All Forum Posts by: Cliff Harrison

BRRRR is great because if executed correctly, you get all of your invested capital back and you can move on to your next project. However, if you have plenty of savings and/or income to invest and want to save your time and reduce risk just buy move-in-ready property (or cosmetic rehab only) off the MLS or in good solid rental areas. Use a home inspector and find a good local property manager. Make sure the rent more than covers all of your expenses, including 10% vacancy and long term capital improvements. I like the 1% rule as a quick screen, and shoot for 1.5% properties with PITI being approximately half of the rent. Duplexes with fully metered utilities are a great way to start, in my opinion. Good luck.

Hello All,

I am not an agent, but am looking for experienced agent feedback.  My situation is that I am under contract to purchase a mutli-family in Missouri.  I signed a dual agency agreement with the listing agent, who was already representing the seller. 

We have completed inspections, concessions were made, and the DD contingency has expired.  Approximately three weeks ago, a flood occurred at the property due to plumbing failure which affected two units.  Two tenants were displaced and moved to a hotel.  The agent was informed by the seller, but he (the agent) did not inform me (the buyer). I found out by good luck/accident.  One of the tenants is an army soldier stationed at the nearby military base, and I found out that the officer responsible for off-base housing was unhappy with the soldier getting a run-around from the property manager and promises made and not kept, and the officer has a negative view of the property from this and other complaints brought to him from military residents (at least 25% of residents are military related).  

My question at this time is - did the agent (dual agent) have an obligation to inform me about the flooding, at the time he was made aware?  Or did he have discretion not to, allegedly making a huge assumption that eveything would be fixed by the seller prior to closing (scheduled for three weeks from now) so no need to do so?  My thought is that disclosure is not optional, the agent should not make assumptions about what the client needs to know about, and especially about events that 'may' happen including repairs being done satifactorily to address conditions that change post inspection. Yes, disclosure could potentially hurt the seller (also his client) and, taken to an extreme, jeopordize the closing and his commission but that is the nature of accepting a dual agency role and of working as an agent in general. 

Let me know what YOU think, and thank you!

I had substantial tax assessor increases in all Jackson County properties that I own.  Three went higher than what I paid for them in early 2017, so I submitted the 'informal review' request on those, and left the others alone which were still appraised less than, although much closer to, current market value. 

Johnson County is not a cash-flow area.  Missouri side or KCKS is better for cash flow, but prospects of appreciation and the highest quality tenants are less.  Good luck!  

Maintenance looks very low to me, especially on a duplex property.  I would have that in the $150 range considering the age of the building.

$50 for landscaping - does that include snow removal or just mowing?  Seems cheap if it is including mowing and snow.  Are there trees on the property?

One of the benefits to NOT paying cash (using leverage) that is a little less obvious is that your lenders will require impartial appraisals on your purchases.  If the appraisal is less than your purchase price, in  most RE contracts you have option to reset the purchase price to the appraisal value or walk away.

Don't plan on ANY appreciation buying turnkey inventory.

If you aren't going to use leverage, than I recommend you buy performing notes instead of real property. Or just invest into a syndicated apartment complex deal with an experienced and proven manager. You will get better returns than you are quoting on your turnkey CoC estimates and, in my opinion, you have less chances of bad luck (one bad tenant or one sewer line failure can ruin your year in single family).

Good luck.  Be careful.

If you have floor space, can you put 2 or 3 standard size tanks in series?  Even 12 year double anode models are under $1000.  

 Thanks Nathan.  I was not invested in real estate but I had always been investing in 401k and securities for many years.

I'm wrapping up week one of a new REI oriented lifestyle having left behind 25 years of corporate work in the IT field. So far, it's exactly what I was looking forward to. I had a backlog of projects I'm now able to get to and have just closed on two new properties where I will have time to do a little more hands-on work.

In the next couple months I plan to pursue getting licensed (mostly just to earn commissions on my own purchases including apartment complexes) and find and close my second syndicated deal.

I started doing significant REI research in 2014, closed my first property in January 2015, and currently have 28 units in my personal portfolio and 40 units in my first syndicated deal.

I can feel my soul re-inflating with total control over my day-to-day schedule and priorities.  

Hopefully the good trends will continue with REI and I won't have to jump back into the IT field. I don't think it would be a problem to do that if needed but it's not Plan A.

Thanks for reading - good luck on your own REI endeavors.

Cliff