All Forum Posts by: Steve Milford

Here is the answer you are looking for - there isn't an answer. The #1 problem that few have mentioned is that this situation does NOT fall within Fannie Mae Guidelines, so the loan is not sellable. That is the problem! It can be a principal residence or second home, not an investment property. I have called all the local banks and credit unions to no avail. Everyone wants a crack at it to "get a customer", but they call come back to the same answer, "No."

I am in the same exact situation you are in. The only real answer is to 1031 it to stick-built property. It just is. In a perverse way, it is a goose egg that just keeps on growing lol.

Fannie Mae Guidelines, https://singlefamily.fanniemae...

I see 2 transactions here, purchase and tenancy. My reco is to not confuse the two. Both need to work for you. The Seller's potential homelessness is an opportunity for you. I might counter for $200k, set the rent to cover the mortgage for 6 months, and then any months at a higher rent, and make it MTM. If you lose it, move on to the next. If you don't collect rent and if they need longer than 6 mos, this will create a hardship for you. When Sellers see positive market activity they become "convinced" that everyone will behave that way. 

You need to look at the market with "fresh eyes". If you look with hindsight, it always looks like "not the right time." The problem is that no one knows when the dips will happen and or for how long. If we watch the pros, when things are volatile in real estate, they invest in stocks, or another vehicle, and on and on. Just holding onto the money turns it into dead cash, which gets eaten away by inflation. 

Regarding the rent question, if the market dips a lot and demand suffer, rental income can dip too. Nothing is a sure bet. 

Regarding building a team - do whatever you can to get your feet wet, to build more experience, and to raise capital. As an agent, seeing all that I see, I don't see the market taking a dip, at least in my market anyways. It spikes at the start of every season, and then trickles down a bit, and repeats itself. When it dips, you must be ready to jump on the opportunities. 

Also, with any purchase, plan your exit. Most people "wait" for the right time, but there is no such thing.

@Jeff Melby If it cash flows, keep it. Otherwise 1031 it.

@Allen Gross

Just be aware, one act is not tied to another. They are separate.

I give people I do business, whom I know on a first name basis, a free cup of coffee on their birthday. And at Christmas, maybe 2 cups of coffee. If I was standing next to them at Starbucks, I would do the same thing. Sometimes I send people a copy of my favorite book of the year. I have found that people just like to be appreciated. Sometimes it starts a conversation, and sometimes it doesn't. Overall, I have just found that people are more gracious with each other, when each is kind to each other. And doing business with such people makes any business just a little easier. It just is. BNI lead groups have this figured out 100%.

Maybe, it was strange because you have never done it. I have been homeless a few times in life, so having a place to receive mail is important. Even now, I have a PO Box I visit maybe 3 times a year - catches all the marketing materials everyone wants to send me. 99% of it goes from my PO Box to the trash can near the door, before I even leave the lobby. 

What she was really saying was, "Please complete the transaction already - I need to get paid." Lol.

@Devin Danielson At the same time. Find the deal and then find out what is wrong with it through inspection. Then go find pros to help you out. Always get at least 2 bids to compare against. Over time you will find people that are fair and some that rip people off in time and or money. If you can't find the team to help you, maybe you pass on the deal.

It took me 3 deals to find a roofer that has a price that on average is 60% of everyone else. He is usually booked out for months and does zero advertising - all word of mouth. But on my 3rd deal I was a desperate for a roofer, so I called every local contractor I could find. He just happened to have an opening for the time I needed. Over the last 5 years, I have probably referred him out 10 times, still the best deal in town.

@Howard Thomas This is an interesting one. I've had listings where one buyer gets freaked out or wants to drive down price about little stuff so they go find what seems like the most expensive bids on the face of the earth. I just laugh when the buyer's agent presents the fantasy bid and "expects" the Seller to agree. Yes defects become identitified, but many can fix lol. So what if it drops out of contract. And then sometimes another buyer wants no fixes lol. It all comes back to how bad someone wants the house. I.e. I had a listing last year where buyer wanted $75k in repairs. Seller said ok to $7k. It still closed with same buyer. Funny. I had another where buyer wanted $6k on repairs, they got $$6k worth, except the price went up $4k. Or another where buyer presented a $50k bid for repairs. It fell out of contract. Seller spent $2k on repairs they felt important. Next Buyer wanted no repairs, just closing costs. Wonders never cease.

@Brian Wise Sounds like you know your answer.