All Forum Posts by: Ryan Howell

Nice!  How was the 203k loan as far as managing the rehabs?  Did you have issues paying contractors or managing the draw schedules with them?  In my market, finding good contractors is tough because they all have plenty of work right now, so I've assumed they probably wouldn't want to deal with a 203k making it even harder to get the rehab done.  I'm curious on your first hand experience.

@Brett Milde - I would also consider Brevard, Black Mountain, Chimney Rock and Saluda in your search.  I see many do very well in those areas.  

I go with 30y, but it really depends on your goals.  If you don't need cash flow now and want them free and clear in 15, then I definitely see a good reason for 15.  Personally, I want good cash flow now and don't necessarily need them paid off in 15 years.  I do think 30 year offers flexibility since you can pay it like a 15, whereas you can't pay a 15 like a 30.  Obviously, the Dave Ramsey argument is Murphy's law will come to play and you won't actually pay it that way, which I do agree has merit.

I'm in the same spot now...I wish I had the answer too, but taxable income is the route as I understand it as well. You CAN continue getting loans with asset based lenders, which is what I just did, but you will be in the 5-7% interest range, making the BRRRR's tougher.

@Steve Vaughan - You are spot on.  Great advice.  Lately I've been seeing this hurt of lot of investors that are trying to get their first or second deal and really struggling.  That was the reason for my post, I just wanted to shed some light on the topic from a different vantage point to better equip investors to determine the best strategy for them.  Going "unrepresented" vs dual agency is a distinction I've not seen ever discussed on here.  I'm sure there are many differences between NC and other states too, but its worth studying the local agency laws and understand the agent's perspective.

I want to give some perspective on this topic.  I think I have a unique perspective, because I started out as an investor, then became an agent.  Since a large portion of my business is working with investors, I either have them calling me as the listing agent OR I'm helping them as the buyer's agent.  

My first property was bought with a buyer's agent working for me.  I wasn't impressed with the service I got and decided from then on, rather than finding a good agent, I would put in offers direct to the listing agent, the offer would be lower than others, but they would make more commission and improve my odds, right?  Not always.  After getting licensed, my perspective changed.

First of all, we need to understand how dual agency works.  I am not an attorney, but will give a simplified overview.  I only understand North Carolina, so other states are likely different.  In NC, being a dual agent means you cannot advise either party when it comes to what to offer or what to accept/counter due to conflict of interest.  You become more of a "referee".  That said, there is obviously WAY more opportunity for you to potentially upset a client, especially when dealing with an investment type property, hence more liability on the agent to tread very lightly and watch ever word that is said, as there is a level of obligation to both parties.  

So if you have a GOOD buyer's agent, they will advise you on how to make an offer (we'll come back to what "GOOD" is) and structure it to get accepted.  If you are working with the listing agent, you are completely on your own with no guidance.  Assuming you're getting good advice from a buyer's agent, this will improve your odds of getting the deal under contract.  Unless you are a seasoned investor with equivalent experience making offers in your market, you may be at a disadvantage going it alone.

So does the extra commission make up for that disadvantage?  Not always.  A dual agent is risking more liability in the deal and these are often (not always) deals at below the median price point in the area.  Unless they are a struggling agent with no concern for liability (yes there are some), this likely isn't going to make much difference to them...When I used to call the listing agent with an offer, I would notice the agents would get frustrated with me...I'd offer a number they knew wouldn't be accepted, but they couldn't tell me or advise me, which resulted in them drawing up paperwork and wasting their time.  I also lost credibility as an investor.

Now, if you are a seasoned investor with a lot of experience in your market or buying off-market, the value of the agent will diminish and it may very well make sense to go it alone. If you are trying to buy your first couple properties off the MLS and just getting started, I believe you should find a professional and investor-minded agent (preferably someone who is also an investor). The best place is a local REIA or BP. I do believe the right agent can be a great asset, especially starting out.

@Lisa Barker - this is exactly what I did....I've been doing BRRRRs with conventional loans until I switched from W2 to be an agent full time...my last purchase I just refinanced with an asset based lender. Instead of 3.5% at 70% LTV (3 units) I got 5.125% at 60% LTV (6%+ at 70% LTV). It makes it a bit tougher but still doable. There are lots of asset based lenders you can talk with.

@Chris Loyd - I think the reason the stack is advantageous is 0 to 2 units is manageable and what you don't know won't "undo" you financially.  Each time you learn and improve and grow, so 2-4, 4-8, etc you aren't taking more risk necessarily because you're learning as you go.  Without that knowledge along the way, you may miss something that someone more seasoned wouldn't.  That's where partnering with someone is going to be advantageous.  As far as financing, I think you're likely to get a 20y amortization with a balloon in 5-10 years.  Talk to some commercial lenders.  If they won't lend to you because of lack of experience, this would be another reason to bring in a partner who has experience.

@Michael Broderick - I don't know your location, but in general real estate is doing well and prices have been going up.  I tend to think you are in a good position to sell while the market is good rather than waiting hoping it will get better.  If there is a correction, you may be more underwater.

@Oren Kachel - go to the municipalities website, such as GIS and/or look up the deed.  At least most states, you pay a state tax based on sales price and usually can calculate it.  In NC, its 0.2% or $1/$500 of sales price.