All Forum Posts by: Kevin Boylan

I think that in general, the 50% rule will almost always assure a positive cash flow. I have seen enough evidence to make me believe that, over the long haul, NOI and capital expenses will average about 50% of market rents. But you can also make good cash flow at some higher price when you realize that a house has some new items that fall into the more expensive categories (roof, a/c, etc) and these will not need replacement for longer than you will be holding, or maybe for houses that are all brick and require a bit less maintenance. A good cash flow analysis can point you towards the best years to sell to maximize cash flow. Of course all analysis and rules of thumb are our best attempts at educated guesses, using the statistics we know. But if you can always get your houses using the 50% and 2% rule prices, you're not likely to go wrong.

No, they have nothing to do with each other. HUD owned properties are just foreclosed properties that had FHA loans which are government backed. HUD pays off the lender and so now they are the owner. They are like bank owned properties except HUD is like the bank in this case.

I believe they have modified this recently to where there is no longer a period where it is only open to owner-occupants, it's open to everyone from the beginning, but, if there are any owner-occupant bids they get priority over investor bids.[/u]

That's pretty much the reason I got my license. Before getting it I would see houses come up all the time that I wanted to see - not even necessarily that I was interested in buying, but I wanted to see LOTS of houses as comparisons for instance - but it was a hassle to make an appt with an agent to see all of them. And I'd feel guilty if I wanted to see houses I knew I probably wasn't interested in because agents don't like to waste their time. And the commission saved could possibly at times be the difference in getting an offer accepted.

But, I probably still would not have gotten my license just for that reason. What made me decide to get my license was the above reasons plus it provided other possible income because it opened up the normal residential market. I can now also provide typical realtor services too. And when working deals for other investors I can learn a lot about what to do and what not to do by their examples as I see their situations play out.

All Cash,

I'd be interested to hear you answer to John's question too.

There really are no restrictions other than the requirement to disclose that you are a real estate agent.

You are totally correct and I don't think it really matters what market you are in, market price is market price. If you jack up the price to accommodate a commission and it sells, then it was likely priced too low before that and you just jacked it up to market price or even still lower than market price.

You are also correct in that having a property properly listed and advertised through an agent can make the difference between it selling and not selling. However, investors do have a fairly efficient network that normal residential buyers and sellers don't have, so if you are a seller targeting investors, you are likely to be able to sell without a realtor, but if you are rehabbing and selling to non-investors, a Realtor is almost essential, especially in a buyers market.

If you are interested in understanding short sales, here is a book that will do a pretty good job of explaining the whole process.

http://search.barnesandnoble.com/booksearch/isbnInquiry.asp?z=y&EAN=9780471760849&itm=5

If I were you, I would join the REIA. Membership usually gets you lots of worthwhile discounts at places you will be buying a lot of stuff if you are going to be doing rehabs. Then I would go to the free seminar, but I would not sign up for the class. As others have said, save your money for your investments and get your information from this forum, books, and at your REIA meetings. And most of all, you'll learn from doing.

Beachbum is right, many buyers agency agreements will stipulate something like that you agree the agent will get paid 3%. The idea behind this is that it allows your agent to show you homes that are not listed such as FSBO's, and still, this will be figured into what you offer. But normally this will be covered by what is specified in the MLS that the buyers agent is to receive and the sellers broker is bound to pay that to the buyer broker. But if the MLS specifies 2.5% and you sign the buyers agency agreement that the agent will get paid 3% he could hold you to be responsible for the additional .5%. I don't know that I have ever seen one that says you'll have to pay the agent if the deal falls through but I would not be surprised if there are such contracts out there.

Honestly though, I think that most agents that work with investors a lot won't usually make you sign a contract. Investors know that if they stiff the agent, that agent won't bring them anymore good deals, and the agent knows that if they stiff the buyer, word will spread and they won't have anymore investor buyers. Agents who work with investors are really just wholesalers with a license.

It costs you nothing. They will just get their commission which the seller "essentially" pays. I say "essentially" because of course it is factored into the price you pay. :-)

Just keep in mind that you are the one that should determine what you want to offer, no matter what the agent says. The agent has nothing at stake in the offer you make so be sure to run all the numbers yourself.