All Forum Posts by: Henry M.

I believe I may be the only person successful at this Section 8 strategy based on the comments. 😆 

From 1997 to 2008, I bought multiple properties for under $50K in rough areas of town. If anyone knows San Antonio and remembers areas like Five Palms, they know it was super rough in the '80s and beyond.

I invested at most $5 per square foot on purchase for renovations, making the properties beautiful but using basic materials.

Back then, I would run background checks on all tenants. I used NTN, or the National Tenant Network, and passed those costs onto potential tenants.

My practice was to look at their vehicle and the condition of their current living situation. If they opened the car door and a body fell out, it was a no-go! Just kidding. 😆 You know what I mean. If their property and vehicle were clean inside and out, they were most likely approved. Many were leaving locations that were also Section 8, but perhaps the owner was selling.

I would collect first and last month's rent, a deposit (equal to one month's rent), and a pet deposit from the tenant. I was receiving around $1K per month in rent.

The tenants were responsible for all repairs (esp. in cases of negligence), and I conducted inspections monthly.

In all those years, I only had one eviction for non-payespecially of their portion. I won the case when they didn't show up, but they moved out on their own by the court date.

In fact, on my very first property near Ingram Park Mall, I initially didn’t want to rent to Section 8 tenants and opted for the general public. My first tenants were the worst I have ever experienced, and I quickly learned the eviction process. Because of that experience, I began renting to Section 8 tenants from then on.

The key for me was being proactive: I screened all my tenants and conducted my due diligence prior to acceptance. I maintained a solid relationship with each tenant, even with the one I had to evict. Most stayed with me until I sold. So I didn't have too many turnover and get ready expenses.

And to the point made by poster, #3, I agree: you have to know where you're investing.

Back then, I also had quadplexes, and I even rented a one-bedroom apartment to Section 8. He, along with most, if not all, of my tenants, were great.

These single-family homes, when purchased correctly, provided me with more profit than any other area of town.

Today, I don't buy and hold, but I felt I had it down to a science. There was a seven-year waitlist for demand during those years; I'm not sure about the current situation, but I would want to do it again... However, today's numbers and inflation could make this poster's post pretty accurate.

"Big" Henry

Quote from @Charlie MacPherson:

They seem like the textbook definition of time wasters and as an agent, time is your most precious resource.

Unless they want to pay you a strong hourly rate for submitting - and let's call them what they are - garbage offers, tell them to lose your number.

I am very tempted. LOL.

Will it make a profit? Yes. But it would not be enough to move the needle to be motivated to buy such property. If the numbers are correct, there's maybe $20K to $50K in profit when all is said and done... And that's if everything goes according to plan. Not sure how property moves in that area. If the days on market are short, then possibly, otherwise this is a walk-away.

"Big" Henry

@Thomas Jaskulski

If it is a good deal, the buyers will be the easy part. You'll have to understand most of these investors are going to counteroffer. So be prepared. Know your value. Make sure if you go into a contract (no option period), you require a substantial earnest money. You cannot afford to waste time.

Just make sure your numbers are accurate otherwise you can create a bad rep among real investors. 

Good luck!

Kuddos to @Katie Smith response. 

"Big" Henry

@Luis Maza

Regarding wholesalers, probably 99% of those deals are garbage. Unless you're direct to a seller, you'll often find yourself with tight margins which equates to losing in the end.

Here in Texas, I’ve gone through hundreds of deals this year and maybe half a dozen deals were worth the investment.

We'll see what occurs this coming year and how it will affect real estate. In the meantime, hang in there. 😎

"Big" Henry

Quote from @Henry Lazerow:

My guess is most of the deals selling go to newbies who have no idea what a rehab really costs or that once you open the walls the costs often go up 10's of thousands so you need a solid margin to make money. 

You hit the nail on the head... And regarding wholesalers, probably 99% of those deals are garbage. Unless you're direct to a seller, you'll often find yourself with a short pencil. 

Here in Texas, I’ve gone through hundreds of deals this year and maybe half a dozen deals were worth the investment. 

We'll see what occurs this coming year and how it will affect real estate. In the meantime, hang in there. 😎 

"Big" Henry

Quote from @JD Martin:

Hell, they don't even want to pay you, so you're working for free. 

Don't deal with the dregs of society. "Buyers" like that will only frustrate you and leave you working for nothing. 

Dregs... That's a first on the term. It sounds more slight than blatant. 😆 

TBH, I’m considering terminating the representation agreement due to their current "strategy". As a dedicated and hell of an agent, I find this approach is weighing me down with excessive work.

Even as an investor, I struggle to understand their strategy which wasn't disclosed until after the fact (signed rep agreement) three weeks in.

It seems I would need to submit around 100 offers just to achieve a potential engagement of 2% to 5%, with no guarantee of closing any deals.

Thank you for your response, I definitely appreciate it.

Quote from @Russell Brazil:

Thanks for the tag @JD Martin.

@Henry M. 

NAR Settlement has zero to do with this situation. Either you get to an acceptable net price to the seller, or you dont....just like any other offer.

Love the response.

The reason I ask about the new NAR requirements is because these investors seem to believe that all offers should include the seller covering the commission. Despite my efforts to educate them on this topic, they remain convinced. When a seller refuses to pay the commission, then the investors MAY agree to pay up to 3%.

I understand that the NAR requirements stipulate at least two forms or documents disclosing buyer agent compensation to both parties.

I’m just concerned that we might be in a pickle in this process.

These sellers are not motivated by distress, but if a seller does engage and declines to pay the commission, will the representation agreement suffice to secure compensation, or will we still need to execute the compensation disclosures?

I’ll need to conduct some further research, but I wanted to ask your approach.

I am a real estate investor and a licensed realtor. Occasionally, I assist fellow investors in finding suitable properties.

I have two clients who are business partners who are interested in making lowball offers on various listings. They aim to have the seller cover the buyer's agent commission as part of their strategy. Their approach resembles the BRRRR method.

For example, we have a 3-bedroom, 2-bathroom home in fair condition (requiring less than $20K in cosmetic repairs) that has been on the market since August 2024. The price reductions have been minimal, and the current listing price is $300K. My clients want to submit an offer of $230K.

Btw, this is a Texas market.

As a seller’s or buyer’s agent, how would you respond to this situation?

I have an experienced opinion on the matter, but am seeking outside perception and strategies, if any.

Additionally, what are the implications of the NAR Settlement regarding this strategy if any?

Quote from @Bruce Woodruff:

Quote from @Henry M.:

Quote from @Bruce Woodruff:

Third - Just find a good GC. Vette them thoroughly. Have a specific SOW and a Valid State contract. Pay as you go, nothing upfront.  [Not sure what @Henry M. means by 'day rate', there is no such thing with General Contractors, must be doing small jobs with pick-up laborers]

Bruce,

Just to clarify... I never stated GCs charge a day rate. However, in the event an owner has to be the GC of the project, don't pay a day rate to subs. In Texas, specifically San Antonio, Subs who are skilled usually like to charge a day rate. It doesn't necessarily equate to small jobs. This can be big jobs as well. There's no better GC than the owners themselves. Every third-party GC is going to mark up 10% to 30% to make their cut. The last two rehabs I completed were six-figure budgets... And during the stretch of the renovation, there will be times when firings or quitting will occur. The only way I completed my vision within the budget was to take over projects myself.

"Big" Henry

 Gotcha. Never heard of a Sub working by the day, must be regional....?

BTW, Common Day Rates range from $125 to $250 contingent on the work. Not all do this, but many do.