All Forum Posts by: David DuCille

I have two words for all of you and I'm shocked they haven't been mentioned yet.

SECTION 8 

If you are in an area where your housing authority supports Section 8 this is the best opportunity to have success with investing in the ghetto.  I own a property in an area that can best be described as "HOOD AS ****!!!!"  It is in the WORST neighborhood in Tampa, known as Sulphur Springs.   my property is 4 beds 2 bath all block construction as opposed to wood frame which is a big deal down here in florida.  We paid 25k and spent 35k to renovate it and some thought that was crazy so we are all in for $60k.  We have a brand new roof, brand new AC, brand new kitchen with real wood cabinets and GRANITE and STAINLESS appliances.  Tile floors throughout, and brand new windows.  I come from the fitness business and to supplement my income in my early years of fitness I worked as a bouncer in NYC.  Without a doubt, places that have dress codes have fewer problems.  When you give people something nice they will do a better job of taking care of it.  But the other important thing about my renovation was to make the property durable.  If I put carpets or laminate flooring in there, I could have saved a few bucks starting out but I would have been replacing it every time a tenant turned over.  The new windows, roof, and AC help make sure that the tenants electric bills will be reasonable and make them more apt to want to stay long term.  Last but not least, SECTION 8.  Section 8 tenants are subject to annual inspections.  Section 8 tenants aren't nearly as bad as regular market rate tenants in lower income areas.  If you give them something nice, they know it will be taken away from them if they don't take care of it.  If I would have gotten someone with a 4bd section 8 voucher, I could have gotten $1300 month rent.  ultimately, I chose to accept someone with a 3bd voucher becaue I needed to get someone in the property as I was starting to have vandalism issues.  Nevertheless, I still get $1100 month with the Housing Authority paying $865 and the tenant paying $235.   tenant is responsible for ALL utilities as well and since I did a complete renovation of this property I will have VERY low maintenance expenses for the next several years.  I will make my investment back in 5 years time and this property should be very rentable with minimal maintenance for the next 20 years.  Now with all that said, one bad tenant definitely could do some serious damage to this plan but that can happen anywhere.

The numbers MUST work.  Real estate investing is all about risk/reward so if you are going to invest in the hood with higher risks, you must be sure there is higher reward to be had as well.  The house across the street from this one is a wood frame duplex that the owner bought for 12k in 2011.  he spent about 8k making it liveable.  He runs it like a "rooming house" renting out the individual rooms.  He doesn't have a property manager just an employee who sometimes collects rents on his behalf.  He takes whatever he can get from the tenants because he paid the thing off in under 2 years time!  he's got 4 people living there across the 2 units and gets $350 per person.  That is an insanely good deal.  If tenants are light on the rent, he takes whatever they have and works with them.  Yes this is more work involved for him but again, he recouped his investment in less than 2 years, this is all gravy for him now.   these tenants can burn the damn house down at this point and it really wouldn't phase him

 quite frankly, it sounds like an incredibly STUPID rule.  How bad did the market there get hurt in the real estate crisis?  I get it if you want to make sure that all work is done properly with permits etc.  But to say that ONLY licenseed contractors can flip property sounds downright ridiculous to me.  I'm trying to understand how this helps.  What ever happened to Caveat Emptor, let the buyer beware?  your going to have a bunch of people get licensed as contractors when they really don't know jack about building things.  Seems crazy to me. I've seen plenty of licensed contractors do ****** work and i've seen plenty of unlicensed or homeowners do great work.  Onus is on the buyer to inspect the property that they are buying.

I don't see this as a dilemna at all.  If you didn't have a license you would be paying an extra 3%, now because you have a license you save 3%-brokers cut.  I work on 70/30 split with a cap then I keep all commissions.  There are so many different commission plans out there it should be a piece of cake to find one that works for you.  Even if your on a 50/50 split with your broker, if you buy a 100k investment, it's still 1500 cheaper than it would be if you werent licensed.  The way I see it, you have 3 options.  Suck it up,  your not going to save every single dime.  2. Sit down with your broker and negotiate a better commission split or a better agreement for properties you buy for yourself.  3. Go to another brokerage with better deal/get your brokers license start your own.

If your only doing your own deals and not actively looking to move units then you are a liability for your broker and they want their cut.  If you are savvy about how you do things, you can really make open houses work for you and generate additional money.  Open houses go 1 of 2 ways; they are super busy and you get plenty of leads to make more money or they are dead slow and you can sit there and do the clerical work that you need.  It's like working from Starbucks.    The key is picking and choosing the best open houses to do.

 I love your directness and candidness Chris!  This is a common refrain heard in the real estate world.  I consider myself lucky.  The agent I got was randomly recommended to us by someone who bought a vacation home from him.  It just so happened that he owns a dozen of his own rental properties and does property management for close to 100 others.  There are good, investor friendly agents out there but they are few and far between because quite frankly, it's not very lucrative.  For example, I'm working with someone now who is buying a 30k condo.  I will only make $1000 on this deal.  I've already probably gone through 2 full tanks of gas driving to and from the property to check it out, do insepctoins and get contractor estimates for him.  But realistically, it's also a super easy deal for me because he's a cash buyer.  Helluva lot less hand holding and hoops to jump through.  I also don't mind because I'm passionate about investing too and I love the "thrill of the hunt" and envisioning what the end product can become.  Last but not least, $1000 here $1000 there adds up and you network and meet all sorts of people along the way that turn into other deals and of course, successful investors will be wanting to buy their own homes and vacation homes etc so doing right by someone on a 30k deal and handling the way I'd handle a 300k deal builds a lot of good will and my brand.   

I think you are on the right track and if you can truly get licensed, and join your local board for only $600 a year, it's truly a no brainer.  Here in Florida, dues end up being much closer to $2000 a year when all is said and done.  as for you ultimately getting your brokers license, it may not even really be worth it to you.  There are so many brokerages with so many commission models out there.  some charge a fee per transaction which is relatively low and then they cap it as well.  Just as there are "buyers markets" and "sellers markets" there are "agents markets" and "brokers markets"  we are in an Agents market right now.  If Brokers don't offer up good deals, agents have the choice of many brokerages with better deals to offer.  Should the market tank again, we will find ourselves in a Brokers market where agents who wish to stay in business are going to be reliant on an experienced broker to show them how to still stay afloat during hard times.  As you know, many people got out of the business in 08-10.  Now those people are the ones wishing they stuck it out.  Best of luck to you

 There is nothing wrong with you offering to pay the agent for his time spent doing some of these tasks for you.  I totally understand your desire to get licensed yourself to do these things; that is the #1 reason why I am now a licensed real estate agent.  However, it's literally a $2000 proposition just to get started in the biz and then each year thereafter probably still a solid $1000-1500.  If you offer your agent some additional $$$ to do the comps and analysis for you it could still be cheaper than getting licensed.  But getting licensed will allow you to get the low hanging fruit that we mentioned earlier (friends and family members that will do deals through you simply because they know you and like you).  Sell a single $200k home a year and make back all of your investment x 3. 

 Keller Williams will certainly not have a problem with taking you in, training you, and letting you do whatever you want to do with YOUR business because that is our approach.  It is your business.  Feel free to message me and I can tell you a bit more about what KW has to offer

I don't disagree with you joel, I'm just saying that we are talking about a Homesteps REO property here. But quite frankly, it can be any home. If someone offers you double what you paid for it a month after your bought it, take the money and run. You can certainly find a similar home to what you just bought, pay cash for it and put a considerable sum of money in the bank. For most americans, that would be life changing money. Having read up on the OP's profile, I see that he is a well established investor and this house is simply 1 home out of a portfolio of several so we have a different scenario here. Perhaps it is best for him to try to haggle a bit more out of the deal.

I agree with Bill G.  If they are truly paying you double market value of your home, so what if their agent gets 4%.  you just make sure that he earns that 4% by doing all of the legwork and the paperwork in the process.  Sounds like a great deal to me, it would be nice to get more obviously but it would suck if you hold out and you end up getting nothing.

never mind, I got through all the comments and I see that the 123k is ARV. ouch, this sounds like a nasty situation. It's sounding like this woman is going to have to call it a day and start saving whatever money she has to go towards rent and let the bank take the place. The way for you to make any money on the deal could simply be to act as an agent and shortsell it since as someone else mentioned, the numbers just don't add up. if 123k is the ARV and it needs 15-20k of work just to sell for that and she still owes 100k plus behind 7k? not looking good.

 Tell us more about this "Appraisal"  if it's appraised for 123k, then thats about what it should sell for regardless of the condition that it's in.  People buy homes in all sorts of condition.   As for helping this woman out, I'm guessing she already has some serious credit issues going on which is why she has a 9% interest rate to begin with.  otherwise, seems like a simple refinance would help her out a TON.