All Forum Posts by: Jeff Copeland

Two words: Market Cycles.

What may have worked in 2008-2010 simply doesn't work now. Many of these things (driving for dollars, foreclosures, distressed sellers, etc) have essentially dried up with the upswing in property values in the past 2-5 years. 

Someone with $100k in equity in their home is not going to go into foreclosure when they know they could just sell it and put $100k in their pocket. And they are much less likely to walk away and let an investor or wholesaler take their equity when they know that property values are at an all-time high. 

These sweetheart deals were always a needle in a haystack even back in the day. 

The haystack doesn't even exist right now. 

But the pendulum is always swinging. 

It's a great strategy for starting out, but inventory shortages for the past few years have made it challenging to find the right property at the right price. 

Also keep in mind you will still need to qualify for the financing, based on your credit score, income, and DTI ratio. Depending on your financial situation, you may need a cosigner (such as a parent or other relative) to get started on your first one.

 So you are a wholesaler claiming to be a cash buyer? And someone called you out and put a stop to it by asking to see proof of funds?

There are legitimate ways around this: You can establish a partnership with a hard money lender who will provide proof of funds (and fund your deals) if you do not end up assigning them. And if your deals are really that good, you should want to close on them yourself if at all possible. 

 If you are claiming to be a cash buyer, then yes, most agents should ask you for a bank statement (or some other proof of funds, such as a letter from your bank) to prove it. Here are my main reasons why:

1. Let's say you love the house and want to make a cash offer today, after seeing it. A cash offer submitted without proof of funds will not be taken seriously by a listing agent or seller. There are too many "wholesalers" out there submitting what amount to fake cash offers trying to tie up properties with a contract in hopes of skimming an assignment fee on the deal. If we're looking at properties over the weekend (which is very common), waiting until Monday when your bank opens is sometimes too late. if you aren't willing or able to do this legwork in advance, you simply aren't a serious, qualified buyer.

2. I am not going to put my reputation on the line with my local colleagues (who I'll likely be doing business with again, and running into at local industry events or the country club or whatever) by claiming to have a cash buyer for their property when I submit an offer, when I don't know that to be true. 

3. I am not going to show you $500k properties if you only have $300k cash (or a $400k preapproval) available. Your financing dictates what you can actually afford, which in turn dictates the properties you should be looking at. Sure touring multi-million dollar mansions can be fun, but it is not an income-generating activity when doing it with an unqualified buyer. 

Bottom line: If you are serious about buying a property, you need to have the financing details (cash, or preapproval, or both) buttoned up and ready to go at a moment's notice. If you do not have these things, you are not ready to buy and should not be wasting an agent's time looking at properties. 

You'll sometimes find a newer agent who hasn't learned these hard lessons yet who will show you properties (and to be fair, some experienced agents will show you one or two properties, and let those meetings sort of double as your initial consultation). But if your agent is not asking you for (or helping you secure) financing information, then they are doing you a disservice in the long run.

We shouldn't be so quick to bash the property manager in this thread. SSNs and other PII are not information that a can (or should) legally share under various federal laws such as the Fair Credit Reporting Act and the Privacy Act. 

Please read this article: https://rpm101.zendesk.com/hc/en-us/articles/115000168954-Why-Can-t-I-Get-a-Copy-of-My-Tenant-s-Credit-Report-

(This article has been reprinted many times, this is just the first link to it I found. No affiliation)

Note: I don't see any reason you can't request it directly from your tenants as the landlord, but your PM takes on a lot of liability by sharing it with you. 

Quote from @Matt Speer:

@Jeff Copeland That's a really good point. It looks like your PM company is one of the good ones... 

 Out of curiosity, where are you pulling this data from?

And I'm wondering if it only reflects from the day a unit actually got listed, to the day it was taken off the market. If so, the numbers do not reflect delays that occured prior to the property being listed (i.e. actually getting it ready to list, which is where most of the struggle often lies). 

Average DOM will vary from market to market (and market cycle to market cycle in the same market), and depends on a LOT of factors. Such as:

Who is setting the advertised rent prices? We get a few owners who "read an article that rents have gone up by 42%" and insist on pricing their units too high (despite our market analysis, experience, advice, and recommendations), so these units may sit for a few weeks in this scenario, which is out of our control. 

How (and by whom) are the days on market being calculated? It's not uncommon for us to have several units that leased up very quickly, and one or two units from value add properties that are out of service for renovations (sometimes for months). These vacant units under renovation are still under management, and still sitting vacant, so most software or "dashboards" will include them in the DOM calculations, and they can drastically affect the DOM averages.  Sometimes you have to dig a little deeper to get the real picture. 

The example below shows 7 units that rented pretty quickly, and 3 units that are down for renovations, just to illustrate how this can affect the average DOM:

It's not an uncommon request. In fact, it's a fairly common brokerage policy. 

Pre-approval or proof of funds shows that you are serious, willing, and able. You'd be surprised how many people will waste a realtor's entire weekend looking at houses with no ability to actually buy anything (or at least not anything they're asking to see). There are only so many hours in the week, and showing homes to unqualified buyers is simply a complete waste of time in many cases. 

Asking for ID is a realtor safety issue. Realtors are often alone with potential buyers in vacant homes and remote locations. It's not unreasonable to ask you to verify your identity. Google "realtor murdered" and you'll be shocked by how many headlines pop up. 

How long have you been managing in your market?

I'm in Florida, so it's certainly not weather-driven, but we always see a noticeable seasonal slowdown in the Fall. Less people are moving during back-to-school season, and then all of a sudden the holidays are looming. 

I'm not saying the other factors mentioned in this thread aren't a factor, just that some seasonal variation is normal. 

Why don't you ask them for clarification? 

They have no incentive to leave your properties sitting vacant, but it's not uncommon for real estate investors to have properties under renovation or "offline" for whatever reason for several months, and the PM doesn't make any money if there is no rent coming in. It sounds to me like they probably just don't want a bunch of unrented/unrentable properties clogging up their system and wasting their time since these properties don't generate any revenue. 

And it doesn't say anything in the language above suggesting the landlord "cannot take other actions". Is this the only thing in the PMA that addresses termination/cancellation?