All Forum Posts by: Ray S.

Hi George for my 2 cents, here's what i think. I buy 4 or 5 houses a month. We also rehab. I dont know if you mean rehab and retail or rehab and hold.

If you plan on retail and you have mls I personally think you have everything you need. In our mls I can see what the market is doing now and historically. For example in our area you will see a steady decline in values and other areas are statci and other areas are going up. So guess where I want to hold houses, and you can probably figure out where I want to sell houses.

Another thing is to think about whether the neighborhood is foreclosure driven or Retail driven. Generally I put it into 3 categories. 1-Retail driven- buy, 2-Foreclosure driven- dont buy, 3-Mix- only killer deals.

Another Important factor is Hotness Ratio, I dont calculate it but I look at how fast the inventory is being consumed in a given neighborhood. Alll of this is easy to do with mls by pulling up the neighborhood and looking at the status of the listed proeprty.

I dont know the first thing about detroit but I would whotail and I would of course get the price lowered if that were an option.

Hi Edita, we have managed properties in Houston for ourselves for 20+ years and for others for about the same amount of Time. We have never made inspections for the sake of inspecting. Once I went to one of our houses and found the tenant had 20 cats or so. We then had to figure out should we let her stay, deal with the turnover and fix the damage of the 20 cats. We decided to let her stay. She stayed another five years and then we had to repair cat damage. It turns out we were better off letting her stay.

On the other hand we always let the neighbors know who we are and usually somebody tells us when we have problems. We also tend to use the Jack Miller approach to rentals. We expect a higher level of responsibility and care since we dont have the economy of scale apartments have. We do pretty good and have very low turnover.

You can get rent ready properties but you have to look. You have to be ready to move fast. If you are making offers that are contingent on financing and inspections you will get beat out.

Looks and smells are everything. Look at the comps that are selling fast in your area and see why they are different than yours. Do this and you will be free.

By the way I dont know how to set the messages so they automatically email me or i would have responded sooner.

Looking at your place with google streets brings up a couple concerns. You have a large cedar tree blocking the view. With your architecture the house needs to show more. The yard needs to be immaculate. The sign needs to be visible(near the street). I would consider the market to a commercial buyer like an attorney, title company, insurance company.
Second concern Inside; Looked like missing drawers in kitchen, not sure also saw cats. Often peopel are not aware of animal smells. These are always deal killers. Otherwise house looked good but still too much clutter in kitchen.

Agent. Sometimes agents will let you out of contract if they are getting results. I have been known to use force. I never get locked into long term contract. Although I am also an agent I sometimes will not list my own properties because of the type of house. Your's is probably one of these. FSBO, i have gone this route 3 or 4 times with always substandard results. When i have a special property and I use another agent I will get someone who sells the most of that type of property. For example there are agents who specialize in listing but really do marketing, there are others who speicalize in getting buyers. Guess which one you want. if your area has MLS you can get this information.

Selling; Is your agent doing his job. As an investor this is your job to know. Your sucess or failure depends on it. Here are some questions to ask yourself. Is he advertising? Is the house listed properly? Does the listing show good--agent remarks, photo's etc? Is the price right? Since your house might be on a busy street, did you factor the 20 to 25% deduction in value, or if you are selling commercial did you factor the potential increase in value?

Looking at your place with google streets brings up a couple concerns. You have a large cedar tree blocking the view. With your architecture the house needs to show more. The yard needs to be immaculate. The sign needs to be visible(near the street). I would consider the market to a commercial buyer like an attorney, title company, insurance company also.
Second concern Inside; Looked like missing drawers in kitchen, not sure also saw cats. Often peopel are not aware of animal smells. These are always deal killers. Otherwise house looked good but still too much clutter in kitchen.

Agent. Sometimes agents will let you out of contract if they are not getting results. I have been known to use force. I never get locked into long term contract. Although as an agent I sometimes not list my own properties because of the type of house. Your's is probably one of these. FSBO, i have gone this route 3 or 4 times with always substandard results. When i have a special property and I use another agent I will get someone who sells the most of that type of property. For example there are agents who specialize in listing but really dont do marketing, there are others who speicalize in getting buyers. Guess which one you want. if your area has MLS you can get this information. Its not the one with the most listings, its the one with the most sales.

Selling; Is your agent doing his job? As an investor this is your job to know. Your sucess or failure depends on it. Here are some questions to ask yourself. Is he advertising? Is the house listed properly? Does the listing show good--agent remarks, do the photo's pop? etc. Is the price right? Since your house might be on a busy street, did you factor the 20 to 25% deduction in value, or if you are selling commercial did you factor the potential increase in value?

Understanding your market: I would say about 100% of the time your house will sell for market value. You just may not be doing your job. Here is how you do your job. As an investor due dilligence is not the agents job, it's your's. Do these steps if you have MLS in your area. 1. tell your agent that you need a detail and summary report for the last year. 2. The detail and summary will be the same only summary will have one line per property and the detail will have 2 to 3 pages for each house. Tell him the parameters will be; house has to be same area (subdivision) or about 1 mile radius. comps will be about +- 10years of your age if house is 30 years old or more, size +- 10 to 15 percent. You want to look at active and sold comps going back 1 year. You want to get about 30 comps. Comps have to include all photos, and public and agent remarks(read them, this is like xray vision). if the street you are on is busy then you want other comps on same street if possible. 4. You will need to spend a minimum of 1 hour digesting this information. You will difinitely see trends, and comparisions. Have to give or subtract for ammenities. I dont recommend doing a CMA that the computer spits out because of too few datapoints.

The rest of your plan sounds good and I dont think there is a shortage of houses in your area to keep the plan going.

BTW some other options are Trading your property for someone who is having trouble managine small apartments, Exchanging property, O.F. with large down, getting rental commitments but not signed and appeal to commercial buyer, or Lease Option. Sorry about length

No Equity, No cashflow, no deal. Forget appreciation. Since this is a site about investing I don't see where the deal is. Our main market is Houston. We typically will buy these house for 70 to 75% all in. That means your value should be around 240k. Or if your valuse is 170k you should be all in for around 120k. On 240k Your rent will probably be around 2200 per month. Also as a general rule taxes are typically 3% with hoa and mud. Your insurance will be around $1000 per year.

Also two other points, using a rule of thumb is dangerous and unecessary. We make many offers that have multiple offer scenarios. Not paying enough is almost bad (never making a deal) as paying too much. Get the real figures and then make the decision.

Last point. Do the comps. Get a summary of House value and Rent values and then make a decision. By the way in over 300 houses i have never paid anywhere near market value unless I get terms out of this world. If you are talking about getting financing and buying something near market value, you are commiting suicide and you wont last long. If you need comps let me know and I will run them.

I agree with everything Bryan said on the sweet spot, if you are doing rentals. We own or manage 150 houses in houston and we will never buy 170k houses, sometimes we end up with them, but never on purpose.

Joe, one of the best potential private investor would be the Seller as the Lender. When you borrow from a hard money lender you put yourself in the position of doing something Millions of People have recently done. They tried to predict the future and were just wrong. Now when you are wrong on this type of prediction they come and take your stuff. How do you know what your exit strategy will be? Refinance? Maybe. A lot of times the Seller is protected by a broker and you cant get a good feel for the willingness of the Seller to Owner Finance. There are strategies to overcome this and you should explore them. I do a lot of deals in Houston and I use partners, I would rather give up more of the deal and not have a short term balloon. Also with the Seller youi may be able to avoid personal liability or at least limit it.

My expertise is single family dwellings -SFD. If your interested in that you should look at what assetts you bring to the table and exploit those as much as possible. For example in my case when I started, I had no money but a lot of construction experience, so naturally I became a rehabber . But in another example one of my students recently retired with significant cash assetts and he is buying a property that needs significant rehab and is flipping it to an owner occupant/rehabber and will make over 20% yield for the next 15 years.

Some things I would put at the top of my list if yoiu do SFD's. Stay in your own backyard. Stay in prices that work for blue collar workers. Do neighborhoods that are at least 20 years old and just focus on a few good neighborhoods. Never, never let others tell you the ARV, this is something you have to master. If you tell me more I can give better advice