All Forum Posts by: Brad Jacobson

I agree with the prior comments that listing on the MLS will very likely pay back the 3% BAC or more by obtaining a higher offer.

However, if you're committed to selling off market, you'll probably want to have the house marketed through a large and local wholesaler.  The big wholesalers always have the best buyers list and know all the serious flippers.  

My experience with local wholesalers is that they'll make your commission negotiation really simple.  Ask for 3% (if your family is okay with you taking the reins) and give a cut to the wholesaler so they can get your buyer.  Again, the commission may be around the 6% or whatever, but they should be able to move it at a fair price.  Note that when selling to an investor, you'll never get the owner-occupant price which 9/10x is the highest offer.

Good luck!

I'm a huge proponent of combining two strategies - the house hack and the nomad.

You should take advantage of the opportunity to buy a house, as an owner occupant, with the traditional 3-5% down as many times as you can!  Then house hack it, live for cheap or free. That's always better than renting.

Then, you can combine that house hacking strategy with the nomad strategy and move every 12 months.  It's the easiest and least expensive way to stack properties early on. 

I'd suggest you consider buying a short term house hack but also considering how the property would perform as a traditional rental once you move out in a year and a half or so.  

Good luck!

Hi Alyssa,

My advice would be to simply find a great real estate savvy insurance agent in your area.

Recently, I switched over my personal and rental properties over to a great agent and he showed me that my prior umbrella policy was too expensive so he simply increased the liability coverage on all of my rentals.  It raised the annual premium some but it was a lot cheaper than the umbrella policy and I ended up with more coverage than before.

Go to a local real estate meetup and ask the attendees who's the best insurance person in your local market and go get their advice and rates!

Good luck,

If the note is for 30yrs, you'll want to confirm if there's a penalty for an early pay-off.  Most (maybe all) traditional 30yr mortgages today have no pre-penalty but an angel carried 30yr could be different.  Make sure to confirm!

In Utah, the owner has title to a property even if the property is still leveraged by another investor or bank.  Therefore, in Utah you can still do HELOCs and other financing tools but I believe this can vary from state to state, perhaps even from credit union to credit union.  It'd be best to confirm if your angel investor's contract speaks to this option or not.

Hi Michael,

Yes, you've got the basic concept of buying a property subject to.

In that same example (seller's owe $50,000, you purchase for $150,000), the terms you create for the financing should have a balloon payment along with enough monthly to cover their mortgage and provide them some cashflow.  It's normal to have terms of 3-5 years but they can be anything the parties agree to.

The hope is that in 3-5 years, you've forced appreciation on the property (rehab, value add, whatever) and the market has continued to push values upwards.  Then, say, the property could be worth $200,000.  At that point, you'd be able to secure long term financing through a traditional mortgage.

When securing long term financing, you'll be able to cash out 80% of ARV (in the $200,000 case, this would be $160,000). You'd get to keep the $10,000, pay off the seller's $150,000 (or whatever amount is owed at that point if some of the payments were paying down principal), and then be left with 20% equity in the property.

Hopefully that makes sense.  Good luck!

Hey Tommy,

If you're a beginning investor, without a strong cash position, the whole life policy is just going to slow you down for your first few years.  However, if you've sold a few properties and are in a strong cash position, it's definitely a cool tool to consider.  

Many very wealthy people use whole life but I've found that whole life isn't the way they got there.  Instead, it's a way they stay there.

Good luck!

Mixed use is a great house hack!  

The only part of mixed use I've struggled with in the past is that commercial tenants are often hard to source.  If that tenant is set with a long lease, great.  But if that tenant leaves next month, you'll want to have reserves for six or more months in case of long vacancy.  Unlike residential, commercial spaces can be tough to fill.

Once you clear that hurdle, do it!!

If you're 54 and say, you'd like to retire at 65 with a healthy real estate portfolio, I would recommend working to acquire ten doors (3-5 small multifamily properties would be my favorite) by age 60.  Then, sit on all ten doors until you're 65 using the cashflow to pay down the mortgages.  Once 65, sell off the five doors that you like least and use those proceeds to try and pay off the five you like most.

Owning five doors free and clear in Atlanta should net a gross $7,500/month.  You could plan to keep at least $5,000/month if they're paid off.  

This is what I am laser focused on, just shooting to acquire 20 so I can own 10 free and clear.

Good luck!

Live in flips and/or any sort of house-hacking is absolutely the best way to get into real estate for starting investors.

Just be cautious when flipping right now because appraisals are typically higher than ARVs in today's declining market. The last three or four homes I've helped people buy or sell have all appraised for much higher than they were sold for.  These appraisals are coming off sales at 4-5% interest.  Appraisals in a few months will come off 6-7% interest rates and will make forced appreciation more difficult.

Good luck!

I'll give the Realtor pitch of why I think it's better to list with an agent rather than FSBO.

The big difference is publicity and the amount of potentially interested parties.  

First, listing with agent puts your property front and center on the MLS. That will drive far more traffic than anything a FSBO could obtain on classifieds, newspapers, social media, etc. If you're working with a good agent, you'll get very good photos, a 3D tour or video walkthrough, and a very good public listing.

Second, selling FSBO removes the buyer agent commission along with the listing agent commission. By not offering a buyer agent commission, you're likely losing all the potential buyers that are already working with an agent to help them secure a property and guide them through the process. Most people aren't comfortable buying a property by themselves so selling FSBO removes a huge buyer pool.

Third, a good agent is going to nail the list price and will prove useful when negotiating. I've seen a lot of FSBO go way too quickly because they were listed far too low (I bought my own house this way, still almost feel bad for how cheap I got it). Or they list on market for way too long because they're listed way too high.

Yes, listing with professionals will cost you 4-6%!  However, when playing with assets worth hundreds of thousands, it's important to do it right.  

Good luck!