All Forum Posts by: Steve Milford

@Rachel 

@Rachel N. Because you mentioned that you are uncomfortable with a room to rent because of your kids, I would assume that you would also be uncomfortable with an ADU. Proximity of a few 100 feet vs 50 feet is irrelevant.

Regarding title issues of your current transaction - once you have your license you can do your own investigative work with lenders, Realtors, Title, etc either prior to or during a transaction. Real estate is a slow moving beast for the most part - when you rush it, bad decisions are made. So take this opportunity, that is how I see it, to get your licensing done asap and figuring out the best way to use that license to get the phone to ring and or to make more money. Congrats on starting your licensing.

I have yet to have a contract that doesn't have problems, it is also a nature of the beast. Even today, I have a closing pushed back because CDs are wrong. When you work behind the scenes you see who is to blame for problems, who is at fault here? The lender, but as you will find, it is always someone else's fault. 

I would go with your gut but think long-term. This comes back to your why. Sometimes people do things because of the money, though this is really only applicable when you have to make a decision versus want to make a decision, or as a true business decision.

Only you can answer if it is worth the money.  

My additional questions would be: 

1) Are you moving into a new house/house-hacking because of a lack of down payment amount?

2) Why not just refinance to get cash out, then take that as down for another more pricier house or just another house? Rather than buy a house (if not enough down avail), what about buying a condo?

Look at the numbers again. With your numbers, a new mortgage is $3,200. If you are between renters it is still $3,200. When you get a renter, the income offset is $1,500, usually a month behind. That leaves a remaining mortgage of $1,700.  Yes it would be $500 less than you are currently paying but there are a few ifs in there that can cause stress. 

If you want additional money and want to "try out" this scenario I would say give it a try first on a smaller scale by renting a room if you can. Then you will know if you are ok with having your renter being "that close". There are other ways to make a few extra $100 per month, and just because you can now does not mean it is a good long-term plan.

I am a little conservative but I like rents that are within market rates for sqr. footage, yet at the lower end as I am more concerned about vacancy and condition of property versus make a few more $$.

I am a little late to the party but...(with my Realtor hat on) - your initial numbers are off.

1) The listing agent is "not accepting anymore offers," as of 9/6. When this happens, many listing agents become very non-communicative. The listing agent might have had an offer already in-hand but per bank needed to list again.

2) Min default is for $390,000, not $66k. Could be more after all liens are discovered. Final purchase price could be more or could be less. Comps are $380k-$400k at quick glance. You need to take any list price with a grain of salt, it is just meant to drive traffic. Where did you come up with your purchase price? 

3) As a final nail in the coffin, "waiting for bank to accept and previous buyer to terminate." Who knows when that could happen - meanwhile your money can get tied up while you wait.

4) "Why would a property owner...?" Who knows - who cares, there are 1,000s are reasons and all are irrelevant. Motivation to sell is already there because it has been for sale for so long. In this case, all you should care about is bank acceptance of price, of which there isn't one yet.

Using a Realtor in a buy situation is a no-brainer.

1) It costs you nothing in most cases.

2) Realtors are very cliquey, and many are only open with info when talking with other licensed Realtors. It is the nature of the beast - we talk to Realtors using our own language. In the end Realtors just want to get paid and this is easier/quicker by working with other Realtors versus random investors. As such, by using a Realtor the conversation is a LOT quicker.

i.e. I have 4 wannabe investors that I get a few minutes of my time per month. Only 1 has pulled the trigger in a purchase, and most (even those I don't work with) that I have encountered want something for nothing. That's a lot of work on the what-if. I would rather have a qualified first-time home buyer.

Just saying...

@Rachel N.

You will have to find a brokerage that works for you. I interviewed a lot of principal brokers until I found a style that works for me. I like the School of Hard Knocks with an active mentor. I watch lots of YouTube for sales and other training.

I have a FT job and do real estate in the evenings and weekends. Why? I found that I have a low risk tolerance, and I "need" steady income for health insurance and to make sure that the mortgage gets paid. As a side note, I have found that it is easier to get financing with W-2 income as well.

I did my schooling/renewals online, and work out of my house with zero floor time. I couldn't even tell you what "the office" looks like lol. Whether or not you are FT or PT in this  business (everyone has their own opinion of what that is lol), it is feast or famine. During the feast, you save your pennies until the feast comes around again. This year so far regarding real estate, I ate well this spring, played during the summer and thus starved, and now will eat well this fall. 

Time wise, I do all my marketing from my desk through direct mail or cold calling, though the best relationships are cultivated over time after I meet someone in person. Though cold calls produce deals they also translate into a lot of work on the back end usually resulting in someone primarily looking for free help/a waste of my time. I do not door knock at all!

In my view whether or not I am a broker or investor, I still must figure out how to make the phone ring and found what works for me so I help anyone willing (that is the key vs. tire kickers) and offer low seller rates. My leads trend toward 1/2 first-time home buyers and 1/2 FSBO sellers. I haven't found the magic formula though am starting to get referrals from past clients.

What have I learned? By being an active investor and helping others, I used to think toward more flips.... now I like the rental model (BRRR) better.

That's it in a nutshell. Let me know if you need more help.

Steve

@Thomas Burnett

My thought would be to go and get your license 1st. That way when you buy your first house hack, or just house, you get paid. As soon as you get your first check, you either catch the bug or not. If you do, then you just need to figure our how to get paid again and again (that's the hard part-getting the phone to ring). 

I was always interested in real estate and "read until I was dead" lol, but no one took me seriously until I put "skin in the game". Information is cheap, experience is expensive. When I started, I was recently divorced, renting a room from my mom, felt "broker-than-broke", borrowed from friends, and then got my license. I didn't have a clue how to do this business, but just started having conversations, passing out my business card as fast as I could, and my mentor answered my questions. It took me 3 months to get my first deal and it was a life-changing event. I bought my house within 6 months of getting licensed. Now, I help others as many have helped me. Let's meet up if you want to exchange ideas. 

Lastly, I would say, be open to learning where ever you can (not just wholesaling) and be willing to take on a new challenge. For example, I thought I would drive toward a particular niche, but I found a different niche that keeps rewarding me.  What is my secret? I am hungry and willing to put in the work-that's it (after I get off work from my day job). i.e. I go look at homes whenever - all you need is access and a flashlight. 

@Rachel N.

@Rachel N.Regarding licensing, you might want to re-look at the benefits of licensing, it is not always just a savings on fees. I encourage everyone to get one because the education alone that you get from it is worth it. And then costs are countered against income. Also, 

• Each brokerage has their own fee structure/business model, so you want to look at one that would benefit you. They are all across the board. I found that if I can do 1 (yes only 1) deal a year, I break even with fixed costs.
• My first deal was when I bought my own home. The fee would have gone to the seller's agent if I didn't have a license. Instead I got it.
• The access I have to homes is much better, and I talk with more investors than I ever would have been able too without having a license.
• Realtor world is very cliquey, so it is worth getting into that conversation however you can. Most speak a different language to the public vs. to other Realtors. 

My 2 cents.

I think you are making it too hard. If this was me...if I have to convince my pocket buyers then there is no "deal" IMO. I offer scenarios as I find them and then they tell me what to move on. To me, there is no "deal" here based on what my buyers want and you are offering.

If the seller won't lower the price and seller wanted my help still, then I would offer it as LR+BAC or a smaller SAC+BAC, and just make it a retail offering. If your brokerage won't allow you to do that, or they are too greedy, go find a new brokerage.

Regarding 2nd question, when I was a renter I preferred M2M because the opportunity to make a change was available every month versus being forced into a major decision once a year. Ironically, I always stayed longer when I was M2M.

@Michelle Fox

My 2 cents...

If you are looking to rent look for property managers and then contact them directly. I use Hotpads.com for that and then work it backwards. The info can be a little dated, but still works. You can use other rental search tools as well. Looking for property management firms in an area doesn't work because there are so many, and that doesn't mean they have rentals in the area you want.

If you are looking to buy anything - just understand that there is little inventory here, so if a property is priced competitively - yes poof it is gone. 

Good luck.

You might want to first look at your goals. Where do you see your investing? And why? Do you have a long-term strategy?

It may seem like putting the cart before the horse, though your long-term strategy will help you decide where to get started. It will also keep you grounded along the way.

I see this with my real estate clients. They want to focus on the numbers before focusing on what they want - in the end, what they want becomes a determining factor more so that the numbers. Or, you can focus all day long on the numbers and still not make a decision to get involved. It is called Analysis Paralysis.

Even though there are lots of metrics and numbers, this is only half the battle. The other half is what your gut tells you to do; what the "feel of the market is".

i.e. 

I got into real estate for 2 reasons: 1) To help those that get told, "No, you can't do that," like I was before I had a license, and 2) To become an investor myself - to learn the trade and generate cash to do it. When I started, all I had was a down-payment for my first purchase.

I am a DIYer type, though now 18 months after my first investment property/house hack, I find that a better use of my time is to outsource some activities and pay for some professional advice from a CPA. This still works into my long-term strategy, but I want those decisions to be smart.

The BRRR method is not really my cup of tea, I prefer the flipping model, but right now I find myself facing capital gains unless I do BRRR.

What is my long-term strategy? Greatest cash flow. In this market, Portland Vancouver, appreciation is very good if you can find a home at a good price. To me, that is a big if and can create a long search - as the cost of rehab can eat up any savings fast, and I am buying for instant equity. Ironically, the skills I have developed as a Realtor regarding estimating comps and ARV have become invaluable.