All Forum Posts by: Jason Chen

I think what's going on is that the correct deal hasn't landed in your lap yet. 99.99% (yes, 1/1,000) deals in central Florida are NOT worth getting into in my opinion. You see a duplex in Orlando for sale for $125,000. You know you could negotiate it down to $115,000. You know that if you wanted to sell it a year later....the highest offer you'd get would be $110,000.

Properties like these rampantly exist in Orlando where we know the property simply isn't worth as much as  what they say. If anything, you've probably just been doing a good job being selective about getting your hands on a great deal. Now the downside is that should you encounter a great deal, there's going to be 3-5 other people offering on it. Take my advice and bid a solid offer (assuming the numbers make sense) when it does happen. There's no reason to rob yourself of the pleasure of having a real winner on your first deal.

My second piece of advice is to look at the surroundig smaller cities around Orlando. 

 As a general rule, I dont invest in tiny areas, but the thing is that places like Inverness, Belleview, and Wildwood are small little towns surrounding Ocala, the larger town of 60,000 people.

Glad to see that people in Florida are still happy to throw money down the drain buying a $95,000 duplex when they could buy one in Ocala for $70-75,000. If for any reason, this would be why investing in these kinds of places might actually be worth it. Literally just take the buyers to the cleaners.

One day I will probably reveal the name of the motel. It is not located in Tampa, and it doesn't even have conference rooms. I wouldn't mind giving other BP members a discount at all.

The motel is not for sale, but the $400,000 number is just something I threw out there as a less than minimum price floor for how much it is worth. In fact, if I listed it for sale today for $550,000, there would be someone offering $475,000-$500,000 for it within a couple of months because I know of someone in this area who has already made a similar offer for a similar motel here.

Even if someone offered more than that, I wouldn't take it unless it was a ridiculous offer that was above $800,000, for a number of reasons. The prinary reason would be that I would be sacrificing something that generates a lot of cash flow, combined with the fact that the motel business has a very high barrier to entry like I mentioned earlier.

Let me give you an example of what's going on in the motel scene. There is currently a 17 room motel that rents for $65 a night in Florida. It is currently listed for sale for $2,950,000. You can actually find this listing on loopnet right now. The owner claims that the property has a net income of $232,000 which I believe is not true. The thing with motels is that the numbers can easily be fudged with, and often are. Am I to believe that my motel which generates $115,000 a year after expenses and has three more rooms and rents for roughly the same price, has only 50% of the income of that 17 room motel? I am tellig the truth, whereas the other owner is exagerrating things. A duplex or quadplex for example, are examples of properties where the numbers are difficult to falsify.

And it's being listed for $2,950,000. I dont know why someone would pay over $600,000 because theyre going to be in adult diapers by the time it's paid off, and thats assuming they negotiate the price down to $2,000,000.

Good point. Something about this deal is a little fishy.

Also just saw that the investor if from GAINESVILLE Florida.

You are getting into a deal that is very average based on the financial you have given. I am familiar with this area in general. The seller might be hiding some facts, and the thing he is hiding might be something huge like a sinkhole problem since it is Florida after all.

Id be super cautious about this deal and not be afraid to back out if things go awry.

Spoken like a real investor with a good eye. Never be fooled by the men in fancy suits and clipboards. I have avoided many a deal where I just knew the numbers weren't good, and the true numbers were in my head. 

There are 2 extremely important things when it comes to the game of rental cash flow properties in Florida.

The first is something which should've been taken care of before even deciding to purchase, and that is "Does this property have a potential sinkhole underneath it? Because if it does, I am running for the hills". I am assuming you have had this taken care of already since I doubt you're even in a sinkhole area in the first place.

#2 would be that the most likely unexpected thing for you to experience is a bad renter. Make sure you SCREEN your tenants properly and make sure they are truly qualified. Be firm, but friendly. Assuming, this is the ONLY real estate investment you will ever make, you could very well go through 15 years with not a single terrible renter, and maybe a couple that simply struggle with making payments on time, and one that had to be evicted (wouldn't be that bad at all if that's all that happens in 15 years on a 4plex).

SCREENING prevents tons of problems, and a huge sign of an inexperienced amateur landlord is one that has found themselves in a big pickle because they neglected to screen their potential tenants properly.

That's about it. Landlording is a pretty boring job.

Step 1: List job ad on craigslist

Step 2: Conduct interviews

Step 3: Disqualify the people who call craigslist "craiglist"

Step 4: Disqualify the people who have a few tattoos or a medium number tattoos. You'll always want to hire someone who either has no tattoos, or WAY too many tattoos. Inbetween people will probably not be good at the job.

Step 5: Hire the chillest person of the remaining bunch.

Step 6: Tell us how it goes.

I usually don't do much to figure out the utility costs because I am familiar with the cities I invest in. I think i would if it were it were a city I'm not familiar with at all though.

Are you investing out of state? Just make sure there isn't some crazy stuff going on and i guess you're good to go.

Oh yeah, and to answer your question, just ask the listing agent to provide it for you. Don't be afraid to ask

Owner-financed deals can be incredible for obvious reasons. The financier is right there in front of your face willing to finance you. You could theoretically have 1,000 properties where all of them are owner-financed, and generate huge cash flow or whatever.

Without any details of the property, I don't really know what to say. I always personally appraise properties myself because I believe that I am better than 99.999999% of appraisers (unless it is a super expensive kind of niche property like appraising Apple's new donut-shaped office). The appraiser's opinion shouldn't be worth much because YOU, the investor who intends on being the successful investor, will make sure that you can appraise it more accurately than the other guy.

This seems like the kind of deal where you can say "$270,000 and 7.5% and I will do this deal", and the dude will probably agree to it.

It's shown me how dumb and greedy and stubborn people are in this game called real estate, which is actually just a game of mostly common sense. The money obviously means a lot to me too, but I do also do it to understand how people behave when it comes down to business.