough for him.

I'm not arguing that it may work for you. But in most markets, I wouldn't think this is the best strategy for newbie investors who aren't RE agents to latch on to.

Every time I post a $10/hour entry level job, I get over a hundred applications from recent college graduates with lots of school debt and no real prospect for paying it back. 

College is truly valuable for training in clear-cut job fields, or if you're going somewhere that will make great connections for you, as @Rashad K. mentioned. Outside of those circumstances, I do not specifically recommend college, especially if it involves going into debt. (If you feel like you're missing the "college experience", just find a group of friends who party a lot, and watch lots of MSNBC for the PC haranguing you'd get from your professors.)

In my experience, there are three really good paths into real estate investing (there are probably more, but these are the three I've seen most):

1) Have a super-high paying job that generates lots of excess income you can use to invest. College can help there, but the average "bachelor's of whatever" degree doesn't do that.

2) Get your real estate license, become successful, start investing using commission and knowledge you gain there.

3) Go into the skilled trades - electrical, plumbing, framing, etc. Those are in-demand jobs where pay ramps up quickly as you gain skill (takes about 8 years to become a master plumber, and any master who's not making 6 figures is doing something wrong), and they really help you know what you're dealing with as you buy houses in need of renovation.

I sort of combined 1 and 3 - ran global groups of software engineers for years, then used the money to start my first business. My third business was a remodeling company and from there I got into REI. I could've done it much quicker if I'd had a real plan, but I just sort of drifted along for quite awhile before I got serious in my late 30s/early 40s.

Good luck out there.