All Forum Posts by: JD Martin

 That's OK, I don't offend easily :D 

My take is that we are viewing this from different angles. As a realtor, you are programmed to sell that house at (more or less) any price that can be had, because the incremental difference in your commission between $280 and $320 is $600, which isn't a lot of money when you consider making either $4200 or making nothing because the house is too close to the competition. In other words, in my dealings with realtors over the past 25 years, my experience is that realtors will always tell you to drop the price in order to move the house, irrespective of whether the price is truly the reason the property is still unsold. There is a buyer for everything, at nearly every price. Of course there are more buyers at $299 than at $329, just as there would be more buyers at $259 than $299. 2 weeks on the market, with only open house traffic to look at, is not enough data to determine the price is too high. IMO. 

I would probably flip that house. If you have closing costs of 10% outside of your rehab, you are still looking at a 35% cash profit on a house selling for less than $200k - that's a pretty nice turnaround. Around here, a house picked up for 68k might be worth 130, best case, in a flip. At $1400/mo rent, assuming 100% leverage, you'll end up with $300-400 cash flow making a lot of assumptions (HOA, taxes, insurance, etc), which is still decent money, but that's a 10 year turnaround to make what could have been made in a single flip - i.e., would you rather have $40k over 10 years and deal with tenants, or $40k in 2 months and deal with no one?

Everything I hold and rent doesn't make much sense as a flip. I try to use about 3 years or less as a break-even point, i.e. if my cash intake exceeds my flip proceeds in 3 years or less, I'm holding the property forever (well, maybe not forever). 3-5 years, I'd have to think it through, as it depends on the neighborhood, long-term appreciation prospects, ability to replace the property, etc. 5 years or more, I'm flipping. 

At that price you really have nothing to gain by dropping the price in my experience, as no one walks around prequalified for $320k or odd numbers like that. You would have to make a significant slash to bring in the next group of homebuyers - down to $299 - and if you are already 10% below the rest of the market you may actually elicit questions and super inspections on "why are you so cheap for this unit". Buyers generally know what range something should be selling for, so if you dump the price significantly after a couple of weeks it will either signify something is wrong with the property or you really need to get out from under it. IMO - if I saw you drop the price 5% or more after that time frame, I would probably offer you 90% of your asking price, max. 

What size is your house? You mentioned fine schools - few people with children move during the school year, unless they are staying in the same district. If the house lends itself to a family, they are even less likely to move during the holidays. Houses look ugly during the winter, as everything is dead and barren. You may be better off rebooting and trying again in March or April when things start warming up (and heating up in the market). Since you have your license, you should be able to pull stats on home sales in your area during the last (12, 24, 36, whatever months) year; what does history say about sales numbers during the year?

One other thing: a drop in traffic after a good open house or two doesn't necessarily mean anything in my experience; you get a whole lot of "lookey-loos" who have no real intention of buying a house during open houses. If you had 25/30 appointment showings, with no offers or comments, that would be a lot more concerning. 

Good topic. Sometimes these figures make absolutely no sense to the market value of the house. If you are the recipient of a low assessment, I wouldn't say anything. If you are the recipient of a high assessment, you would want to appeal it. I recently bought a SFH that has an assessed value more than double what I paid for the house, and this is in an area where assessed values are usually about 80% of what the true market is; I will be appealing it.

In your case, you are looking to be the ultimate owner of this property. You really need to consider market comps (what has already sold, recently, comparable to your unit) to get a feel for the value of the house. The assessed value probably has little bearing on what they have priced the house at, unless they are simply cracked in the head. What does your market analysis say about what has sold in the past 6 months?

I'm not familiar with your market, but around here house sales has entered the Dead Zone until spring. Lack of traffic (IMO) is more a characteristic of the time of year if you had that many people the first two weeks. If you are competitively priced - you have to be honest here, as people have higher opinions of their own home than the market, usually - there's nothing to be gained by price slashing other than to appear desperate, or to hope to snag an extra buyer or two that is just a peg below your asking price. Exception might be if you are priced just over a natural break point that excludes some traffic, i.e. you are priced at 305, 255, 201, etc. In that case, a modest drop can pull more traffic through searches into your property. 

I suppose mine is a dishwasher and CH&A, since every property I seem to find doesn't have a dishwasher, and adding one makes my properties super attractive for the niche (lower priced 2br/1ba SFHs). I don't leave any property without these 2 items. 

 The availability of funds is only limited to your bank's policies. My bank allows access to funds same day if deposited before 2 PM. This assumes that you have the credit limit in place to write the check from the CC account. If you go this route don't forget to leave room for the transaction fee, i.e. if you want to get $20k, and the transaction fee is 3%, you will have a balance of $20,600 on your CC, so if your credit limit is 20k it will bounce. You have to write it for $19k and change. 

This is but one reason why there's no such thing as "The check is in the mail" with my units. Tenant either deposits directly into my local bank account (I provide deposit slips), sets up automatic payments (I use Cozy, it's free) through their bank ACH, or uses a commercial third-party setup (I use Erentpayment, costs $3 and the tenant pays the $3). No cash, no checks in the mail, no "he said-she said". I have the payment method written into the lease as to how we will accept payment. 

Yes, it makes sense, even for one unit. You don't have to look for the mailman, the tenant doesn't have to look for a stamp, it can't get lost, and you don't have to worry about tenants floating bad checks. Since you are in TN like me, you should have the 10% penalty clause in your lease (I use a flat $50 charge, but I rent in the $600 range) after 5 business days. 

 Yes; I've used a couple before, but you do not get everything, i.e. you have to pick - credit, background, eviction history, etc. I used one not long ago wherein the tenant had a cosigner because of lack of credit history (parent, student), and all I really needed on the tenant was criminal/background check. 

Ugh. Probably something to look at before people are in. What does your lease say about parking? Does it give them two dedicated parking spots per unit? Based on your picture, this looks like a rough situation. Do the garages let out into the driveway? If so, it needs to be clear. If your lease doesn't guarantee off-street parking, I would mandate that the driveway stay clear at all times and maybe charge more for the dedicated garages, or give the one without a garage a discount. 

Outside of that, I don't know what creative strategy is possible. Either people have to be blocking the driveway, or they have to park on the street. Unless the driveway is wide enough for two vehicles plus letting the cars out of the garage. In that case, you could create several parallel parking spots.