All Forum Posts by: Jace Holt

@Jordan Callaway Thanks for the input. I like your idea of separately paying a buy-side agent. I look at it as money well spent to get better deal flow. 

One of the difficulties is that I am continually looking in new markets where I am unfamiliar and could really use a local expert to make the process smoother. Apart from your suggestion, I'm not sure there is any good way around that until I have a solid contact in most of the regions.

I should also add that while there is occasionally a delicate balance that has to happen to avoid a conflict of interest, I prefer the listing broker/agent because they have the most information and are only 1 step removed from the seller. I do not enjoy double broker negotiations because the communication can get a little less precise and lose my ability to have a real problem solving negotiation. Even when just buying through the listing broker, I wish I could just negotiate directly with the seller. Do you have any ideas on how to make that situation happen?

I have a question for anyone experienced in working with different commercial brokers for buying mid to larger multi family property. 

I have worked with several now and I have found varying levels of helpfulness. I've had some who will hire and oversee inspectors, draft documents, if necessary work with any government agencies, help with market due diligence, meet with contractors at the property, etc. 

On the other hand, I have had brokers tell me they need me to do virtually everything, including drafting all of my own documents for them to hand to the other party.

I nearly always work buy with the listing broker. I obviously prefer the more helpful brokers as they save me days of work throughout the transaction, but I'm not sure if I should be expecting all of the service some offer me. Is that what they supposed to be doing? I feel funny asking them to do tasks they were obviously not going to do. What all do they do for you? Would this be solved by just bringing in another broker/agent local to the area to split the commission and do all of the work I want done? If I start buying their listings with another agent who splits the commission, will I start losing deals and getting offers rejected I otherwise would have won?

Thanks for any helpful input!

Hi Benton, welcome to the area. Definitely come to the meeting  Brannan mentioned. If you have some specific types of projects you are looking for, I would be happy to point you toward what I can.

@Eric Hamlin Hi! You are welcome to join the REIA listed above as well. Hop on the Facebook page and introduce yourself there. If you have a specific question about the market or something else, go ahead and ask that.

@Rebecca Jensen Hi Rebecca! You are welcome to join the local REIA called SEIREIA-Real Estate Investor Club. There is a page on Facebook you can join. Meetings are the second Thursday of every month in Idaho Falls.

I'm looking for help analyzing this creative sale arrangement. What are the tax implications? Is this violating any sort of securities laws? Feel free to poke holes or shred the idea apart, just please provide the legal/logistical reasons for the issue. Thanks!

Proposal:

The property is presently valued at $140,000. ARV $250,000. The buyer pays the brokers fees and get added to the title. The property is financed at 65% of present value. The buyer pays the bank fees. $70,000 is paid to the seller. $21,000 is used for renovations, repairs, and stabilization. The buyer oversees all management, renovations, and operations. The property is stabilized and refinanced at 24 months. The seller is paid the other $70,000 plus $20,000 for remaining on the loan during the 24 months. The seller is removed from the title and not on the new loan. The seller receives a total of $150,000.

I find deals on the internet, but I don't approach anything without trying to create some additional form of value for the seller, myself, the broker, and the investor. If you can't specifically point to where you are adding significant value to the deal for everyone, I think your going to spend a lot of time wondering why good deals don't exist.   

@Tyler Maher I do not currently have any completed projects I own in Rexburg. I am familiar with the market because have worked on a few larger projects there, managed apartments there, and conducted a market study and analysis using myself and a research team. I have two projects there in the works I plan to complete but are currently placed on hold until I finish some other projects.

There was no difference between economic occupancy and physical occupancy on apartments I managed in Rexburg. We had a 100% collection rate plus a little additional revenue from late fees. The approved housing renters are virtually no different in reliability and unit damage. Deposits almost always covered damage and cleaning fees. Approved housing allows you to go through a process and block students from class registration or graduation if they steal from you so you have extra leverage to be made whole. As far as collecting rent, just be polite and completely firm with your collections. Set your rules and tolerances ahead of time, and then don't budge an inch. There is a significant amount of entitlement you need to be prepared to stand up to.Occasionally students or their parents will call and try to insult you or bully into giving them rent free housing. Surprisingly, even parents of married students tried this. (Or they feel their child isn't being treated right, they will show up at the child's apartment at 7AM and rampage through the unit and throw a tantrum and make you call the police on them. Story for another day.)

Per square foot, family housing is roughly 50% as profitable. This reflects on property prices of land inside the approved housing boundary which I have seen as high as $2.4M per acre. This means that the ROI from creativity in deal finding paired with larger investors favors the approved housing investor. It will be more profitable and simple to buy married housing as a smaller player.

@Tyler Maher There are three main categories of rentals in Rexburg. "Approved housing" which represents approximately 70% of the market, traditional housing (locally referred to as community housing or family housing) which represents approximately 25% of the market, and unapproved roommate-style housing which I would guess to be around less than 5%. If just starting, you will want to go if possible with the smaller two segments. There are so many rules to getting school approved housing and the university prefers larger projects.