Finding the right realtor to analyze my first rehab property

Dan MackinBusiness Member

Real Estate Agent · Erie, CO · Member since 2014 · 1k+ posts · 512 votes

7y

@Justin O'Malley what sort of hack are you trying to do? separate units or just room hacks? We only covered some basics at the class you came to last week so what other questions are coming up?

For room hacks I generally see a couple of those potential properties come up weekly.

Some thoughts on the property you are referencing.

1. Structural work is a specialty and one that is achievable, but is not a quick turn around with most engineers. You would want an engineer to check it out and give you a report so you can have an idea of the scope of work.

2. I honestly would really look at your numbers in terms of holding that property. As a rental after all costs I have a hard time believing it will hold its own. Now as a live-in flip that might be possible.

3. Take location into consideration. That property backs right up to the commercial on Federal. That will have an effect on overall value.

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Justin O'Malley

OP

Lakewood, CO · Member since 2017 · 66 posts · 21 votes

7y

@Dan Mackin thanks for the tips!

The main reason is I'm interested in this property is the detached 2 car garage in the back. I do woodworking as a side gig and that would be an awesome shop to work out of without disturbing people in the house. I think this could provide me with about $1000 extra income per month since I already have the major tools.

1. I have heard horror stories about structural issues so I would have to look into that but my realtor led me to believe that is they were bad I could back out of the contract without losing any down payment or anything , is that remotely true?

2. Holding the property would for sure cost a bit but I haven't been able to find anything I can afford comfortably that doesn't need serious work. I also don't believe it wouldn't work as a rental strategy in the future but I think the sweat equity could be worth it in the end and get me out of paying my current landlords mortgage.

3. The location is right behind a shop but it's also across from a park which would be awesome since I have a dog and run a lot.

This property also has 55 saves on zillow in the 1 day that it has been listed so I'm assuming it will go well over the asking price. I appreciate all your input so please don't think I'm arguing for the house at all. I'm just trying to learn as much as possible at the moment, thanks again!!!

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Kyle MccawBusiness Member

Property Manager · Keller, TX · Member since 2011 · 1k+ posts · 1k+ votes

7y

Don't bother with that agent. 95% of real estate agents no NOTHING about investing. Look in your local real estate investment clubs for an agent that understands what you need. Most good investments in my market Dallas-Fort Worth are never hit the MLS. So you may want to start talking to wholesellers. But be sure they have have good references.

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Justin O'Malley

OP

Lakewood, CO · Member since 2017 · 66 posts · 21 votes

7y

@Kyle Mccaw good points!

I have it stuck in my head that since a wholesaler is a middleman that that automatically eats into profits. I guess if there's enough meat on the bone that there is money to be made by both parties but I'm still new so I don't know the margins for wholesalers.

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Matt M.

Realtor · Denver, CO · Member since 2013 · 2k+ posts · 1k+ votes

7y

I would suggest your talk to your agent about your concerns. Did you sign a buyer's agency agreement? Read the contract as you could be liable for commissions owed during the agreement.

There are very few of us that actively fix and flip, and I would only hire someone who practices what they preach. There are many that can regurgitate numbers/figures, but if they aren't in the trenches, then I'd look someone else.

Are you doing the 203k loan? I would run away from structural work. That hole can get really deep. You need more of a carpet and paint kind of place for your first deal.

I completely disagree with @Kyle Mccaw regarding the wholesale route. Unless you know what you are doing and have a good handle on the true costs of rehab, I would avoid going directly to a wholesaler. I've seen too many people burned lately, especially by those companies that spam craigslist. Wholesalers margins are all over the place. I've seen $2k up to $70k recently.

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Bill S.Pro Member

Moderator

Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes

7y

Originally posted by @Justin O'Malley:

What's up BPers,

I've been shopping around for my first property and I have a concern with who I hire as a realtor. I won't drop names here but the person I found has sent me a lot of overpriced properties and every time I have sent them something that is cheap but needs work, they steer me away saying I don't want to dig my self into a hole. I think this realtor is much better suited for families finding their ideal home rather than finding properties that generate passive income (after some elbow grease).

My question to you is how do I find a realtor in the Denver area that will help me determine if the deals I find are actually deals or not. Any and all suggestions are extremely helpful and I thank you for your time!

The current house in question is on the MLS for 195k. It's a 2 bed/1.5 bath in a neighborhood that has a median home value of OVER 340k! The description of the property mentions structural issues so I can see why my realtor was skeptical but the pictures don't look like anything that can't be fixed with a 203k loan. In Denver I've had a lot of troubles finding any property that cashflows enough for a house hack but I think a BRRR on this property could fetch a large profit. Let me know what you think!

It is my experience that homes with structural issues rarely go for a discount that is enough to repair the issue correctly once and for all. There are a number of bandaid fixes available and these are what usually gets applied. It's all good until you go to sell and you sell again and once again the discount doesn't cover the cost to repair right.

Many agents steer newbies away from projects. This is because most newbies don't have a real understanding of what it costs to do rehab and agents and their managing brokers don't want to be hauled into court with claims that they said the work could be done for the meager funds of the buyers. It happens a lot. Most managing brokers coach their agents to guide buyers away from fixers.

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Kevin Grinstead

Realtor · Denver, CO · Member since 2016 · 499 posts · 129 votes

7y

Hi Justin, there are some great agents out there that know a lot about investments. They may not fully know your rehab costs but should be able to give you a general idea. When you talk to your prospective agent, ask them if they work with fix and flippers and what experience they have with them. Also ask them if they have access to any offers market properties.

There are many opportunities out there that can be found a variety of ways. A wholesaler might be a good option as long as they are bring fair and honest to the seller. Their assignment fee might be the same or even less than a Realtors commission.

Structural issues can be a big deal. I would see if you can schedule a structural engineer company to check it out with you if the sellers don't already have an engineers report.

Another challenge about structural is that even if fixed you will be best protected if you disclose that there was a structural issue when you sell in the future.

Good Luck and Happy Investing.

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Finding the right realtor to analyze my first rehab property

Finding the right realtor to analyze my first rehab property

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