All Forum Posts by: Doug Pretorius

Nice deal Gunnar! I hope you really appreciate how great it is to be a landlord in your market. That house in my market would be $250-$300k and rent for $1,300-$1,500. I honestly don't know why anyone would bother to be a landlord in my area, you have to put 50% down just to breakeven on your cash flow, so you have ~$150k sitting dead in the hope that the house will appreciate.

@Alison M. How do you stay in touch (especially by phone or in person) without becoming annoying? This has always been a weak spot for me.

@Amanda Fox Sort, don't convince. Motivated sellers are created by circumstances, not by you finding the 'right' words to communicate your offer. Keep your offer simple and to the right person it will sound perfect.

@Account Closed Whoa easy, Joe. No need to threaten to 'off' them if they don't take your offer ;)

@Amanda Fox Just to give you a bit more confirmation. I agree completely with what has already been said. There is NOTHING you can say to create motivation. A seller either wants or sell or they need to sell. If they need to sell and what you have to offer is a fit, then you have a deal.

@Mark Ferguson Trying to predict the market is a bad idea anyway. You should only invest in deals where you have a blatantly obvious instant equity and/or immediate positive cash flow. Anything else isn't investing, it's speculating.

Maybe things are different in Tucson. But in my experience, comps aren't worth paying for. Get 5 realtors to do CMAs and you'll get 5 different prices ranging by at least 20%. I can come to the same 'conclusion' about price by just averaging what's for sale in the neighborhood and taking 10% off the top (for commission and closing costs.)

Besides, I'm a believer that past prices do not indicate future trends. Your subject property is competing with what IS on the market, not what WAS on the market.

John, your price seems fine for a LO (even a bit low). The problem is finding a T/B with ~$3k down PLUS $5k for the flooring and paint. That's nearly 10%, it's pretty rare to find T/Bs with that much cash available, and on top of that you're dealing with first-time buyers who aren't used to doing or paying for repairs.

A quick ~3% assignment fee sounds like a good idea. Unless you want to do the repairs yourself and hold onto the property for awhile.

@Dominika M & @Roy N. I've done 10 of these deals and it usually takes 4-6 weeks to find a suitable buyer.

I've tried the buyer-first approach but I'm not very good at maintaining positive control over a buyer's expectations, so they tend to become unrealistic and lose their sense of urgency.

@Dominika M When I got started there was only one other guy I knew of who did RTOs on a regular basis here in the Kitchener-Waterloo area, and he was a realtor. He did it as a way to get a quick and easy commission on leads other agents wouldn't touch (sellers with no equity, buyers with no down payment).

Nowadays it seems everyone has jumped on the bandwagon, from individual landlords, to corporations, to several of the big-name realtors.

As @Roy N. said it's mostly in the starter home price range.

These can be a good deal for everyone involved if you don't get greedy. I'm looking for sellers who bought recently with a nice low interest 5 year mortgage. They typically have no equity and are just looking to breakeven and get out from under their payments. I'll buy their home for what they owe on a contract deferred to the renewal date of their mortgage.

Then I'll look for a buyer who doesn't quite have 5% to put down and maybe has a few credit issues. With 3-5 years on the mortgage I've got plenty of time to work with them to get sorted for financing. If that doesn't work and they've been a great customer (responsible with payments, take good care of the property) I'll assume the mortgage myself and keep them on until they can pay me out completely.

I shoot for about a 10% spread on both price and payments for my profit, so over the course of the deal, the buyer ends up with the lions' share of any appreciation or capital improvements that they make to the home.

Hope that helps!