All Forum Posts by: Pat Lulewicz

@Luis Salas - careful with this strategy. In NC, when you speak to a potential seller, you are legally required to share with them that you're an agent even if you're there to buy their property or wholesale it off-market. If you don't and the seller feels "ripped off" after you assign it and make a profit, they will come after your license and have a good shot at it.

This also makes it more challenging to be fair, honest and ethical with a seller. Your responsibility is to act in their best interest and provide them the most accurate information possible about their home. "low balling" doesn't necessary meet those standards.

The way that realtor's generally have to work is provide the seller the true and accurate comps (market value) as well as expressing to them that you could also buy it at a discount but buy it fast, no repairs, etc (all the other stuff wholesalers say/provide). You just walk a very fine line when you're a licensed agent that wholesalers and a lot of brokerages will not look fondly at this type of activity.

Message me privately to chat more on potential workarounds and how to operate in the space doing/being "both".

Hi Linda - your services make a lot of sense for someone who is trying to go the MTR route, however if they are just now buying a house in today's dollars and rates, and setting it up as a MTR, it may be hard to substantiate a few thousand dollars to pay a third party to do the set-up after they just spend tens of thousands, or potentially hundreds of thousands on a house DP in Raleigh + furniture.

I think the fundamentals work for someone who's owned it a while, has made great cash flow, and who has been thinking about converting from LTR to MTR, and just doesn't want the hassle of set-up and marketing but wants the returns. You're more likely to find LTR owners who want to convert to MTR because they are effectively the same rental experience and management for an owner, just with (potentially) more frequent turnovers. Going from LTR to STR though is an entirely different management experience for the owner/client and its rare someone wants to ADD work to their rental portfolio by making it actively managed.

I figure your 107 units is at a single moment in time, right? So rentals get leased and other rentals come on-market? Would be useful if you tracked that daily/weekly to see how it moves if it does. DOM (if that figure is available) is probably more important to your Q. But if those are already active MTR-able units then your set-up model isn't really relevant to that group, right?

Is all of your full-rehab cash stuck in the deal now? How much was the renovation itself? Given that its operating well as a STR, would it make sense to do a cash-out refi to get some of that cash back?

My macro answer is: it is worth it to get your license if you are active in the industry.

I think Jennifer makes a lot of great points. Totally agree on:
1) the info you learn in RE classes and continuing ed; its entirely meant to keep you compliant, no education.

2) commission can end up being smaller than you think. Most transactions right now are still paying 2.4%-2.5% to buyer-side agent. The split is very firm specific. I know some people who pay a flat fee per transaction to their firm, and keep the rest. Others do a 90/10 agent/firm if its their own lead. Worst I've heard is 40/60 agent/firm on firm-sourced leads. Just do your homework and call around.

The legal and ethical requirements in selling your own property (whether you are listing it or not) are extremely heightened and everyone will hold you to an incredibly high level; that goes for flips or rentals. I will say that if you are buying your own home or rentals, its a nice amount to be able to apply to your closing costs, and most firms give you a few "free" transactions like this is a year where you don't pay a split for personal purchases/sales.

Being able to have a license and throw offers on every and anything you want is also extremely useful. If your investor-friendly-agent has other clients or is on vacation, you may not be able to submit an offer as timely as you would if you could do it yourself. Even having the MLS access to see disclosure documents and agent-only comments could sway you one way or another on moving forward.

Finally - if you don't or can't service someone but want to refer them to another agent (in or out of state), you can get a referral fee back (negotiable % usually in the 20%-30% range) to help offset those fees. Imagine if you brought @Jennifer Cook-DeRosa a $5M warehouse owner, who wants to sell, on a silver platter. Not a bad way to make a living.

No experience with the 2 you mentioned, but I'm a fan of paying the year so I don't forget next month/quarter and the coverage lapses. My insurers reimburse me for what I didn't use; it can take a few weeks for the check to come, but that's just cash flow management then. The amount shouldn't be massive (all things considered) so if that's the case, give yourself the peace of mind.

Even if you're doing a BRRR and your lender will end up "covering" 100% of the rehab costs, its a reimbursement and they don't front it, so you've got to consider your cash flow (liquidity) and make sure you have enough cash for the downpayment, some of the rehab, and then get reimbursed for the work, and then do more work, etc.

@Isaiah Wilson - @Bonnie Low is absolutely right - you essentially just have to take a standard lease agreement like you would have with a LTR tenant and adjust it for the parameters of the MTR tenant. This will include shorter lease term, potentially different utility criteria, etc. Add last month rent in there if appropriate or if y'all agreed to it. Potentially more security deposit given the shorter-term nature of the stay.

Most states, NC for sure, don't differentiate MTR from LTR. Anything longer than 30 days is generally considered "LTR" but I'm not an attorney nor do I play one. Check with the specific county for that language and any ramification that may have.

If your numbers are spot on, I would have felt comfortable around $105k in my markets. Remmeber that your first (couple) deals are great ways to make money but more importantly to learn. If you did this project and ended up going $10k over budget to where you didn't make a crazy amount of money, chalk it up to education U and right-size for the next deal where you have better data points.

Hey @Biswajit Dash - surrounding areas of Raleigh are of course getting attention because of folks getting priced out of the beltline, development costs, etc. However from a tenant-demand perspective, still seeing most people will still spend the extra $50-$100/m to rent close to where they work, family, etc if they have the opportunity to. Especially if the home aesthetics and footprint are comparable, there is still good rental supply available. This is why job growth/fundamentals get talked about so often when choosing a market; put yourself where you have the most qualified applications possible for your home.

With $100k down and assuming 20%-25% DP, you're looking at homes in the $350k-$450k range, with $400k probably being a break-even, at best. You can absolutely find this kind of inventory within Raleigh limits.

To answer your question specifically - all of those cities have development through the rough - residential and commercial, more on the way and swelling buyer demand. These are continuing to spill over even farther out towards Selma/Smithfield, Benson, etc. Majority, if not all, of these newer communities are going to have HOAs and some restrictions on rentals in their covenants. Make sure you review those before buying so you aren't stuck without a, legally viable, business strategy. 

You will have to be a bit more specific about what "opinion" you're looking for. I love NC, only invest here, and think its the best state to do so regardless of goal. I think its the best state to live in as well. But I'm sure you're looking for a different opinion.

As far as where to look, specifically for flipping - there's plenty of articles on this website and across the internet about how to search for the right location: demographics, trends, inventory, etc. I've met people who successfully flip million dollar home in Raleigh and others who successfully flip mobile homes near the NC/VA border. If you look at the top 100 cities in NC by population, people are flipping successfully in all of them. Top 40 will probably give you the most feasible (from inventory and demand perspective) options. Top 20 are the names most people toss around when discussing markets.