All Forum Posts by: Susan Gillespie

@Robert Kretsch I have a contact and will email you offline.

The exclusive contract basically says the agent/broker has exclusive right to locate properties and assist in negotiations for you. It also says you must work exclusively with that agent. Further, you agree to compensate the agent for anything you purchase during the contract time frame.

In many cases, it's fine to use an exclusive contract, because the agent is putting in time and effort for you. However, if someone other than the agent finds a deal for you (another agent, wholesaler, investor, etc.), and you buy the property, you're on the hook for paying a commission to your exclusive agent, even if that agent had no part in the deal. That's the rub for me as an investor. Agents don't like non-exclusives, because it can seem like you're not committed to working with them.

My non-exclusive contracts say that if an agent has shown you a specific property, you can't suddenly decide to purchase the property from another agent or leave them out of the deal. That would be a rotten thing to do anyway.

My best advice is to find an agent who's very knowledgeable about investing, not just the buying process, and develop a good working relationship. If you find a great agent, an exclusive contract might not be a bad thing in the beginning, especially if you're out of state and can build trust. As others have said, it's easier after you've worked together on a deal or two.

@O'brian Rossi I see two concerns with your situation. First, email and timely responses are critical to effective client communication and the bid/negotiation/close process. Even with relatively smooth deals, there are often wrinkles along the way. I would have major concerns if I had trouble getting timely email responses from the start. If it's difficult in non-stressful times, what will it be like when you're under pressure and need quick follow-up? You already missed some opportunities with the delays.

Second, it doesn't sound like the real estate agent is an investor herself. Great agents who are also investors are out there, and I'm guessing you could meet some through this site. Non-investors don't think about cash flow, or how expenses impact your investment return. Investors do.

Since you're investing out of state, it's especially important that your agent can share location-specific knowledge that impacts your investment property search, from rental trends to restrictive city licensing or regulation. Agents who deal with these issues themselves will be much more prepared to help you.

As an investor, you should make sure your contract is for non-exclusive right to represent you.

Is your agent the best match? I too would respect her time and thank her for the help she's given you, but it sounds like time to move on. You don't necessarily need multiple agents, you need the right agent.

Hi Matt, I'm not against paying for quality seminars or education, but in real estate investing, I don't see much quality.

Many free seminars are used for marketing versus education. Many paid seminars are used to recruit students to buy even more expensive materials and classes that enrich a specific individual or guru.

I've attended two paid seminars on real estate. One was a Kaplan course and the other a community ed course on multi-family investing many years ago. I still keep in contact with both instructors - they're smart, knowledgeable, and in my opinion, do it because they enjoy teaching, not because it's a big money maker. Good seminars have learning objectives, quality content and qualified presenters.

Real estate investing has a shady, seedy side. That's due in part to no professional standards, no governing body, no licensure or accreditation, etc. Anyone can claim to be a real estate investor without proof of education, qualification or even experience.

You get what you pay for.

Thanks @Joshua Dorkin , but I mean the alerts I get. They're in random order. Can I sort?

@Dan Brewer

Can you clarify your statement "That is exacerbated by sales channels that only provide a one-year snapshot of a buy-and-hold investment."

A buy-and-hold is not a one year deal. What sales channels do you mean?

I get MLS updates for my target neighborhoods and there's barely anything to look at right now, let alone priced attractively. Anything that's distressed and priced lower is typically long gone before the investor exclusion expires.

On the positive side, you're shopping the competition and getting a much better idea of your market, property condition, etc.

@Robert Kretsch @Dan Verdick

@Michael B.

There's a MNREIA meeting on Feb. 4 in Minneapolis. Have you gone to one? You can print a guess pass to attend two meetings for free. Introduce yourself there, tell people what you're looking for and get on wholesale buyer lists. It's a good place to network and you might find some leads.

@Account Closed congrats on your news and good luck with the move. April is good - flip flop weather will come soon, and the snow, ice and polar vortex will be a distant memory...

Hi Robert, I have great memories of visiting a cabin on Lake Pulaski in Buffalo, but it's been a long time. A few questions:

How is rental demand in the area? In the Twin Cities, it's slower for me to rent in winter months, but picks up in spring. You're probably good if you close in March or April.

Did you factor in closing costs?

What's the condition of the property? Would you have upfront costs to get it rent ready? (paint, carpet, etc.)

What's the interest rate?

I ran your numbers, assuming 5% interest rate, and got monthly cash flow of $168. To me, this is basically break even. I think your repair/maintenance estimate is ok, but it depends on the condition. If one major issue crops up, you're close to paying out of pocket.

I got an internal rate of return (IRR) of 7.2% over 30 years, without appreciation. I look for at least 10%.

If you could get it for $135k, you'd be just over 10% IRR, again assuming no appreciation.

I don't know if your market matches the Twin Cities, but in December there was a 2.7 month supply of homes for sale. It's extremely competitive, and I'm guessing you're looking at MLS listings with your realtor.

http://www.stthomas.edu/business/centers/shenehon/pdf/MplsStpResREIndex1282014.pdf

Good luck. Feel free to message me and I'll send you my evaluation if you'd like to take a look.

Susan

Hi @Jordan L. I think it's smart to focus on real estate as an investment when you're starting out. I wish someone had told younger me to do the same.

I would consider:

A duplex. Live in half, rent half. You'll gain experience and should be able to get good finance terms as owner-occupant. You could move out after a certain period of time (dictated by loan terms) and then have both as rentals.

A single family home that you first owner-occupy, then convert to rental in the future. Depending on condition and loan options, you could finance some renovations or repairs if needed. Look for a roommate or rental space to generate money for your next deal.

I would talk with lenders to pre-qualify and check into first-time buyer deals and incentives. I would also talk with real estate agents - with investing experience !!! - who know your market and can offer suggestions.

You don't need HMLs as @Karen Margrave explained or portfolio lenders yet.

And @Buddy LaRue gave great advice. It's all about the numbers. Start talking to people, look at finance options, and get knowledgeable and comfortable with your numbers to guide your decision.