All Forum Posts by: Jake Kucheck

I didn't read your whole post. You spent a lot of time on it I'm sure, but maybe that's your problem. Time needs to be spent doing things that make money... which it sounds like you aren't doing as much of that as you could.

For one thing... I would say trying to flip in a landlord market is a lot more likely to be frustrating than flipping in a flip market. Same as trying to be a landlord in a flip market.

If the market doesn't fit your business plan, you should either change your plan or change your market. But you know what they say about doing the same thing and expecting a different result...

The 2% rule is just a simplification of the concepts of supply and demand, combined with socioeconomic norms in a given area.

In XYZ market, the average person lives paycheck to paycheck (if they have a job at all). Those that aren't employed live off of government subsidy. This makes homeownership a long shot at best. What's more, traditional owner occupant financing is unavailable because purchase prices are so low, lenders do not find it worthwhile to lend in this market. Thus, the market of buyers is comprised solely of cash buyers, the majority of which are non-owner occupants. In a market that is so heavily swung towards tenants who are not future homeowners, there is a heavy supply of tenants, homeless, and criminals. Homeless and criminals can be difficult to avoid, for a number of reasons, but with a little research and practical application of behavioral tendencies, you can be right more than wrong in picking your rental locations.

So, given a low rate of homeownership, a strategic acquisition model that attempts to minimize crime and vagrancy, and a large supply of tenants, you can expect their to be high demand for your units, if you keep them in good shape. This will typically produce impressive yields, so long as you can keep the criminals from burning your units to the ground.

Lastly, homes in this type of market are not $100K or $50K. They are between $4K and $15K. This is where the 2% rule works best.

Marketing of any kind is typically somewhere in the spectrum from embellishment to blatant misrepresentation. Luckily, you don't have to buy anything based on marketing, you buy based on analysis.

People's reasons for selling will vary, but really don't matter that much. If he is selling because he is trying to avoid deferred maintenance, that will be apparent in the property, will it not?

You should analyze this deal like you would all other low end, cash flow based rental deals:

Rent/(Purchase + Rehab) = ???

Now the answer to that equation is likely a single digit %. In some areas, 1.5% is good. In some areas, 2% is good. My personal best is 9%, but that is the exception rather than the rule. That property also happens to be in an area almost all investors wouldn't touch. You have to compensate for risk somehow.

Thanks fellas. I hope others have had similar lightbulb moments because of the summit, and been able to venture into new territory with success.

You never find anything you aren't looking for.

Truth be told, I didn't know what to expect when I landed in Denver. Other than a handful of impressive, local CA investors I'd had a chance to meet in person, I had no clue who would be there.

You may have read about my previous enthusiasm of things that came from BP/the Summit, here:

http://www.biggerpockets.com/forums/223/topics/73622

What I didn't know I was looking for was a bunch of houses in the midwest. As it turns out, a deal that raised eyebrows (and glasses of beer) was discussed in detail on Sat night in Denver, and then later we tried to poke holes in it over breakfast (and in the case of Will Barnard, more beer).

So then I got back to CA. Was I still drunk? Was it really possible to buy a house for $5K, put $2K into it, and then rent it for $500+/mo? Without anyone robbing/shooting me in the process?

A bunch of DD later, I decided to buy deal #2 described in the previous post. That deal hasn't gone very well at all, but it was my first time in a new market, I had a lot of things all go wrong at the same time, and I didn't want to get discouraged. I kept buying in this market.

I now have 35 houses in this market, 24 of which were acquired in a bulk deal that closed recently. The purchase price for that deal was $7,123/property, all 24 of the properties with seasoned tenants and management already in place.

The bulk deal was the result of a combination of luck, good timing, being in the right place, and having some balls. I can assure you there were no mandates, no +3s, no reps, no brokers and no BS. Just one guy with a bunch of houses he wanted to sell to another guy. But, it also could not have happened without me having attended the BP summit, as I never would have known what I was looking for.

Also, I'm now working on another deal in the same market, for twice as many properties. I think it is fair to say I like this market.

I'm slightly more sophisticated than to ask, "what's a good GRM?", because I know that is a moving target, and will be met with different answers based on goals, geographic locations, levels of experience and the like.

However, I would be interested in knowing what other folks are targeting in terms of GRM. To clarify... I want to know what would be good in everyone's book.

I was at an investor lunch last week where someone was mentioning a note deal where they foreclosed and ended up with an 18% cap rate once all was said and done. Most of the room nodded in agreement that this was good. What I'm trying to get at is what GRM would one need to arrive at before being considered universally "good".

You are all missing the point. Romney HAD to go with Paul Ryan. This is not an issue of ideology, tactics, or shrewd political strategy. It is not the manipulation of our citizens into believing in an us vs. them mentality. It is not a slight of Tim Pawlenty, Ron Paul, Mike Huckabee or Marco Rubio.

It is simply that Mitt Romney needed balance. After all, if you were a man with zero first names, you would have no choice but to pick a VP with two first names, in order to restore balance.

I'm sure J Scott will agree with me here.

If you make a low offer every day, you're guaranteed to get it right!

However, from a more practical perspective, you will probably find that if you are offering on REOs, the best deals will come in Nov/Dec when you can close prior to 12/31.

I can't wait for the September thread. August has been nuts so far. Which would explain my quickly diminishing influence.

Of course you can, but be up front about your strategy and expectations of each agent. If everyone focuses on what they are best at, that should improve results all around.