All Forum Posts by: Dave Bingham

@Mary Ann 

It can be convoluted when quantifying whether it is commercial or not and can be quite the mind job if you allow it to be. I think I'd try to take myself out of the equation if I were you and go with zoning. If you go residential with this you might run into all sorts of problems with HOA's, zoning dept., etc... Perhaps look for places that are for sale that already are zoned for this specific tax. Or you could find an area that has a great location but is zoned improperly. Zoning boards at times give variances if you can provide a compelling reason.

@Barbara Brown 

Hi Barbara! Welcome to BP. I have never done a wholesale deal so I could only tell you enough to be dangerous so definitely don't take what I say as absolute truth with subjects in that area! I did get my real estate salesperson license about a decade or so ago though and it was a real boon for me during my single family residence investing career. I have since let it lapse since my need for it is non-existent at this point. The big school around here for getting licensed is Bob Hogue school of real estate.

As a wholesaler I imagine you'll be sending a great deal of yellow letters to homeowners. From what I have seen in my opinion one of the best groups of people in that demographic to target are absentee homeowners. You can find various leads online such as www.listsource.com to get started. I've heard all sorts of numbers regarding a response rate but 1-2% seems to come up frequently. I'd try something creative as well in your communication with them. They get many of these letters and it's important to have yours stand out. Try googling "clever marketing direct mail" to get some ideas.

There are people on here that have done this for years and are infinitely much better at it than I am. Perhaps start a thread with a specific title such as " best direct mail marketing techniques".

As far as getting into the nitty gritty of how to proceed, once you have someone interested I've heard not to pay more than 70% of market value but I'm fairly ignorant here as well. It doesn't make sense to me to have a hard number like that as each property and its needs are different.

Take a drive around Tampa and when you see the bandit signs offering to buy your home for cash write down the contact information. Call them and offer to take them to lunch your treat. Some might be rehabbers and some might be wholesalers. Either way, you'll get lots of information and maybe create a relationship. Worse comes to worse and they are a total jerk you'll know who not to wholesale your deal to in the future! I'd also call the hard money lenders around town. They may put you in touch with rehabbers that you could assign the contract to.

The great thing about BP is someone who actually does this will probably chime in and give you a better picture than I have.

Good luck with it!

@Mary Ann 

What helped me was to find a niche and stick with it. When I was open to everything I learned a lot but made very little money, in fact I lost money. I kept telling myself it was part of learning, my real estate tuition so to speak. Had I wanted to become "That investor" who could look at anything with real estate and find value that would have been a great path. I'm not though, the goal was to make money and I didn't care how I did it. I eventually found something I really liked and stuck with it. The money stopped flowing out the door and of course my general education about real estate inversely dropped as well but I learned a great deal about what I chose.

It looks like you already have a goal of being a force in the collaborative real estate market. Have you thought about trying to work as a agent in a commercial brokerage? Maybe make a website for them and they can teach you some stuff? A type of quid pro quo deal? You have no money invested that way and just upside with your knowledge and networking.

Have you thought about trying to find and market to operations that need basically just phone lines and a roof over their head such as call centers or a brokerage house for equities? It's not exactly collaborative but it does fit an open floor concept and fits very nicely into your "rent the desks" type of mindset.

Keep me posted, I haven't run into anyone that has had these types of goals with real estate and it has piqued my curiosity.

Good luck!

@Fred Conway 

Hi Fred. I'm not really sure what you're asking in your first question. I'm guessing you're asking what is behind the gentrification. If that is the case there are a few factors but first know that I'm more of a multi-family guy instead of individual homes but the trends are similar so I'll take a stab at prognosticating.

It's an area that is being redeveloped as part of the master plan. Investors are helping as well since the government has a vested interest and is actually finishing projects to create a nicer area. As far as what will happen in 5-10 years, honestly who knows.

That's not necessarily a complicated question but it is complex as the number of variables are myriad. Fortunately the variables are almost always the same in each up and coming or area being gentrified. For Seminole heights specifically the surrounding areas are putting pressure in the form of what I call crime n' grime. This doesn't appear to be slowing down due to the redevelopment of SH. What happens out in these areas basically breaks down to choices and opportunity. Presently to my knowledge there isn't much opportunity here so the choices that will be made will probably contribute to decreased values.

The other thing that gives me pause is locals that do not practice real estate as an occupation or even as a hobby are getting in on the action. While it is nice that the area is becoming "nicer" more quickly there is some questionable workmanship occurring and a possible glut from oversupply.  I think this ties into your "how fast do I see it happening" question. the real answer is I don't know but it's far enough along in the process that it gives me great pause to buy there.

However; the oversupply shouldn't phase you if your a long term holder but if you favor a rehab and out you'll be facing a great deal of competition and downward pressure on a possible sales price. I have no idea what the average days on market are in this area but I've been told they are low by other investors I know who invest in the area. Check with @Doug Merriott  I know he's in Pinellas but he may be able to help you or know a realtor over here that could give you more detailed and possibly accurate information than I could. Good luck!

Welcome to Tampa @Mary Ann 

What type of real estate are you looking at getting into?

Welcome to BP and Tampa @Robert Florence 

and @Mark J. !

What types of real estate investments are you guys going after? Office, multi-family, residential?

Pinellas is hot right now. Lots of new units have come online and existing complexes are going for asking price or above with very few DOM. There is some employment growth but I'm not sure it's going to be enough to lease up existing and new units. Now I'm not opposed to having units there but I'd limit my exposure to 4-12 like you said until I knew better the pulse of the direction from better data.

Tampa is a much softer market presently. There are strong areas mainly in the path of progress and others that are mature, stagnant or even declining in value due to various reasons. Seminole Heights is an area that I can tell you off the top of my head that is experiencing some gentrification.

Here's a few links that you might find useful:

http://www.tampaedc.com/

http://www.tampagov.net/economic-and-urban-development/programs/community-redevelopment-areas

@Ronnye L. 

See this link. It explains what a cap rate is and how it is determined.

http://www.biggerpockets.com/forums/432/topics/160892-know-thy-cap-rate-the-illusive-obvious-in-apartment-investing

You got in there before I could finish @Steve Olafson 

See above post for how they are determined.

Great job explaining cap rate @Matt Skinner.  For investors this explanation provides a good starting place for determining for what the cap rate is and its approximate value in a market.

To determine if something is good for a particular investor though I'd suggest folks use the Band of Equity Investment Method. This uses personal information about your mortgage to determine if a deal is good specifically for you with your given mortgage terms.

Here's a fast breakdown: (LTV X Interest rate on mortgage) + (Down payment X Fair market return)

So if your LTV is 75%, mortgage constant is 7.875%, down payment is 25% and a fair market return is 9% then your equation would look like this:

(.75 X .07875) + (.25 X .09) => (.0590) + (.0225) = .0815 => .0815 X 100% = 8.2% cap rate

So if everything in the market is trading at a 6-8 cap this might be a great deal for others but not you since you mortgage terms put you above the range. Finding other deals or reworking one of your factors is needed to be competitive in that market.