All Forum Posts by: Robert Leonard

@Will Uter yes, it is a rental. It's a "presold" rental - my son, the LSU student, will rent it!  I'll be in BR today and tomorrow with some time to spare during the day if you'd like to grab lunch or a coffee? Give me a call or text me.

@Jeff Haak the only thing I'll add to the excellent information you already received from @Phil G. is that you should still buy like an investor.  What does that mean you ask?  Seek undervalued properties to use your (potential) 100% financing on! 

When USDA gets foreclosures back, guess what they do with them?  They won't, WILL NOT, sell them to an investor.  They only sell them to someone who qualifies for their financing!  At least that is what was explained to me at the regional office for the area where I do business.  Now that becomes a matter of timing, because there is not an abundance of those USDA-RD REOs available.  It's just something to be aware of and look for in case you are the lucky one who qualifies at the time one of those becomes available that meets your needs!

Just avoid setting yourself up by buying something that is 100% of market value just because you have 100% financing.  The reason I would avoid that is any downturn in the market would put you underwater if property values decline.  Also try to stay below the maximum that lenders will qualify you for.  While you may have little choice in some high cost markets, if your market permits, you can spend less than what you qualify for on housing and have money left to invest, put away for a rainy day or both.

@Matthew Mason I'm sure it's not the answer you're looking for, but @Will Uter 

is on the money - it depends?  I've been scouring the BR market for a long time and I bet it rivals any place with having drastic property value changes from one block to the next.  I've burned lots of gas between Lafayette and Baton Rouge getting to know where I want to buy and where I don't. 

I can tell you that I found the murder statistics from last year and I decided to stay out of the two zip codes with the highest murder rates for last year.  There were 54 murders in BR last year.  22 in 70805 and 11 in 70802, that's 61% of all the murders in those two zip codes out of 15 zip codes.  I'm sure there might be a block or two in there that's not so bad, but I use crime rates to help me reduce the number of properties I take the time to analyze to consider investing.

http://www.redsticknow.com/violent-crime-homicide-baton-rouge/

Welcome to BP @Will Uter !  I always recommend that Baton Rouge area investors join "The RING" (Real Estate Investors Network Group) found on meetup.com to get to know lots of active investors in the BR market and learn a little bit in the process.  The group is pretty well organized.  It only costs $5 per meeting you attend and there's no annual dues. I am a member of the group and I don't get any kickbacks for recommending the group.  I just find it very helpful and I'm sharing what works.  I'm about to close a deal on my first BR property Tuesday with a partner that I found at those meetings!

Until then,  you can learn a lot of good stuff here on BP!  See you around the site and maybe one day in BR!

@Dylan Swanson 

I'll just offer a different take on what appears to be the consensus con, taking CE courses.  The courses may or may not be lame, but whether they are or not, it's another networking opportunity.  Maybe I'm too new at this, but I still like going to CE courses at different venues and with different instructors ON PURPOSE.  I meet other investors and people in the business at these courses, so the content doesn't really matter to me.

As far as if the cost - is holding a license really a cost or an investment? If I find one deal a year that I make more than the annual price tag of the license AND/ONLY because I have a license/MLS access, I can assess the value, walkthrough the property and submit an offer ahead of my competition, is that really a con? That's what my license does for me. It's like if I had to pay admission to get into the bank; If I have to pay $2 to get into the bank and leave with $20, I personally don't mind that, even if anyone calls it a con!

@Kimberly H. what you can and can't do is primarily determined by market conditions and know how.  Finding properties that meet your criteria will have to fit both your market and your ability to find and finance what you're looking for.

As far as "so-so neighborhoods" go, what do you mean by so-so?  Here's my location test: If I had a temporary reason to move out of my house (hurricane blows off roof, fire damage, etc.) would I be comfortable moving my family into this property/neighborhood on a temporary basis, if it were vacant at the time I had that emergency?  If it doesn't pass that test, I look elsewhere.

@Lindsay Wilcox my text to them would say, "If you bring back my A/C unit when you come pick up the rest of your stuff, I won't have to call the cops to let you explain to them where the A/C unit went."

@Cory Binsfield you and I are right here man [as I point two fingers at my own eyes and back at yours]!  You even used so many of the same analogies that I use when I talk to other investors about why I buy and hold.  The only thing I say different, is flipping a house is like eating a goose that lays golden eggs because you are hungry!  Thanks, awesome post!

That said, I know there are markets where it makes no sense at all to buy and hold.  I get that.  My perspective is based on what I have access to in my home market in the price range that I invest, 125k or less.  To each his own, but when you can do what Cory described in this post, it's an incredible way to invest for the long term that I think offers very appealing lifestyle options.

@Victor Noriega Wow man, that Cynthia is one smart woman! ;-)  Those are some of THE most important questions to ask in this business!  Understanding the answers and being comfortable with how you answer them are so critical ... I love it!

You are so on the right track, I can only say, listen to your wife and do what you are doing!  You will do well!  :-D

@Christopher Williams my first thought is how did you arrive at your ARV? Below 50k is the price point where conventional financing becomes a challenge. That's not extremely important for you as an investor, but it is to retail buyers who are going to be part of your plan A or plan B whether you are a buy/hold or fix/flip investor. Is the area the property is in likely to decline or increase in value over time? That depends on market trends, but a property on that critical price point bubble should be analyzed carefully.

You are also using some terms in a bit unorthodox way when you say "accept notes on this property."  Are they offering owner financing?  I'm not sure what you mean by this?

The estimated repairs are a very important component of acquisition cost of a property.  Carpet and paint can cost a significant difference if you're talking about a 1200 sq ft house vs. a 2500 sq ft house?  Coming up with the total repair estimate is what will help analyze the deal.  Those are the kind of details you need to have to come up with how much you want to offer for the property.  Even if it's not an immediate expense as long as the current occupants are there, it will have to taken care of when they eventually  move.

What utilities is the investor paying?  That's another unusual expense?  That's something that is ordinarily paid by investors who own multifamily properties who end up paying for water.  And that's still not even in all cases.

Here's what you need to figure out. What will it cost to do any deferred maintenance/repairs (DMR)? What will it cost you during the period the property is vacant while doing any necessary repairs/maintenance [holding costs (HC)]? What is the ARV of the property based on recent sold comps of like properties? How much profit ($$) makes it worth your time and effort to invest in the property? Here's your formula:

ARV - DMR - HC - $$ = Purchase Price (PP) A good offer is an amount below the PP to allow for negotiation with the seller. You should come up with a maximum allowable offer (MAO) that fits your formula and is the point where you say, if I can't buy at or below this price, I'm not buying.