All Forum Posts by: James Mc Ree

@Ken M.

I don't think there is an easy one or two-point answer for lowering property prices. My point though was I don't think there is really as much demand as the media promotes for lower prices. I've never heard someone say, "I wish my million dollar home would sell for $700k." For every buyer who benefits there is always a seller who pays the price. That is a powerful political balance that prevents action.

Averages are often misleading. Average incomes include folks in poverty who will never buy a property and billionaires on the other side for whom the property cost is irrelevant. Properties are selling, but at a lower rate than before. Yes, they are more expensive for all of the reasons cited above and I'm surprised we investors sucking up properties for rentals hasn't been cited yet too.

I think the normal, pre-COVID supply is most constrained by owners with fantastic mortgage rates who don't want to give them up, remote work that allows folks to avoid the "moving for a job" reason for selling and more investors buying properties and holding them as rentals. That latter certainly has value, but not to someone who wants to buy a home.

I see you are in AZ and TX. There's lots of land there and lots of growth. I am in the Philadelphia area where most available land is infill properties and conserved farms.  Development is still happening, but nowhere near the rate out west. Land is available in PA, but often not in sufficient quantity close to the jobs and the new builds are quite expensive.

I'm sure no one will argue in favor of higher taxes when just considering the number. It's a much more interesting discussion when the actual budgets are broken out and people are asked what they want to give up. Schools? Police? Parks/open space? Road maintenance? After going through a few of those categories and hearing, "No, we can't possibly cut that....we need more of that!" we realize many residents are not willing to go through the pain of lower taxes to get the reward. Open space and preservation tends to be a more vulnerable target.

Regulation is one of those amorphous bogeymen (or women!). What regulations should go away that have meaningful savings? Stormwater is one of the big ones I often hear about as it can add $50k to the cost of a new build property sale. The builder/seller of that property might not feel it is worth it, but the folks down hill who are regularly flooded probably have a different opinion. Other regulations, such as adopting the current building code, provides safety and reliability to people for decades. Should that be eliminated?

It seems the headline "Housing is over-priced" is primarily by the media and housing advocates to attract attention. It's always been difficult for young people to afford their first home and usually the second and third. As mentioned above, rates and home ownership are around their historical norms. We were just spoiled by the post-2008 low rates, especially post-COVID.

I think prices are exactly where they should be! Why? Buyers and sellers set the price. Seller asks. Buyers bid. They eventually agree without coercion. No sale if it is too high, so seller will have to come down or buyer goes up. The market has always been this way and young families have always struggled to buy their first home or two.

How about this: A homeowner says prices are 30% too high, for example. Ask if they will sell their property for 30% less than current value since they feel it would be over-priced. I bet none will take that deal. Why? Because buyers will pay a price somewhere around the market price and sellers like that.

Increased supply in areas buyers want to be in is the only market-driven answer for this problem. Lower interest rates and more government assistance will drive prices higher. The only semi-promising idea I've seen in this area is zoning changes to allow for some form of ADUs on current properties that do not allow them (or smaller lots, etc): end state is more properties. That will get a lot of resistance and cause other problems, but it could significantly increase supply. I think we will regret it in 50 years if it comes to pass.

The web and gurus make it sound easy if you pay them $5,000 for the secrets no one else knows. 8-)

There is an interviewer for a job who would tell applicants they are not qualified. Lenders sort of fill that role in real estate since cash is the primary barrier to entry. The borrower applicant asks for cash and the lender asks for their credentials. No cash if no qualifying credentials. Contractors will do too to ensure they aren't wasting their time and they will be paid.

You see that a lot on BiggerPockets with new wholesalers posting, "I don't know anything, but want to be a wholesaler. What should I do and how do I do it?" Imagine that being your pitch to get hired for a traditional job.

No. I envision a bunch of time spent reading about depressing failures. 

I would present the topic the other way around: how to do HML the right way with short vignettes about what can happen when that advice is not followed.

Imagine how your tenants will use the space. A kitchen with limited storage will benefit from an extra shelf. It might not make much of a difference for a kitchen with lots of storage.

Can you use the space above the cabinets for anything if it were a soffit, such as an air duct, plumbing or electrical? That might be a way to provide more features. For example, you might be able to duct a range hood to the outside instead of recirculating the air in the kitchen.

I prefer to renovate almost to the ceiling. The renovation I am working on now has 93" ceilings. I went to 90" and am using the remaining 3" for electrical.

Loan price & rate are my priority. Speed typically varies 30-60 days which is usually within my closing window for inspections, insurance, etc. I am a buy & hold LTR investor.

Consider Corian if laminate is too "low" and quartz is too "high".

Consider if laminate --> Corian --> quartz gives you any rent increase. We don't know your market at all, but my guess is that laminate would work fine in a D area. You can always upgrade to quartz later when the laminate is destroyed. I would try to get resilient, but inexpensive, everything for a D area.

So, you have a prospect with no interest in seeing your property and credit so bad they are in bankruptcy, but you are considering their application? Are you trying to decide which dumpster to use for the application?

That looks like a high probability of disaster to me if you rent to them. It might be different if they showed interest and you got to know your story. I envision someone moving in and telling you, "You know, I am bankrupt..."

@Carlos Lez

I am confused by all this. You wrote your tenants complained about a laundry list of issues that don't actually exist. I am OK with that part. You then express concern about a code complaint that will slow things down. I don't understand that if there are no issues. You should welcome the code enforcement person if there are no issues and ask for them to give you an inspection report specifically focusing on these issues. That becomes some excellent physical evidence for an eviction lawsuit.

I see that you are writing, you have an old Victorian. The issues your tenants are complaining about have nothing to do with age. They concern cleanliness and basic function. For example, screens are there or not and it has nothing to do with age. Your local maintenance code probably requires screens in all the windows. A simple pic showing them there or not is trivial to make that go away.

Have you personally inspected this property prior to their move-in? I always do a walkthrough with my new tenants to allow them to point out any issues. These issues appear to be easily addressed with the tenants, as in they say X, you both look at it together and agree it exists or not.

I am concerned with your multiple references to the property being habitable. That could be just above the line of "uninhabitable." How bad is it really? I don't have experience with someone who is genuinely proud of their property merely describing it as habitable.

These were CfDs and mortgages on regular homes, land and mobile homes, 1st and 2nd position.