All Forum Posts by: Eddy Dumire

FWIW if anyone is looking to wholesale deals in Stafford or Fredericksburg, send me a PM.

@Mike Hudson

I'm going with the BRRRR strategy that @Brandon Turner recently described.  It's basically

• Buy a distressed property
• Rehab
• Rent
• Refinance
• Repeat

So far I'm bringing in about 1400/month from 2 properties so if I can keep that up, 10 properties will get me there.

I was about to acquire my 3rd property two weeks ago but TD Bank has taken 70 days so far to underwrite my HELOC so I'm short on cash until that happens. It's very frustrating to watch good deals pass me by!

Found this interesting tidbit:

Is A Written Commission Agreement Required?

A written commission agreement although preferable is not required. In this regard it is noted that General Obligations Law section 5-701 (10) specifically exempts licensed real estate brokers and salespersons from the requirements that such agreement be in writing.

The contract of employment may be established by facts showing, in the absence of an express agreement, a conscious appropriation of the labors of the broker, and in some cases by the mere acceptance of the labors of the broker. Even if there is no agreement, express or implied, between the principal and broker, if the principal receives a benefit from the real estate broker's services under circumstances which, in justice, preclude him from denying an obligation to pay them, the broker is entitled to some relief.

It cannot be assumed that a broker works gratuitously, and the lessor and lessee are held to such knowledge when they accept the result of the broker's services. When the lessor has accepted the lessee brought to him by a broker, and when the lessor and lessee have agreed upon terms and execute a lease agreement, the broker's work is done and he has earned a commission.

Further, where a contract of sale or lease agreement admits the broker's performance of services and includes an express promise by the seller to pay the broker's commission, the broker is entitled to summary judgment on its claim for a commission as a third-party beneficiary of the contract or lease.

from:

http://www.garywachtel.com/PracticeAreas/Real-Estate-Brokerage-Commissions.html

(New York Attorney)

Unfortunately there is already an established "agency relationship" with him and his agent called "implied agency" even though no contract was signed.  That alone may entitle the agent to a portion of the commissions.

Definitely going to look this scenario up when I get back to studying.

Well they should definitely be paid then, just not quite what they're asking for :)

Keep in mind though you may still owe them in a few circumstances.  Your agreement says 3% or $2000.  If the listing agent is offering the standard 3%, then you may need to come up with the difference if that is less than $2000.  The other possibility is that the listing agent is only offering 2% in which you'll need to come up with the difference there too.

Keep us posted.  I really want to hear if you're able to get the $595 removed.

What Sharon describes is fairly standard.  I haven't seen a "greater of 3% or $2000" arrangement before though.  I definitely wouldn't pay $595 up front before I decide to buy anything.

I suggest you find a new agent.  A better question is why do you think you need an agent?  If the seller has one and you don't then the listing agent will just keep all the commission so there's no advantage to not having one.  But if the seller doesn't have an agent, then having one may cost you 3% directly out of your own pocket if the seller refuses to pay.  If neither one of you have agents, then you can use this as additional leverage for a discounted sales price.

Did the agent show you this property?  Have they been working with you for a while showing you lots of properties?  If so, then they've already earned compensation from you and you need to come to some agreement.  Remember that everything is negotiable though.  If you do need to compensate this agent, I would push back on anything you don't believe to be fair.

Reading between the lines, it sounds like your realtor has been working with you for a while and just didn't put the agency contract in front of you until now.  If so, shame on them.  My first agent did the same to me a long time ago.

Disclaimer:  I'm not an agent... yet.  I've taken the class and I'm studying for my test.

Rafael has some good advice about using a HELOC to get your DTI down. The only risk is that you may push yourself beyond the 80% LTV if you try to consolidate that back into the mortgage. If that happens, a great option is to look into a single upfront PMI payment. I paid about $4k total for this option instead of paying $200 monthly. The payback time of 1 year and 8 months is far better than $200/month for 12 years or so.

I would suggest you look into refinancing your current mortgage via HARP while it is still your primary residence.  You may be able to get the payment down enough that you can get it to cash flow.  I don't suggest you pay a lot of points or make a large cash infusion.  That would be throwing good money after bad.  If you can get it to the point where it at least covers costs, then you can just sit in a holding pattern until it's paid down enough to sell.

There really aren't very many multi-families in Stafford at all.  There are some in Fredericksburg but I'm really not in a position to speak about these knowledgeably.  

There are definitely single family homes available and they can cash flow as I mentioned, but they are not as profitable as other areas of the country (from what I hear on the podcasts).  If you really want profit and don't mind owning remote properties, I'd suggest looking elsewhere.  If you have to have something close by, Stafford and Fredericksburg may be good options for you. 

Have you looked into Winchester?  I don't know anything about the real estate market there but it just seems like it would be a good idea to investigate it.

@Jesse T. understood about the 50%, but if you pay cash for everything and have no financing costs, it's pretty easy to get a property to meet the 50/50 rule.  What I meant was since I paid cash for the townhouse I meet the 50/50, but it's deceptive.

@Nilesh Makhija I would say that Prince William and south could work well.  The property costs in Fairfax and north are just to high to make sense.  You could buy a $500k house in Alexandria that rents for $2k and have negative cash flow or buy 2 (or 3!) of the exact same house in Fredericksburg or Spotsylvania that rents for $1500 and cash flows $300 per month each.  -- note that these are numbers out of the sky... I didn't search for properties or check payment costs so be sure to do your own DD.