All Forum Posts by: Dillon Cook

BRRRRing is very dependent on future rates/prices.  Senior economists across the board are split on their *predictions*.. Each have reasonable arguments on the Fed hiking rates further or backtracking them.  Who's to know.  Finding immediate equity in deals is more important now to give cushioning, and obviously overleveraging is a bad idea.

Quote from @Drew Sygit:

@Dillon Cook mostly agree.

1) We warn owners of this all the time - yet they still expect to get top dollar!

2) 95% of agents don't know how to handle an investment property.

3) We'd probably pass on this, unless the owner listed the property for sale with us. Otherwise, it's not worth dealing with the listing agent who doesn't understand why they can't show the property whenever they want, and seem to look for every reason to throw the PMC under the bus.

That's a good point and I didn't word #3 clearly enough.  Choose a listing agent who is already partnered with a property management company.  You get the experience, knowledge, and ease of communication all at once. 

I work out of a Property Management firm in Tampa.  I help quite a few investors sell their rental properties when they are ready to offload.  I also help quite a few new and experienced investors purchase rental properties.  I see many mistakes and have made some myself.  Consider the following before selling your rental property... it could mean earning tens of thousands more and saving yourself from headaches during the sales process.

I consistently see so many mistakes sellers make when they're ready to sell their property. Whether its a condo, SFH, or 2-4plex, using the following points will help you maximize your proceeds and make your life a lot easier during the sales process. Most of these need to be planned out months to a year in advance, so if you are forced to sell on short notice, it's probably not the end of the world.

1. Don't list during the middle of the lease

The most important one.  No more are the days where a hedge fund will pay CASH over ask for your rental property, tenant occupied at $200 a month.  If your tenant has 4 months left on their lease, you're losing an entire buyer pool.

This is a big no-no for single families, condos, and townhomes.    Home buyers have been the majority of purchasers of previous rental properties lately, and they can pay more than an investor if the property is in average shape and especially if the property is renovated.  Owner occupant buyers will not want to deal with a tenant!  Even a month to month tenant will dissuade them from viewing.  Having your property manager send a non-renewal to the tenants will allow you to get all repairs and touchups done 2-3 weeks after they vacate, and you can list your property beautifully empty for top dollar.

Over time, 2-4plex properties tend to have long term, under-market rent leases.  If you are considering selling, don't renew another full year lease!  Either non-renew or let tenants go month to month.  Since multifamily properties are mostly purchased by investors, the tenant situation is a little more flexible, but think about this example --  The tenants are paying $800 a month in rent when the market rate is 1200.  The owner renews the leases at 850/mo. The owner has been thinking about selling and decides to go at 250k.  A buyer likes the price of the duplex at 250k, but then sees he's going to be locked in -$700 a month due to the super low rents.  A rent credit is negotiated and given to the buyer at closing for 8.4k to make up for the loss in rent ($700x12 months).  The seller loses an instant 8.4k when he put his signature on the renewal leases.  Now apply that to a quadplex and you double the issue to nearly 17k off the purchase price.  

While rent credits at closing sound like an easy fix, you may be looking at much MORE than 8.4k off the duplex in a normal negotiation since renovation work will be halted, perhaps interest rates will be much higher in a year for refi, and who knows if additional damage to the property will be sustained by inherited tenants over the following year.

2.  If you have to list a rental property tenant-occupied, find an agent who knows rental properties 

It's almost an out-of-body experience when I find a MLS listing that clearly states the current rents, lease end dates, whether or not utilities are split and if the owner pays any of them, age of roof and HVAC, if there are laundry hookups in-unit, central ac or window units, etc. Having all this information and more readily available in the realtors notes in the listing will show you're a professional who knows these details are important, allow for quicker analysis and offers by buyers, and avoid any confusion after accepting an offer if some details were misunderstood over a text or phone call.

3.  If you're self-managing, considering signing up with a property manager a few months before listing

It may seem counter-intuitive to do so right before selling, but property managers can help to organize and package your investment up nicely within a few months.  Packaging up month to month leases, rent roll/ledgers that are professional and organized will go a long way.  PMs can also assist with collecting rents, sending nonrenewal notices, or negotiating increased rents.  Interior inspections can be performed to identify what work should be done prior to listing.

Quote from @Tammy T Pimienta:

Hi all! i am totally new to this group and forum. I live in the Tampa Bay area and am desperately looking for a mentor. Someone that has proven success in the real estate investing business. I have so many things I need assistance with because here in Tampa I have run into so many disingenuous people that have all wasted my time. I own a Townhome, I also have property I inherited in the Ybor city area (home and land). I am also a veteran. I am trying to find various strategies on how to execute my next move. I would like to rent out my Townhome. I am stuck on if I should I refinance it, buy single family, then focus on building a multi-family on the land I have or find land elsewhere and then build out. I know there's many ways to leverage what i have but just not sure how I should proceed

I am open to suggestions and real life strategies.

Hi Tammy, too many options is often more a curse than a blessing when you're new because you get stuck analyzing which is marginally the best play.  Think about where and how you want to be living in 10 years and reverse plan.  If you're comfy in your townhome, building a new multi in Ybor would be where'd I'd lean towards with little info provided.

Quote from @Marvin Scott Butler:

@Dillon Cook Thanks for the your advice I paid 230,000 for the house and been appraised at 360,000 also my property manager said I can get 2200 a month in rent. That’s why I looking at house hacking and the brrr method for my next deal

That's a near copy of my situation as well.  I'm adverse to a cash out refi because I locked in a rate in the upper 2s and it hurts to think about 6-7s.  

Are you trying to use the HELOC to fund the entire purchase or reno.. or both?

Quote from @Marvin Scott Butler:

Hi, I'm in the Tampa Bay Area and I'm looking to purchase another property. I was looking to do a HELOC on my primary residence to fund my purchase. I need some advice is this a good strategy or should I rent my house out apply for a conventional loan and use the brrr method to scale my portfolio. Thanks

You're going to want to run some numbers on if your property can pull enough rents to make up for the HELOC and existing mortgage.  Some lenders have advised my buyers that just refinancing to lock in a rate is better than a HELOC since interest rates are anticipated to rise further.  Without knowing your situation, my guess is that renting out your current home, using a conv loan to buy a mild, live-in fixer upper would be the best option. 

Quote from @Michael Haynes:

Hello Michelle Reid from MA, I paid $175,000 Cash, in my Target Area in Valrico, Florida after a year before Covid of Searching every day for 3/2 houses with pools and then Condos and Townhomes. I got a like new, 1536 sq. ft., 3/3 Townhome with one car garage in a 17 unit, gated Community with a pool big enough to do laps. Built in 2016 and we just had all new roofs put on with the HOA fee, so, I can live here for ten more years and then Sell without having to worry about the condition of the roof to qualify for Home Owners Insurance. Everything on the North side of Brandon Blvd. or Hwy 60, after the main area in Brandon, leading to Valrico, is like all clean and new. Your kind of stabbing in the dark to be doing a Search on BP for a good place to invest from MA. Do you know how to do a Search on Zillow? Do you know how to use Google Map? I did a Search for just properties two years ago in the whole State of Florida on Zillow and there was not one lot for less than $100,000. Your asking about Seffner. Do you know who lives North and South of Martin Luther King Blvd. in Seffner? The age and sizes of houses that were built there 50 years ago? Find your Target property and look at it with Street View on Google Map. Do you like what you see? Is the asphalt in the street still there? How about your Target property. Does it have a driveway? Is it surrounded by Oak trees that cover the roof and need thousands of dollars worth of trimming or removal? Is it Woodframe or Block? Was it ever Termite tented? Is it fenced? This last year I noticed that the Flippers were making the insides of all the 100 year old, Woodframe houses, look like new with really bright, white and gray interiors and doing absolutely nothing for the yard. Do you know what it is like to pull permits to do any work on houses now in Florida? Do you have a Team you can trust? Why Florida?

I think your response assumes the investment of a SFH.  Most investors are looking at multifamilies right now. 

Hit those areas up! It is a very good 5-10 year play based on population trends. Proximity to Tampa (Brandon/Riverview) and Lakeland and being right off i-4 are going to be great long term. There is strong rental demand there.

Quote from @Natalie Wright:

Hey there, 

I don't know if this is really the place, but the usual sites are untrustworthy...

My husband and I are looking to rent in the Tampa, Orlando, Port Canaveral / Central Florida area. We've seen a huge amount of houses and the frequency of scammers is about 4 out of 5 so far... We are irritated and exhausted and just want to talk to someone trustworthy.

Does anyone here have or know of someone with a 3-4 bed, 2 bath single-family property for rent starting in September? We have a perfect rent history since 2021, prior to that we actually owned.

Alternatively, does anyone know any reliable methods for finding rental homes (as a renter) that isn't 80% scammers? We're losing our minds, it feels like nothing is real anymore!

Thanks for the help! Once this insanity blows over, I'm excited to join you as investors some day 🥺

 We are Tampa based and have initiated some measures to prevent scams by placing signs in windows of our vacant homes. Scams are primarily on Facebook and Craigslist.

Basically, if someone won't let you inside the home by meeting you there or giving you the lockbox code, it's a scam.  

What type of properties are you searching for?