All Forum Posts by: Andy Sabisch

Obviously price will be the biggest factor to move a SFH but there is more that than just a number. Have you over or under improved the property based on the comps and immediate area? You may have put in granite counters when the other homes have laminate which makes yours more expensive but not desirable for the area. The reverse is also true if you have under improved the property. So before you start dropping the list price, see what the comps LOOK LIKE and ask yourself if yours is in the same ballpark. The last few properties we have put on the market went under contract in under a week with multiple offers but they were priced right, were inline with the area but were done with quality and were in desirable areas.

Unless you are dealing in a low-end market, a home warranty should be a standard inclusion especially for first time home buyers.  I also feel we have done a 5 star job but if something fails, I would rather have a warranty in place for the owners . .  believe in karma.  If the profit margin is tight and $500 makes a difference, see if you can save $$$ elsewhere.

Interest rate buydown or seller assist is common place thanks to the jump in interest rates.  We have only had two offers recently that were not looking at seller assist and in a few cases, they wanted / needed 6%.  The only way we can support that is to adjust the selling price to compensate to some degree - spreadsheets are great in seeing what is needed to make us and them happy.

Hope this helps .  . 

We just listed a property and the photographer we use now offers 2-D and 3-D renderings which we opted for.  I was not there when he took the photos but the renderings were done with his phone.  I can reach out and see what he uses.  This is what they looked like.  Impressed the heck out of me and we asked if he will do it as a stand alone option to help us in the layout phase which he will . . . $75 is not bad in my mind.

There is a difference in the hit someone's credit takes if they are behind in payments or they are in foreclosure so offering to buy the property before it goes into foreclosure does help the owner to some degree and it is not claiming to help them stay in the house.  I have seen some people tell the owners that they can rent it after they sell it but if they did not make payments to own it why would they pay rent and you will simply be heading to court to evict them.  Use the right words so you are not tricking them into discussing a deal that you can't make happen (stay in their home).

First I would make sure that you can do what you want based on the zoning for the property as many areas see MF properties differently than SFHs.  

Second, as you mentioned, I would see if the utilities support the conversion.  Will you split the water line and add a second meter?  If not you will have to cover the cost for both (unless you have a well).  The same with the electric.  If you are not installing a second service / meter, you will be carrying that cost as well.  If people are getting free electricity and water, they tend to be a little less frugal :) .

Then check on insurance costs for a MFH and add that to your projections.

Finally, talk to your contractors and see what requires permits, what their experience has been in getting them to pass inspections, the timeline and the cost.

Factor all of these into the decision to move forward or leave as is - maybe advertise it as a 4/1 with a home office with outside access and get more rent that way.

One last point - I hope that the addition you mentioned was done with permits and is reflected on the tax rolls because if not, you may open a can of worms you wish you had not.

As others have said, are you looking to buy the property at below market pricing or are you looking at helping them stave off foreclosure. If the later, be interested in what tools and resources you have to do that. It seems a more truthful approach is to help them sell their property and avoid the credit hit a foreclosure will produce since you are trying to buy the property (to flip or rent) rather than help them stay in their home.

The first option is to use the "Cash for Keys" approach and offer them some money to move out and find somewhere else to live.  While the state is tenant friendly, eventually they will be forced out and at that point it will be without the offer you gave them and with a black mark on their record making it harder to find another place.

Since you are looking at flipping the property, you need them out to do the work and I would discuss that with them - not the flip portion but the work that needs to be done and can't be done with them in it.  Hopefully that will get them to take the cash for keys option. 

Make sure you figure that offer into your number to see if the deal still makes sense.

We are in central PA as well and while A/C is a plus, most homes do not have it and rely on window units for the dog days of summer.  We have one that just went live today and with the heat wave we are in - close to 100F - it would be nice but what we found was one window unit upstairs, blinds down and ceiling fans on makes it not bad up there.  Buyers can put in a window unit in rooms they need to.  Spending the money you are talking for a system that will add minimal value is not where you should be spending your money for a flip.  Remember, the cost of a mini split is really driven by the number of head units inside and not the outside unit.  Adding one for each bedroom and then other rooms will quickly drive the cost up there.

Sometimes simple is better than complex and in tracking expenses, simple is often the best approach.  If the information entered is not matching the  payment platform then what is being entered is the issue.  I would focus on ensuring ANY expense is entered properly so that the expense can be reconciled with the payment.  Google Sheets is a great tool for multiple people to track expenses but as they say "garbage in garbage out" so see where the breakdown is and shore that up.  There are tools out there but we have found that they are more complicated and as a result, introduce more places for errors to creep in.

Finding quality trades people today has become a challenge . . . the good ones are booked and the bad ones are plentiful.  Dealing with that on a local level where you have eyes on the project and the ability to deal with issues early and if needed legally is 100 times easier than doing it long distance.  If you are not familiar with the area (selecting a location because property is cheaper than your home base), often that great deal might be 10 blocks in the wrong direction and you get burned.  Then finding quality contractors - with which you do not have a track record is another hurdle.  We are lucky to have contractors we use regularly locally and get bumped up in the cue when we need work done because they know we are here for the long haul and will keep bringing them business.  Hitting someone cold will not give you that leverage.

As Russell said, investing long distance is extremely risky without an established crew and contacts in the area you are looking.  It is easy to get burned locally . . . imagine how much easier it is investing 500+ miles away!

Think long and hard as to why you are looking long distance.  The real estate training gurus say that investing in your backyard is no different than investing across country but what is said often is far from the truth.  Looking solely at price is a sure fire way to lose big time.  It is always amusing to hear people say I am going to invest ing (name a town) because there are no other investors there.  Guess what, every town - no matter how small - has investors looking at doing flips and BRRRs . . .

Good luck - just do your due diligence before jumping into long distance flips.

Quote from @Jesus Barragan:

I’m working with them now and it hasn’t been a full month and we got one home under contract and sold it the same day. We have received 7 leads in 3 week and sent out 4 contracts and got one signed. So far my experience has been okay with direct 2 Deals

Here's the issue though .... for evey one person that does well, there are 99 that don't.   It is easy to find a few success stories but in most cases, investment funds go up in smoke.  We were sucked into another program which I refer to as an expensive lesson at best.  It didn't bring me anything BP and the local REIG didn't and in most areas less.  There will always be hurus claiming to make you rich for a fee ... remember people like Carlton Sheets from the 80s? ... but knowledge of the market and more importantly the market you are interested in ... is something they can't provide.  Invest in guru courses with care ... there may be some good ones out there but when I hear what many charge, I move along.