All Forum Posts by: Ryland Taniguchi

Use multiple methods to come up with an offer price range and take the lowest one.

1) 70% of ARV Minus Construction Costs.

2) Fixed Cost Method = ARV - Rehab Costs - Holding Costs - Closing Costs - Profit Accounting for Risk = Offer. If you use a per square foot, you need to also add a profit margin to account for the rehab risk. $5/sq foot = 12% profit, $15/sq foot = 16% profit, $25/sq foot = 20% profit, $40/sq foot = 24% profit.

These quick methods are used to make offers but you should always get a licensed and bonded contractor bid on the rehab and maybe negotiate your offer lower if you have an inspection contingency. I know that some people like to make the first offer stand on it's own. In my opinion, you make your money in real estate by being great at negotiation and we'll try to go for a 3rd and 4th negotiation from when we start. Depends on the seller through.

Where do you think the hedge funds got most of their properties from? From big wholesalers. As a large volume wholesaler, we used to tag properties for the hedge funds and automatically get paid commissions if they bought it. We also list REO properties and the same thing. Bulk buying has been going on forever. Nothing new has changed. The hedge funds like Blackstone won't buy non-performing notes because it would be bad for their image to mass foreclose on people. In hot markets like mine where (1) MLS deals are one in a thousand (2) the auctions and REOs are overbid and (3) it's borderline illegal to solicit to pre-foreclosure sellers, wholesaling is the only way to go. Most realtors work with retail properties and generally don't know how to price "for profit" ugly homes, tear downs and raw land. Wholesalers are needed to fill the void for flipper and builders.

Originally posted by @Jay Hinrichs:

@Russell Brazil  this is a great question... and you have both opinions expressed above.. IE some take no value from the big company and do it all themselves ,, others take value in that they get business because of the brand.

Then you have others who are in the investor or turnkey space and large company does not help at all its all about lowering their splits.

I know when I had my smaller brokerages 50 to 70 agents... its was VERY difficult to get a top producer from KW RE C21 etc to jump over just for a better commission split.. most of these agents were making 500k plus and the difference between 35k at KW and 12 K at my office was not enough to get them to move and rebrand themselves.

I did some some top producer band together and start their own firms though. And that is were I currently hang my shingle a small boutique  35 agents.. but the owners 4 or 5 of them are all top producers and builder developers in their own right ...

For me running the brokerage was just a free place to work and what I personally got out of it was LEADS  and deals  that were off market and brought to me by my agents that was the true financial benefit for me to herd those cats.

I agree that the purpose of having a realtor brokerage is to generate leads and investment opportunity. To do that, you want to have 40 to 100 agents. When I built that at Keller Williams, they were working hard to prevent me from building a team that big. At that point, you would normally buy in as an owner but for me that really did not make sense financially or politically.

The only thing I don't like about having my own brokerage is the liability if it is an investor friendly brokerage. I am looking for a 100% boutique brokerage that will essentially let me take it over and get flat fees per transaction. If anyone knows a 100% shop that would let an established brand take over for a per transaction fee, please let me know.

My perspective is a little different from the posts on here. If your an agent, are you running it in the S-quadrant or B-quadrant? I never wanted to be a realtor but a run a realtor business. I never wanted to be a wholesaler but run a wholesaler business. I also never wanted to be a flipper but run a flipping business. 

I have my license at Keller Williams because they teach you how to run a business that runs itself. We sold 152 houses last year and I never once personally worked with a client. Keller Williams is also awesome for high level networking with top agents and teams across the country. 

Now that's the positive with Keller Williams. Here is the negative. Keller Williams wants you to only follow their MREA model and the model typically only works if you want to be a traditional realtor. They don't like it when you try to build your own mini-brokerage of 30 to 40 agents. Politically, I have experienced sabotage after sabotage over building a bigger team. One of the reasons I joined Keller Williams was that I saw a benefit that they could recruit for my team. They don't like it when you take too many recruits from them and so over the last year and a half I've recruited everyone myself. If you join Keller Williams, the point is to make money. There seems to be real jealousies and envy if you make a lot of money as a non-realtor.

Keller Williams despite publishing three awesome investment books Flip, Hold and the Millionaire Real Estate Investor is not friendly for investment-minded people. They feel like being known as the off-market hub is taking money out of their pockets. 

In summary, I think Keller Williams is a great place to start. Learn the systems to how to build a team and make valuable connections. At Keller Williams, they let you build your own brand and now I can easily go off on my own as we have a solid brand. Vest your profit share after three years and then find a 100% boutique shop that will let you keep your own brand. I don't think Keller Williams is a fit for people who do investments like discussed on BiggerPockets.

I would find a realtor who specializes in new construction. Find out what new construction on a land like yours sells for. Find out the zoning and if you can short or long plat the land. On my team here in Seattle, we have an agent who is also a licensed architect and so we'll do rough preliminary drawings as a value add for our clients. Land has many moving parts especially if it's a long plat. Do you have road access? Is there a slope (which is more expensive to build)? What are the setbacks? Is their wetlands? How easy to access water and sewer? One good idea is to find the escrow/title agent that specializes in new construction as they will know who is who in your market. After finding the finish value (what a home will sell for), you want to ideally be at 20% to 25% of that by the time you finish the preliminary plat application and finish the permitting process. Find out if it pencils out and then look at your options. Another idea is to simply seller finance the land to a builder for cash flow or JV with a builder.

Two issues are one getting paid your commission and two traditional financing. If the wholesaler is a licensed agent, they can renegotiate as a fsbo with both of you as the listing and buyer's agent. If the wholesaler is not an agent, you can split the wholesale fee. The second issue is traditional financing. At least in my area in Seattle, I don't know any traditional or even portfolio lender that will do traditional financing on an assignment contract. That's why doing the real estate commission is such a nice option. One option maybe in your state (can't be done in my state) is the simultaneous close. I have portfolio lenders that can get around the 90-day appraisal seasoning if you do this type of close. We are not able to do simultaneous closes in my state and so I couldn't tell you how that would work exactly. Usually the simultaneous close works better with an end-buyer who has cash. When I was a licensed contractor, I've even done it before as a mechanical lien so the end buyer could do traditional financing. That was pre-2008 and I am not sure you can do that now. If your end-buyer is a cash buyer, that makes this way easier to do.

I use a great agent in St Louis. Message me with your phone number and email and I will get you connected.

Originally posted by @Tim Jones:

We have a buyer in Colorado who wants to buy land - they do not want to do a construction loan - they just want to purchase the land but need to finance it.  We have directed them to FirstBank because we understand they will lend on land.  Any other suggestions?

Thanks!

Let me know if you prefer to PM, text or e-mail me.

Tim

Can't speak for Colorado but in Seattle the banks almost never give out horizontal loans, particular on long plats. I've heard it done but highly highly unlikely. We go to private money sources for the horizontal loans usually at 70% loan to cost, 8%, 5 points (2 points paid-up front). 

Originally posted by @Mark Kao:

@ryland, do you ever attend one of these BP meetings someone mentioned earlier?

 Best reason to attend BP networking events.. There are no Gurus there trying to sell you a $1495 course. After being solicited for this stuff since 2000, that is awesome!!

Originally posted by @Mark Kao:

@ryland, do you ever attend one of these BP meetings someone mentioned earlier?

 Yes. I have also been a member of REAPs since 2003 and off and on in Reia. I feel like the BP meet-up has many "mover and shaker" investors and Travis and Tiffany are awesome.  Great place to network.