All Forum Posts by: Account Closed

Hope you're all doing well today.

I'm currently a full time house flipper/ real estate investor, but am interested in starting my own brokerage firm in part to reduce the costs of my flipping business, but also to have full access to the MLS, provide secondary income, etc.

In Kentucky, in order to become a broker, you must work as a licensed real estate agent for 2x years. 

I don't meet this requirement, nor am I interested in working as a real estate agent full time. 

As such, I'm thinking about partnering with someone who does meet this requirement. 

The idea is- I'll pony up the initial cash, provide the brokerage with a stream of consistent listings, help recruit agents, and handle the strategic business decisions/ administrative duties, while my partner will handle the day-to-day operations of the business. 

Does the majority owner of a brokerage have to be a licensed broker?

If so, to overcome this problem, could we form an LLC and segregate the equity from the share of distributions (at least until I've recouped my initial investment/ earned a healthy return)?

Finally, if I (as a flipper) make an offer on a sfr/multi that's not currently listed and my offer is rejected, would it be a conflict of interest to pass the deal along to the brokerage that I also own a stake in?


Thanks,
Patrick 

@K. Marie Poe

Thank you.

I'm planning on listing the house for $199.

Some of the houses in the area have stainless steel appliances, some have black.

None are white.

Do a lot of homebuyers expect new appliances?

Agents are telling me SS, but it's in their best interest for me to drive up the price of the home regardless of the cost. 

Hey all,

I'm finishing up a flip for a 3/2 single family home in the 180-200k price range. 

I've gone over budget by about $5,000 and am looking for ways to save money.

I've looked through pictures of the other kitchens provided in the CMA/ on the MLS. About half of the comparable properties have stainless steel kitchen appliances, the rest have black. It's unclear whether the majority of these kitchen appliances are "new".

I came across a place here in town that sells restored/used appliances.

A lot of their inventory is slightly damaged/ dented, but there were some beautiful fridges, dishwashers, ranges that looked brand new. Most of their stainless steel appliances cost about the same/ less than new black appliances from big box retailers.

The choice I'm facing right now is whether to buy brand new black appliances, buy restored stainless steel appliances, or save ~$1000 and buy restored black appliances. 

Will home buyers expect brand new kitchen appliances?

Will restored appliances be a potential turnoff?  


Thank you very much,

Patrick 

@Hattie Dizmond 

The facade is a combination of brick and siding.

What do you mean by "match that"? Tack siding to the deck? 

Any preference for the color of the stain?

Thanks,
Patrick 

Hey all,

I'm currently rehabbing a split level house that has a 16' x 8' deck in the front of the house.

The deck is built about 4 feet from the ground and leads to the front door.

I had my landscaper remove a ton of overgrown weeds/ brush from underneath/ around the deck, but now it looks quite bare with the exposed beams atop a pile of mulch. 

Does anyone have any  cost effective suggestions for sprucing up the deck/ front of the house?

My first thought was "cover it up with bushes", but I know very little about transplanting shrubbery, but it's nearing winter, and I imagine this could be fairly costly. 

I'm considering putting lattice around it, but am concerned this might look a bit cheap. 

The after-repair value of the house is going to be around $190,000 in an area where the average home price is ~$210,000. 

Thanks,
Patrick 

Have you considered an FHA/ Homepath loan?

You have to remain an "owner-occupant" for one year. 

There are also a variety of ways to get cheap money to finance renovations/rehabs of the place is in less than stellar condition.

http://www.amerifirst.com/amerifirst-blog/bid/1042...

Note- FHA loans only apply to residential properties (1-4 units).

Anything over 4 units is considered "commercial" real estate.

Local laws/zoning may vary depending on whether a property is considered "residential" or "commercial".

Book written prior to 2007 throw around a 1.2 DSCR like it's gospel.

Unfortunately, that was the pre-financial crisis standard.

If you haven't done this before/ don't have an immaculate credit score, the required DSCR is going to be like 1.5

Not really sure what you mean by this in the context of our discussion.

Markets change. Prices can go up and down. 

That doesn't mean we shouldn't consider Cap Rates. 

That's like saying " we shouldn't look at the income statement because those are last year's numbers-- no projections we make from that are going to be valid". 

Also, if anything, this is far more likely to occur at LOWER cap rates, since the lower the cap rate, the more you paid for the NOI.

 No, I'm trying to maximize value. 

I don't care about NOI if the cost of acquiring that NOI doesn't meet certain thresholds. I'd rather put my money into equities.

I'm not going to buy garbage at 5% cap and justify it with "well, I'm paying a premium for less risk". 

Edit: Also, I'd like to point out that you're implicitly arguing that Cap Rates are determined by supply/ demand of NOI, not market risk--

@Account Closed 

"I PREDICT that when mortgage rates increase a percent or two that values will skyrocket in the short term because people will panic about getting into the market at low rates. Sure, when rates are double or triple there will be a slowing down of values but then the cycle starts again."


Why do you think this?

If interest rates tick up a couple points, it'll put downward pressure on home prices in the short run which may allow more households to afford single family houses. This is because down payments will become smaller and suddenly potential owner occupants will be able to afford places again. Also, since we're coming out of a recession (and since savings are relatively low) it's likely that within the next 5-10 years, American households' savings will increase. 

Now obviously, even if single family houses decline in price, the additional interest will force monthly payments up. Point is, the changes in multi-family prices are far more ambiguous and largely depend on the magnitude of each of these effects.