Peter Harris Multifamily Apartments

[Richard Rinehart]

I'm at North Seattle Community College all day for a Peter Harris, Commercial Property Advisors, boot camp.  

I have been a student of Dave LIndahl (best $1,000 I ever spent) and was at REAPS listening to Anthony Chara (good multifamily guy) on Thursday.  On my commute yesterday I listened to a You Tube video by Mr. Harris; later that day I told my wife listen to this guy I really like his strategy and approach.  

Last night I get an email that Mr. Harris is here in Seattle.  Call it destiny, I'm not sure but I am here.

[Patrick Britton]

I'm going to do my good act for the day with this post:

Firstly, you should know that I am familiar with the instructor and have heard is pitch and ideas. Let me save you time, money and energy by saying that the vast majority of what he preaches cannot be done in Seattle or anywhere in King County for that matter.

For starters, the instructor is totally unfamiliar with the going capitalization rates of King County. In his example at the presentation I attended, he was throwing around capitalization rates north of 7%. It will be extremely rare in Seattle to find an apartment building producing more than 5%. And if it does produce more than 5% you have to do some serious homework to make sure someone is not lying to you, because they most likely are. 

As well, his marketing strategy is nothing short of obvious, mundane and completely ordinary. He sends letters to people who own apartments but live out of state. That's his big secret... And he gets his lists from Listsource, which is a total sham only newbies use. Someone with an inside track on wholesaling apartment buildings would be well above and beyond these basic and obvious marketing tactics.

I wonder if the primary source of revenue for this individual, as well as others, isn't in real property, but rather in marketing and educating to those looking at buying and selling real property.

And now for my favorite part that is gonna make all wholesalers out there angry, but is the cold hard truth. Wholesaling in a seller's market is incredibly difficult, if not flat out impossible. Inventory in Seattle is less than 1.5 months... That's the strongest seller's market in about a decade.  Right now, it is the seller who is in control and can dictate prices. No matter how desperate or motivated the seller is, he or she can find nearly any listing agent and get their property sold in a few days for top dollar.  I see this every single day folks.  

Do you think that you, as a wholesaler who can "close quickly" and "pay cash" but need a 15 day inspection contingency can compete with guys who actually have money and can actually close quickly and who only need a day or two for inspection? No chance.  

But then there's the argument that going the wholesaling route avoids real estate commissions. People who make this claim are allergic to math.  Sure, that's a possibly 5% or 6% (everything is negotiable) but what is the wholesaler trying to get? He wants a 20% to 30% discount to value. So geniuses, if you are a seller whom would you go with? Somebody will take 5% or 6% or somebody who will take 25% of your money.

In short, this instructor doesn't know the market, doesn't know the conditions and makes the entire process sound a thousand times easier than it actually is.  Sure, it is "simple," but it is not easy.

On the other hand, when you are in a buyer's market such as Reno, areas of Texas, areas of Florida, certain parts of Phoenix, and most of the Midwest then the wholesaling has its merits. In a buyer's market, there are more sellers than buyers and therefore it is the buyer who can dictate prices. This is how a wholesaler can add value.

I am stunned at how a real estate guru from Florida, for instance, can waltz into a room here in Seattle and think that whatever worked in Florida can work here. That's either just plain ignorance, denial or flat-out stupidity.  

Please believe me when I say that trying to wholesale apartment buildings in King County will waste your time and cost you money. Sure, there are some people who have wholesaled apartments in this area, but there also some people out who have walked on the moon. Just like the lottery, you're always going to hear about the winners but rarely will you hear about the millions of losers.

There, this is my one a selfless act for the day.