All Forum Posts by: Ed Emmons

A couple times recently I had the selling agent ask the seller, “what price would you be happy with and be willing to sell it to me for now?”  I looked at the property within a few hours of the listing. The price they responded with was a little over what they were asking but both homes that I bought appraised higher than what we agreed to. I knew my numbers and both of the homes are now rented and performing well. There are tactics used by agents like “give us your highest and best” because we have multiple offers. Sometimes there are multiple offers but all very different and one of them would definitely buy the home as offered. Sometimes this pressures buyers to pay more than they should. Granted agents work for the sellers and they try to get best price, so you can’t blame them. That is why I tried this strategy because it was very fair to the seller and it still worked for me and avoided the ridiculous bidding.

Another property that needed foundation work had my offer and at least one other. The agent came back with the highest and best tactic but I told them that was my best. The seller later took the offer. So although you will lose some properties because others are willing to pay too much, be patient. Maybe when interest rates rise and markets change, the same homes will be back on the market because the numbers didn’t work. It is much better to lose the property to a competitive bid than to lose it to the bank later.

I agree with @Matthew Irish-Jones. You’re at a great age to start investing. Although difficult to know where you want to take investing through your life when starting out, there are a few things to think about. These will affect your next moves. As an example, do you see yourself involved with the construction and management of your own portfolio or is your investing going to be passive? Is your goal to become very big or just well off? If you want to be involved, then now is the time to seek employment with those with a lot of experience to learn the trades with the goal to become proficient on your own projects. If you want to be passive developing a good team is essential. If you want to become very big than focus your efforts on syndications. The house hack is just a stepping stone but it can be a good one. Hope all goes well just don’t stop growing.

In Maine you can conceal the price if you want to. If the documents that you mentioned don’t disclose it, you are not likely to find out without contacting one of the parties. It is not likely that the price of a previous sale would severely affect another because it can always be argued that there were mitigating circumstances. Granted at times it would be nice to know but not absolutely necessary. Curious why do you want to know? 

You might see if you can get a business line of credit secured by the property. That’s what I do on one of my trailer parks. Basically works same as a heloc for buying more properties. If your current mortgage holder will do it they can remain in first position.

Try First National Bank, Matt Mattson in Belfast Branch, 207-669-2347

The laws in Bar Harbor for STR just got much more restrictive so look into it before purchasing there for that purpose.

@Seth Borman,@David M. mine also works well at 0 degrees. It keeps my small house at 70, or at least our living area. We close doors to unused space. It is obviously less efficient when warmer but still only adds about $100 a month to my electric bill year round. On oil we would use 600 gallons or so. The added air conditioning in hot months makes them good investments. I have them in a few of my rentals. But this morning it is -20 and no heat from unit. If this was the only source I would be in big trouble. So in our rentals we might set other heat source at 60 and let the heat pump do most of the heating but on days like today there is no emergency. 

I live just north of Bangor. Today it was -18 and my heat pump had error code p3 which is “ambient temperature too low for compressor to run”. It did not come on. So I guess this answers the idea of whether it can be the only heat source. If you are in an area where temp can go below -15 you better have an alternative. By the way my heat pump is about 4 yrs ago but I don’t think that makes a difference.

Deals can be found anywhere if you know where to look. I think for your first one you should be considering asset class over the specific town. A,B,C, or D all have different characteristics. B and C will usually provide the best cash flow. A often is long term appreciation but minimal management. Stay away from D when starting. Most towns have these assets classes in them where the numbers can work. You just want to avoid areas where the population is declining or where it there is no economic driver. Small towns can be good if close to economic hub, meaning an easy commute. Prices in these towns can will be less than the city itself. Universities also make a good rental market. Currently all my properties follow this model and are in small towns. They all cash flow nicely and currently have been appreciating nicely like everywhere else. This appreciation trend will slow down in most areas over the next couple years.

Determine how involved in the management you want to be, what asset class best suits your goals and talk to some long time investors to see if they have something that would fit your criteria. I have sold hundreds of units over my career. In almost every case the buyers made out well and so did I. The couple of them that didn’t was no fault of the property. I currently have 9 units in the C - B class that work depending on your personal goals.Most new investors overlook other investors as a source for good deals and yet all of my bigger properties have come from other investors. Very few of them were on the market. They were good deals for me where I was in my career and all the sellers made a profit from me. Hope this helps.

Investment Info:

Other fix & flip investment in Greenbush.

Purchase price: $600,000
Sale price: $2,500,000

2 mobile home parks consisting of 66 lots, poorly managed and distressed. We used equity lines for down payment. We have contributed a few hundred thousand to rehab so far including the 19 homes. Most has come from cash flow. In one year we cleared out 6 junk homes, rebuilt 19 pads and filled with homes. Paved the road in one park. All non paying tenants have been evicted. Revenues have nearly doubled. We expect revenues to increase another $18000 per month in 2022.

What made you interested in investing in this type of deal?

I’ve owned several and better return than SFHs

How did you find this deal and how did you negotiate it?

From lot for rent sign, talked with owner.

How did you finance this deal?

Commercial loan and equity lines.

How did you add value to the deal?

Cleaned up park, raised lot rents, filled empty lots, paved driveway, improved infrastructure.

What was the outcome?

Still in progress, better tenant class, doubled income so far. Hasn’t sold yet but form made me put in a sale price. Based on 9-10 cap, should be approximately the value when completed.

Lessons learned? Challenges?

Finding enough homes and getting labor to rehab them

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

First National Bank