All Forum Posts by: Derek Carroll

if you've done a couple with an agent, then you've at least seen what needs to be done and might be able to work your way through it.  its not that complicated if you know the checklist / order of operations and some of the pitfalls to watch out for.

seller pays agents if there is a commission agreement in place.  in this case the seller has no listing agreement and is not offering to pay a commission so I was suggesting that you can hire a buyer to exclusively represent you and pay them yourself(versus on a listed deal and you have a buyers agent who in reality is a fiduciary of the seller).  It could be a set fee $500 or whatever for helping you through the transaction.  There are no set buyer or seller agent fees

You might also be able to convince the seller to pay and an agent to accept a half a normal commission since there is only one agent involved and the deal is already lined up. 

think about a ground up construction deal, for a while in place income is zero while interest accrues.  Eventually the value add is a massive swing and hopefully more than covers debt service. people buy deals all the time where in place income is low or even negative, but usually its a turnaround value add play.  eventually the goal is to reverse that ratio.  

cap rate less than interest rate doesn't necessarily mean negative returns, only negative effects of leverage. if you're looking for a long term buy and hold without a lot of potential value add, then absolutely look for deals with positive leverage.  Some people using this strategy might be ok with lesser returns because: 1) they cant come up with the cash and need the debt 2) they are considering after tax results 3) market (non forced) appreciation if factored into their analysis by way of ever increasing rents or cap rate compression on sale 4) they just need a place to park their capital for the time being and real estate is a safe bet.  

Hard to compete with many of these buyers if you are using a different strategy.  A certain deal could be a homerun for one investor vs a dud to another, all because they have different goals and needs for the transaction.  

fences and cameras all the way!  Post that people will be fined and that they're on camera.  Prosecute a few if you can and have to, to build awareness.  A fence will help deter some and also help with the aesthetics of the property.  

Have you ever done a transaction before?  If so, you know most of what needs to be done.  In NY the attorneys and paralegals really guide the transactions after a contract is finalized.  There are some steps along the way where it certainly helps to have an agent but if you've done a deal before then you can lean on your experience and your attorney/title company to get the deal to the finish line.  Along the way agents help with inspections, appraisal, comps, making sure you're doing what you need for financing, and useful for sure.  In reality after a contact is signed an agent plays more of an overseer to make sure things stay on track, rather than handle actual responsibilities.

If you've never done a transaction before, then you might have a hard time convincing a seller that you can make the process go smoothly.  Without experience and not knowing what questions to ask and whom to ask them to, it would be worth your while to have someone help on your side, even if you pay the buyer broker fee.  

I always have all parties on the lease regardless of job or income.  While not the reason why I do this, I’m sure it at least gives some pause for thought before some folks break up and bail on a lease arrangement.  

@Quynn Costello

You can’t ever make a person buy. Your contract can only impose penalties if they don’t follow through with the purchase.

This happens all the time for experienced investors but for a newbie it will almost never happen out of direct friends and family.  Who wants to risk their guarantee on the loan to a new investor?  Better bet would be to find a parter to go in on it with you, put up some cash and also sign on the loan.

In general I tell people to start simple and with one LLC, but absolutely with the help of an attorney. As your investing progresses you'll realize the needs for additional LLCs or those needs will be brought up by your attorney or accountant. Don't overcomplicate it from the start.

If you’re really worried about them splitting and disrupting your cash flow then you probably shouldn’t rent to them.  You could sign a month to month lease to get them out faster if that happens.  I’d be more interested in finding good people with good histories than trying to worry about what could happen in the future.  

It all depends on the contract language but the reality is a buyer can back out at almost any point.  Worst that happens is that they lose (and you keep) their earnest money deposit. On most commercial or large Multifamily the deposit goes hard and at risk earlier in the transaction but on a small residential a buyers attorney could make a number of arguments all the way up until closing and still have a shot of getting their deposit back.