All Forum Posts by: Brad S.

I have found good luck with this Association:

go to narpm.org (National Association of Residential Property Managers) and navigate to ---> connect with (tab) ---> search for a property manager (dropdown menu) ---> search for property mgrs in that area and call them up and interview them. I didn't find a lot of their members in Louisiana, but there were some that came up. Start with the mgrs with designations next to their listing, that typically shows they are dedicated to good business practice and ethics. But,  as always, tell him to do his due diligence and interview them and call at least 3 references of other landlords that use or have used the mgrs. Good luck!

I have 2 projects in architectural stage now. 2 different architects, both are charging generally by the sf. One is $15/sf ("discounted" to $12/sf) and the other was at $2.50/sf, but has gone to around $4/sf due to some complexities. I thought the first guy was expensive, but it is a small project (400sf) so I started with him so not to waste time, then I got the 2nd guy involved on the larger project (4 units- 3,200sf total). I only have the engineering proposal for the small project so far, and that is $4,100 for the basic phase. And my brother recently finished building a ground up 4,200sf sfr and paid around 4x your quote for soft costs, so it does seem to be pretty high for a 700sf conversion.

There are a few ways to go about it, but it is pretty challenging if you don't have direct access to the data (mls) and being your first deal, I am assuming you may not have a lot of experience combing through market data. So, here is probably the best way for you to go about it. 

Find a few experienced, active Realtors in that area. Contact them, let them know you are working on acquiring deal. You don't have to tell them the address or identifying specifics until you get it under contract. But, you can tell them the cross streets, and 1,250sf, 3/2 ,etc, general info, and ask their opinion of that current market, what they think it would be worth in remodeled condition, if they see the market slowing or going down at the moment, if inventory is stable, rising or shrinking, how long days on market are now and is it taking longer to sell in this market, etc. Let them know you may have an interest in having them list the house for you when completed, so they have some motivation. Or, if you plan on keeping it as a rental, be honest and tell them you may keep it as a rental, but ask them to let you know of any similar deals. You want to be respectful of their expertise and time. Many Agents will be willing to share some of that info with you, as long as you are honest about it. A good Realtor has their pulse on the market.

One way to find a good Realtor, is to call up some of the local Brokerages and ask the receptionist (or whomever answers), who are the best, busiest agents for the area where your house is. Good luck!

Quick/Easy answer is - it depends on the specific market the property is in. I'm guessing in your CA area, most buyers expect the appliances to be there when they buy. And you want to be better than, or at least similar to, your competition (i.e. the other active listings in the area). So, YES, I would put in appliances.

In all my rehabs, from South LA to higher end LA neighborhoods, I would always install appliances (range and microhood), prior to selling. I would usually put in microwave range hoods, and duct them if possible, and a nice looking range. Those are not much money these days, especially for the return and "perceived value" you will get from buyers. I usually find "scratch and dent" appliances from reputable stores and get steep discounts on quality appliances. So, the buyers feel they are getting nice upgraded appliances, even though I didn't spend a lot of money. They are brand new, never used, but may have some imperfections. I look for the ones with minor to moderate imperfections or those that are not noticeable, like a dent on the side, which doesn't show when installed. There are a couple of specific stores I use near me, one is a Lowes outlet store. 

I rarely have put in refrigerators in the houses I sell, unless that was part of the negotiated contract, or a higher end project with a built-in fridge. But it may be a good idea to have one, if your market seems to want it and if your budget can accommodate it. Re Dishwashers - my answer is yes, even in that size kitchen. It's going to give buyers a sense of perceived quality and they may even feel a need to have one anyway, so your house would satisfy that requirement. I'll include a couple of pics of projects I did long ago, with relatively similar sized kitchens.

Look at other listings and sales in the area and see if they have appliances, etc. Also, talk to realtors in the area, especially one you may use to sell your property, and ask them what buyers expect, etc. Or reach out to me directly if I can have a chance to list it (I'm a Broker). I'm happy to review the market and see what's happening in that specific market.

Another important thing to know is if the house does not have appliances, that is an expense they will have to pay out of pocket for after they buy. If the house sells with the appliances, it gets financed into the whole purchase, since they will be fixtures of the real estate, except for the fridge, but that shouldn't affect anything.

Sounds like those realtors had a few overpriced listings that they found highly motivated, uninformed buyers for, in a potentially softening market and are blaming the appraisers for their issues.

It's more of a question of do you want to move your real estate "investing" more into a real estate "business". While they are both businesses per se, the difference is like owning and managing the business or owning and being your own employee in that business. 

I see posts all the time about self managing, especially in str's, and that is fine, but I don't think most people really understand what they are saying or doing when they do that. IMO you should still account for property mgt costs in your calculations, since that is a typical cost of doing business, and if you choose to pay yourself to do that, that's fine, but it is still an operating cost.

You don't buy a business without taking into account the labor cost to run that business. In other words, you don't buy a restaurant franchise or other retail business, without calculating cost of employees to run it. If you are buying yourself a business in order to work in it, you are buying yourself a job.

I agree with the other posts - start the eviction process asap. 

Tenants have an amazing ability to find extra money for rent when they know they HAVE too!  ..or make other arrangements to vacate the house when pressure is on. Either way, the problem is solved.

Seriously, it's like MAGIC!  ...One day they have all this trouble going on and they are "about" to get paid any day, or get access to the money, etc, and as soon as they realize they are in danger of getting evicted, **POOF** they either move on or catch up.

You are not being a bad or uncaring person for expecting your agreed upon rent in exchange for offering them a nice place to live. Unless, of course, you want to subsidize them or support them in this way. That is always your option, but understand, that is what you're doing when you allow this situation to happen. 

You can nicely be empathetic to their situation, while still being firm about YOUR situation! It's basically offering a smile and understanding, while still reaching your hand out for your full rent. Again, it is always up to you if you want to help them out and help pay for their living expenses, but understand, that is the CHOICE you are making when you allow it to go on.

I have heard many stories in the past and have felt bad, even trying to help some tenants in certain ways, only to get taken advantage of. Now, I typically have a 6th sense about these situations and act accordingly. Some people really do need and deserve help, but many are just testing your boundaries.

Troy has a good detailed description of some common value/comparison issues. I'll hit briefly on some of the main factors we observe and compare when formulating our value opinion. Keep in mind we are searching for recent sales with similar attributes.

Subject Property
* Location - is it on a busy street, private gated community, end of a culdesac, backing high traffic street or freeway, airport noise, across main neighborhood boundary where the market appeal changes, in highly rated school district, etc.

* Site (Lot) Size - typical size for the area or atypically large or small and how does that affect potential buyer appeal, or strange shape lot (pie shape, etc) which decreases its' utility (use).

* Design/style - certain neighborhoods may show preferences for specific home styles/designs, I have some markets near me where Craftsman (arts and crafts) style houses are highly desirable and command a premium, I also have seen many relatively recent new builds and rehabs which are modern style and are getting premiums based on that. This depends on the neighborhood and what buyers appear to be showing desire for.

* Quality - Is the house modernized with current materials and finishes, are they higher end upgrades, materials and finishing (solid surface countertops-Quartz, etc, custom solid wood cabinets with soft-close drawers/doors, built-in SubZero refrigerator/freezer, 48 in Wolf range, wine/beverage fridge, large center island with prep sink, solid wood or good quality engineered wood flooring, etc) or does it have outdated or minimal upgraded finishes (Formica countertops and cabinets, tile vanities, vinyl roll flooring, basic carpeting, no major upgrading, etc).

* Age - similar in age to the surrounding homes or significantly newer or older

* Condition - has the house been fully remodeled recently, partially remodeled, or just basic maintenance and updating as needed

* Bedroom/Bathroom count - # of each and is that typical for the area or is it a 2/1 but most buyers pay more for a 3rd bedroom and/or 2nd bathroom, or does it have a "superadequacy" like 6 bedrooms in an area that typically has 2-3 bedrooms

* GLA (gross living area) - size of living area, again is it typical for properties in the area or under or over built. In some areas, buyers want larger houses to accommodate their growing family and therefore, may have additional appeal for larger homes (1,200sf vs 2,500sf), or they want additional space for a home office or gym, etc.

* Heating/Cooling - central heat and air or wall furnace and no AC, if the house is in a community close to the ocean, AC may not be a big deal, but in hot environments, it may be seen as a necessity and this may be reflected in prices.

* Garage/Carports - # of each, some areas have a premium for garages since the weather will affect their utility. Basically, if it snows or rains heavily in your area, you would probably want an enclosed garage and preferably attached to the house with direct access, and buyers may pay more for that.

* Yard amenities, etc - in-ground pool/spa, covered patio, built-in BBQ's, elaborate yard landscaping and upgrades, etc.

Those are many characteristics that we look at when evaluating a home, and then we are looking for recent sales that, hopefully, have many of those attributes, or we piece together different sales which have some of those attributes, to reflect the important characteristics of the Subject Property in the market. It is a combination of art and science.

All the things Troy mentions and I'll add a little to that. The contract price can be one of the best indicators of market value for the Subject property (assuming typical terms and no major concessions). It is literally a direct reflection of market demand for that property, especially, when you have multiple offers on that property. The first part of the Definition of Market Value we use for lending purposes, is "The most probable price which a property should bring in a competitive market." Many times an actual contract price perfectly fits that part of the definition. But, as Troy says, as long as the comps reasonably support it.

I'll start with a few of my favorite quotes.

"Whether you think you can, or you think you can't ...you're right." Henry Ford

"If you argue for your limitations, they're yours" ..don't remember where I got that one.

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I am not reading any responses from anyone saying that it is "easy." But, I have read a bunch of your responses stating words like can't, don't, not, no, etc. Which seems like you discount any possiblillities before learning about them or giving them a chance, even when experienced people are offering you examples. Some better words to focus on would be "how can I."

A few more thoughts.
It sounds like you are equating money with "value." As a professional "valuator," I see that a lot. Your best opportunity to do the things you seem to want to do, is to figure out a way to bring value to others. And since you seem to be saying you don't have the money, you would do better raising your "value." This typically happens by learning more about the business and how others have already done the things you want to do, like buying a property with no money down, subject-to, at a steep discount, or ?. Basically, if you feel you don't have the resources, go find them, and I am not just talking about the money. Resources, go far beyond money, like education, information, creativity, relationships, etc. But, if you keep discounting any options so easily, then you will prove yourself correct, and all of us who HAVE done what you say can't be done, will continue to do those deals.

And as you gather more info, you may decide to approach things in a different way or in a different order. You may decide that doing a flip deal first works best, in order for you to gather more money, or finding money partners and splitting profits or cashflow. There are many reasons why people would want to do that. There are professionals that are too busy or lack the knowledge of how to best invest their money in RE that would gladly put up their money in a secure investment for a higher than market return. And there are also many reasons people sell there property at a steep discount. 

I, like many others, understand that it is not typically easy or straight forward to do what you seemingly want to do, but if it was, it would probably carry less value. I think one major problem is, that in the most recent past, it was it was too easy to make this business successful and people didn't put in the work to understand how it typically works. In other words, they added little "value." And now that we are in and going toward a different cycle some don't know how to navigate the market with their limited toolbox.

But, bottomline is if your not willing to put in the work, this business may not be for you. No need for you to be "wasting time" (your words) if it doesn't fit your ideals. Maybe you need to work through your frustration first and then decide which route/s to pursue.