All Forum Posts by: Chris Vacek

I would need a little bit more info.  Are you a real estate agent?  Standard is around 25% for a client referral.  When you say you found a 1M deal what do you mean by that?  You know someone who wants to buy?  You know the seller and found someone who is interested in their property?

TL;DR Standard referral is 25%.  I have seen 30 and I have seen 15.  IANAL but im pretty sure referrals can only be paid out to licensed real estate salespersons/brokers.

If something looks too good to be true it probably is.  Scam?  Probably/possibly.  Could also be someone is entering info wrong on a website somewhere and listing a rental as a sale.

Zillow and Trulia are all horribly inaccurate anyway. Local MLS puts them on at least a 3 day delay and with the speed of the market around PS that's a big disadvantage. A good deal is not going to sit on the market for more than 3 days.

This is one of the reasons why you should get in touch with a realtor in the area. They should be able to give you access to a direct feed from the local MLS that will be much more helpful and devoid of useless info like the listings above. You don't need to sign anything with them or make an kind of commitment to see whats going on in the market.

Reach out to a few Realtors and see which one you feel most comfortable with. Remember a good agent costs the same as a bad one.  It's on you to do a little shopping.  With a good agent you should be able to tell them exactly what your situation is and what your needs and wants are and they will be able to use their experience to put the right properties in front of you.  Makes the process of searching a whole lot easier.

Good Luck with your search!

In regards to #1... Here's the thing about real estate agents:  The really good ones usually cost the same as the really bad ones.  I would contact a BUNCH of agents, explain your goals and tell them all it's first come first served.  The search part of the investment game can take a while so you will have plenty of time to weed out the agents that you dont like/feel comfortable with and work with the one(s) who understand your goals and expectations.

Another option is to ask other investors in your area who they work with. Any agent can set you up with an MLS search but the really good ones will be able to recognize the deals that meet your goals and will make sure you see them.

As far as #2...

Understand that that agent will be representing the seller (the bank) when they speak with you. If the property is listed by an agent you should find an agent to represent you and reach out through them. The seller pretty much pays your agent so its almost free representation...why wouldn't you? I don't really do REO transactions too often so I will leave it to someone else to answer as far as what kind of questions to ask them.

Good Luck!

I am basing this off zero knowledge of the tenants future plans so keep that in mind.  If it was me I would increase rent just a little and ask them to sign a  new lease.  That way if they just say yes I have added to my bottom line --which is the name of the game right?  If they say they plan to leave I can offer to discount the rent (back to its current rate).  If they still say no after that I inform them that I will begin to show the property and that they will need to be available to show the apartment to potential renters and that if I find someone I will be giving them the required 30 days notice and they will need to find a new apartment at that time.

Chiming in from westchester NY.  Not familiar with the Rochester area but I will answer what I can:

2. What can I expect to get in rent for a 5 bed/2 bath ~1700SF, nicely updated home in Fairport?

1. I would say you need to go by what similar rentals in the area are going for.  Be careful with the assumption that your M-I-L's difficulty in finding a rental indicates a "strong" demand for rentals.  It could be the opposite and there is actually very little to no rental activity in the area.  If you have access to a local MLS I would take a look at average days on market and #of rented vs expired rentals in your price range/area over the past 5 years 

3. Any suggested pricing tactics for older homes that aren't selling, need updates, and the price should come down?

1. I'm not a big fan of "tactical" negotiation TBH.  It leads to the idea that in order to acheive your goals the other party needs to compensate from their end.  This is the emotional angle that most residential transactions end up taking and deals end up dying left and right when people piss each other off and emotions spiral.  
2. I would encourage you to instead try and be as dispassionate about this as possible and use that as your negotiation tactic.  You are saying that the price should come down?  Show me the money! You are now a member of BP which means you have access to plenty of investment formulas.  Show the owner how the repairs you are going to need to make and the money you are going to spend on your end and how its going to affect your goals.  Be clear about your goals "I need XX Cap rate"  "I need to pay less than XX month" and show them how the deal as it is currently structured does not allow you to achieve them.  Then make a suggestion as to how the deal could be restructured to meet those goals.
3. At this point the owner will either play ball or not.  Remember there is no law that says the owner has to make sense.  He can set the price of his property at whatever he want's (and there are plenty of agents that will do it for him).  If he doesn't then walk away and start searching.  Remember you can't force a deal to happen.  That's why we have the numbers and the formulas.  Stick to your goals and you will be fine.

Any suggestions/thoughts would be greatly appreciated! Thanks!!

1. I don't want to sound like a complete negative Nancy here but I would also steer away from the pretty Victorians.  My experience with these is they are a LOT of maintenance.  A lot of them have beautiful intricate woodwork that looks very nice but is a huge maintenance task that from an investment perspective just doesn't make sense.  
2. Again this is also going to be your primary home so maybe you are willing to concede a bit of your potential returns in exchange for the "I just love it though" factor but from a strictly investment perspective I would look for something more along the lines of a boring brick flat roofed building.

And lastly:  welcome to BP!!  You are already well on your way to financial success just by becoming a member here :)

Edit for the Italics

Seller wants to sell, but we can't agree on a price. I want to wholesale the deal but the numbers won't work.

I think that's your answer right there.  Your only real option is to increase your offering price but if the numbers aren't working it looks like this deal is not working.  Sometimes you can't just "Make" a deal work unfortunately.

Is there a reason you can not finance closer to home?  Haven't done an out of country transaction before but I understand why you are wary.

This depends on your current financial situation.  Did you finance the house you just purchased?  How much are you guys making in income every year?  

If I had been in your situation I would have purchased the multifamily first, lived in one of the units and rented out the others.

Talk to one of your local lenders/mortgage brokers.  They will be able to tell you right away if this is something you should even be considering right now or not.

I can't speak to NJ as that's not my area but I'm interested in where you have invested in "upstate" ny.  Where exactly upstate is varies from person to person.  Are you talking orange county upstate or Albany upstate?  

If you haven't already considered it I would say you might be able to find something that suits your needs in an area like Newburgh NY (my hometown).  There is a ferry with direct access to Metro North in Beacon and Beacon is a really hot area right now.  Not sure how married you are to the NJ idea but it's a possibility you might want to consider.

The bottom line here is section 8 obviously does not automatically mean bad tenants.  It really has a lot to do with your area and your business model.  I know for a fact there are many around here making good money renting exclusively to section 8.  They are familiar with the system and know the in's and out's well enough to be confident in that market.

That being said there are areas here in NY that through a mixture of bad lawmaking and poor financial planning have created a situation where a good portion of the population relies heavily on social programs.  This leads to certain individuals learning how to "game" the system and running into one of these characters is a real fear for landlords.

As with anything a strong screening process and due diligence on the part of your lawyer can usually keep you safe but for someone inexperienced in the inner workings of Sect 8 it presents a real challange.