All Forum Posts by: Phillip Rhegness

I have been gathering ideas and working out marketing strategies for the past year or so and I am ready to step out of the real estate office I currently work under and begin my own.

The area certainly isn't lacking in the number of current real estate companies nor in the number of active realtors but there are some areas and targets that are NOT being approached by anyone. There is a giant gap that can be filled if someone would just step back with an overall point of view and look at what is going on. Everyone is trying to sell the same thing, and only a handful make any money at this gig.

So, any of you own your own real estate company and, if so, care to share the experience you found? I am not a broker so I will have to hire one (already know who to call for that) until I can set aside the time to go to class and try to pass the broker's test.

I have a few people who "have said" they would like to become salespersons under this new company based on the fee structure and marketing I will offer. A couple are already working for other companies but the others are not yet licensed or inactive. I will not steal sheep, at all. The two are simply good friends who like the idea and see a way to make more money.

I plan to target to a wide audience rather than the narrowed focus each company has here. I plan to offer varying fee packages to the salespersons allowing each individual to pick the one that best matches their expected activity level. I have the marketing concept thought out but have not produced any rough draft materials. I have not secured any office space in a high traffic location but I do have a couple of warehouses that can be used if it comes down to it. But the are some prospective locations currently being offered for sale that I have looked at.

I can dream and scheme and plan but it don't mean a thing without some action. So I would like to hear about some of your entrepreneurial experiences. What would do different if you had to start another real estate company from the ground up?

Hey, Kellie,

How local are you looking to network? I am in Jasper, 45 minutes West of Birmingham.

Phillip

I got the response from my wife, "You better not!!!"

But I did anyway. I wasn't needing her permission, I was talking with her to see if she was "with me" in the deal. Apparently she didn't want to be involved so she wasn't.

I was off one day and when she came home from work she asked how my day was. I said fine. (the usual answer)

Later that evening I said, "Oh, by the way, I bought that property today that I was telling you about." She hit the roof and let me know how mad she was at me for buying it anyway after she told me she didn't want to spend the money on it.

Today, she loves the property and when it comes up in conversation she refers to it as "ours". I call it "the property". Only my name is on the deed...

I say do your homework and if you see a deal you cannot let slide by then buy it and do what you planned on doing. What's the worst she can do? Get mad? :D

I'm not needing any cash, I just wanted to re-invest the money I tied up buying that property. The idea of selling half the interest to someone for what I initially paid for it is sounding better. That whole idea was new when I mentioned it here. The more I thought about it the better it looked.

If he backs out, or if it doesn't work out, then I will borrow against the property and re-invest the money. There are a couple of great foreclosures here I am wanting to pick up...

I bought the property in April of this year for $45k. It was a foreclosure on a business gone bad. It is 2.5 acres with a 10-year-old metal 3000 SQFT building with three bays, and office, and a bathroom. There is also an old 2000 SQFT building with two bays, a large spray booth, and an office.

The rents I was offered were $600-800. There is a similar property 500ft away which sold for $70k in the summer of 2003. That's my best comp. Yes, it does suck. Commercial property has not been selling very well here. Part of it is city planning keeping a death grip on progress and change. Another part is the sellers wanting too much for the properties.

I don't know what other properties rent for. I haven't done the homework on that one.

The city I live in only has about 15,000 people but it serves two counties. The average household income here is $44k and the average house value is $91k. Our household income is only $70k.

Small town. But, a new interstate has been completed with four exits for the city. In popularity estimates, the exit I am near will be the last developed. At the most popular exit, land in selling for about $500k an acre. I certainly don't expect prices like that in 10-12 years but I expect to see a huge jump in value.

I had my property appraised when I put it up for sale and he told me not to take less than $120k. If I had to sell it, that is. Since I had paid it off he said my best bet would be keeping it and letting time pass. Then sell when the demand is there.

I have some commercial property that I have completely paid off. It has been few months now and I want the money (or at least some of it) back. I have tried finding a renter but in this small city those who know real estate and watch it have spread the word about the super low price for which I bought the property. Three potential renters have said they know what I paid for it and won't let me make a profit off them. They will only agree to a unreasonably low rent which would not be profitable for me after insurance and maintenance costs. So it is not being rented.

I tried selling it but the realtors inform their clients of my purchase price and I get stupid low offers of half the appraised value.

I bought it with the intentions of renting it out and waiting 10-12 years for the area to respond to the new interstate 1/2 mile away. I planned to purchase the four surrounding properties to have a six acre parcel with road frontage on three sides.

I have a friend who wants to give me the amount I paid for the property in exchange for half the sale price when it is sold. Sounds tempting. We would split the purchase prices of the four adjacent properties as well.

So, what advice do you guys offer? I feel my money is tied up and not working as hard as it could be in a property I could actually rent!!! :wink: I have been told many times not to own a property because it ties up your own money. It is better to use the bank's money so you borrow what you can. I planned to keep it as a long term investment so I thought having it paid for would be the best course of action.

Do I take whatever rental I can drum up?
Do I sit on it like some have advised and let it appreciate?
Do I sell half to someone?
Do I cash out some of the equity and invest that into an income producing property?

Questions, questions, questions...

Thanks, Josh, for letting me know your strategy in negotiating towards the price you want.

I have bought a different house now, today actually. I passed on the Fannie Mae thinking I would waste my time because the max I would want to pay is nowhere near their listing price. If it stays on the market long enough I may have another chance to make an offer. I am trying to sell some commercial property and will use the profit from that to payoff some debts and re-invest into another property.

If it is still available then I will definitely make an offer!

Thanks, that is exactly what I was looking to hear. I had no idea what kind of flexibility was built into their pricing and what you said clears that up for me.

It was initially brought to the market at $189,900 but then was reduced to $179,500 the next day. Not really sure what was going on there and the realtor with the listing does not seem to be very helpful when I ask him questions.

The home has been on the market now for 68 days. Maybe another price drop is coming...

There is a foreclosure I took a look at and was very pleased with what I saw. Musty, spider webs, a couple of dead roaches, and a moldy finished basement with damp carpet. Yes! $$$ Profits await!

But then the listing agent told me it was a Fannie Mae listing. Doh! What's the chances of me squeezing a good price for this house knowing Fannie Mae is only looking at the property on paper?

Here's the basics on the house:

--4000 SQFT (including 1000 SQFT finished basement
--6yr old central unit and unknown age second unit
--excellent foundation with no to very minimal settling
--split level with large bedrooms and large bathrooms
--1.5 acres lot in a good neighborhood with a few million dollar homes a couple of streets over
--nice but neglected landscaping
--built in late '70s

Fannie Mae wants $179k but it needs everything on the inside. Everything.
--All carpet is nasty and stinks from being closed up for over a year with a wet basement
--ugly paneling in some rooms, vinyl floors are ripped, and most likely the ancient kitchen appliance do not work

The wet basement appears to be less scary than it first looks. A brand new water heater is sitting down there and the basement has a little bit of a hump in the middle (very slight) so water can move two different directions. I am thinking the water heater busted (while going through the foreclosure process) and was then replaced. The carpeting down there held the water since the place is closed up and the only areas that dried are the ones near the windows so the sun light could help out. The back side is STILL wet. Mold is on the trim work and sheetrock but not on the floor joist for the main floor. There is a drop ceiling and the wood behind the ceiling looks perfect.

I think the house could be a $240k home even in this slow, slow market if fixed up. Maybe $260k when things begin to swing back around. So how do I get Fannie Mae to come off that price more so I can sink about $50-60k into it (for materials. All labor will be me) and still make a very nice profit?

Anyone successful in convincing Fannie Mae to take a big drop in asking price?

I posted a link to the .xls file but I may have violated a rule in doing so as I see the link and accompanying text has been removed. Oops!

The spreadsheet was very basic but it would eliminate the need to write out the formula on paper and then refigure it each time you changed a value.

There are only seven variables you can manipulate but the final cashflow value is recalculated with each change. It made for an easy, quick, back-of-the-envelope analysis of an apartment building.

And I saw that the one I was interested in either needs to go way up in rent or way down on price. Either way I decide to walk away and keep looking.

Maybe biggerpockets will decide to host the file and you can let me know additional variables I have overlooked.

Phillip