All Forum Posts by: Shawn Walters

If so, I have several Nashville area properties and curious what property managers you recommend?  

My gosh, I'm so sorry to hear.  There are some really crappy people out there.  This story alone is enough to make me never buy an auction property thats occupied.  I don't care if they're better deals.

First question is what do you guys do when you place a flip on the market in January.  Obviously the market is not as hot as Spring or summer.  

Secondly, how are you pricing your flips - slightly under market value/comps?

And after how many showings or time do you lower?

I've sold several flips, mostly at market value.  Since I hold for cash, I don't pay extra financing fees.  But opportunity cost has me rethinking it a little to maybe I should be pricing more competetively and making slightly less per flip but move them faster.

I generally wait 30 days or 10 showings and if no decently close to my price offers come in I lower.  

Thoughts?

Thank you all - great advice! I will take the LOC right now and that way if I decide to stop doing flips or whatever I still have those passive income producing assets! Thanks again!!

I have about 20 rentals that are generally all rented every month. Net cap rate on them are about 5-6% yearly. In the past 2 years I've stepped up doing flips and have found them to be more profitable and frankly more fun. Each one usually nets 9-15% pre tax ROI and if I do several in a year it's much higher once combined on an annual basis.

My question is this - Should I take a LOC out against maybe 5 of my rentals (they're all owned for cash) and use that money for additional flips. Or sell those 5 rentals (at a profit), and use that money for flips. Both have pros and cons. LOC allows me to keep the rentals, but that comes at a cost - $10k setup fees and ~4% APR on what I use.

State is NC btw.

A sheriffs sale property I am buying from the courthouse has an IRS lein on it.  I knew about it, so it's ok but have never done one.  But what I'm wondering is regarding their clawback.  So they 120 days from when I close (tomorrow).  The property is $383k.  Market value after maybe $20k (all cosmetic) and 2 weeks of work.  improvement is around $460k.  IRS lein is $90k.

I'm told if I do any work at all on the property in the next 120 days, it could be for nothing if the IRS exercises their right to buy it.  And it'd only be for the courthouse price, not the improvements.  So what do you guys normally do in situations like this?  Sit on it for 120 days, or take the chance that the IRS won't want to mess with it?   I'm thinking the IRS wouldn't mess with it, as they'd need $300k more of taxpayer money just to buy it and sell it, then pay a agent commissions on both sides, and market time.  But I could be wrong.  

Just looking for your experience in this and opinions.

Thanks!

Thank you all for the help. I am meeting with two new property managers today, actually to split up the ones I currently have (half are an hour away from the other half). So they'll be local companies to handle them. I've got good reference checks on them already and they each manage about 200 properties currently and charge 1/2 months rent @ lease and about 7% monthly (usually 10%), but no other fees (advertising, inspections and maintenance commission). So let's hope it goes well and I can give these properties away so I can return to normal life :)

Yes, I know about leverage and debt service and raising my effective rates of return by using a debt service, but I don't want debt. Part of the reason I am doing this is so I do not spend the money on anything else. I WANT it tied up in something illiquid. And I want to continue to invest net profits from my other main business into this investment business on a monthly basis. Now, what I could do is save up for a while and then purchase a very prime lease for 2-3 mil or so.

On the SFH's I have now, my immediate (next 1-3 years) cap rates (after factoring in maintenance, taxes, insurance, vacancy, management etc) will be about 6.7 if I use the big firm, or 7.3 if I use the little guy, and more like 8 if self managed. If rents increase over the years the rate of return will increase each year.

And I did speak to a couple commercial brokers a few weeks ago and felt like I was talking to used car salesmen from the 80's, or someone from the boiler room movie. I'm not educated enough in commercial to take that leap and while a dollar general store might be a good cap rate, I don't want it. I only want SFH's in very good zip codes with very low DOM for rentals and sales. Or if it was the commercial market - the same thing - I want a very stable tenant with corporate backed lease with valuable real estate or a good value on the dirt and a long term lease with inflation raises. Not sure where you're looking but for 1.5M those are few and far between. That said…a whole foods sounds very nice :)...but out of my price range.

All of that said, if I want to pull my hair out from the SFH's, I may be calling you and saying lets invest in commercial!! lol

Re commercial - anything under 1.5 million has risk or low return. Ie, short number of years left on lease , or a lease in the smallest of smallest of towns, or ground lease on a lot that will be worth almost nothing in 10 years. Now if I was willing to invest 2-2.5+ million I could get some really good ground leases or triple net with excellent tenants and excellent locations.

The SFH's I've at least bought @ 10% or less than market value and worst case scenario I can sell them rather easily. But yes, I am in a holding pattern right now and re-evaluating. I do have 3 more under contract that I'm debating walking on the earnest money, but we'll see how the next couple weeks go.