All Forum Posts by: James Gefke

I know it was tough, but well said Micheal:)

Hi Chris,

I would focus on using your DM dollars on finding motivated sellers. Try and network with investors in your area to see how they evaluate potential deals. There is plenty on info on this site that will give you a very good idea of what many investors are looking for out there.

I am not sure a direct mail campaign seeking cash buyers will yield the results you are looking for.

If you get properties under contract that no one is willing to buy than most likely they are not the deal you may think they are. If you have a true deal you won't have problems finding cash buyers.

Cheers

Welcome Kristie,

I'm down in Milwaukee and not too familiar with your market but you have found a great resource and community here on BP! Read up here and make sure you are putting out A LOT of offers in the meantime in order to get your first rehab deal! It's a numbers game with listed properties and connecting with motivated sellers comes with time and persistent marketing.

James

Hi Lokesh,

I really can't comment on that program specifically but don't really understand why one should have to pay someone else money to find them deals. Seems kind of backwards to me.

Most likely their program will give some formula on how to evaluate properties and they can simply reject deals you bring them if they don't like them. You can find out plenty of similar info on this forum for free.

I am an investor in Milwaukee and I will gladly pay you a finder's fee of $10,000 if you negotiate a good enough deal that leaves enough spread for that to occur.

As an added bonus I won't even charge you a $1000 up front and a monthly fee for you to bring deals to me:)

Feel free to PM me if you want to talk sometime.

Good luck!

Hi Luc,

The things you mentioned that I don't like are:
1. Previous eviction
2. 8 collections

The credit score is definitely not optimal but there are many out there with similar scores and you may miss out if you rely too much on that number alone.

With that being said you want to make sure that you are placing well qualified that will take care of the place. What type of area is it located in?

As the owner you need to decide what criteria and previous history is acceptable and what is not. I am not sure if you should be upset with the PM company unless you have provided specific instructions regarding screening.

Just make sure you treat each applicant fairly and accept the first one that meet your criteria.

Personally, when I see a prior eviction that is a non-starter for me.

Hi Steven,

Mitch's replying is spot on. You mentioned that you would like to do these deals with no money out of pocket but investors would like a higher return than 10%. Also not sure why the cap rate would increase by someone else running the property.

You are working with a commercial agent who is in the biz of selling property and I would ask he/she what an acceptable return is on like properties in the area.

If you have no money of your own I would start out on a smaller property and buy at a discount where you would be able to provide an acceptable return to a private investor.

Verify the numbers yourself. If the pro forma is only yielding 10 % you most like would be paying way too much.

If you are looking to buy and hold in this market make sure you are buying at a significant discount to make the deal make sense.

Good luck.

Hi Diana,

I don't want to speak for Nathan but if you are looking for a 2-unit property and need to bring 50-60k for a down payment (assuming this would be between 20-30% of purchase price) you would be paying around 100k or more for each unit. I don't know your specific market but I believe that would be extremely difficult to cash flow with numbers like that after expenses.

Owning rental property is a capital intensive business and not having adequate reserves could lead to making bad decisions.

I would spend some time on BP reading about the 50% and 2% rule when evaluating properties as well as discussions that outline the true costs of owning and operating rental property.

I would assume that want to get into owning rental property to enhance the quality of your life. Owning rental property typically makes more sense when you have the capital to do so.

Good luck!

Hi Andre,

If the properties you are working on are truly a deal then it shouldn't be too hard to find the money. If those properties have been exposed to the market for over a month it is most likely not a great deal.

Assessment data from the city is no indicator of value. You need comps of recent SOLD similar properties in the area to get an idea of what the true value is. Most the sales in my area are selling at a fraction of the "assessed value"

You will also try and identify multiple exit strategies. For example, you buy a house with a HML and own it free and clear. If your plan is to refinance and take money out you want to make sure you have a bank lined up to do that. A cash out refinance of a free and clear non-owner occupied SF house may be more challenging than you think from a bank.

You need to first make sure you have a deal and then figure out how you would handle various scenarios.

Hi Geoff,

I don't know your market but in my market (Milwaukee) the MLS has become extremely competitive to locate deals for retail flips. A lot of the housing stock is old and repairs can be extensive. I would assume you may have similar properties in your area. I feel like a lot of people are paying too much for properties but for me the answer is to not start paying more.

In addition to working the MLS a lot of investors I know are marketing to sellers directly. Many are also using this current environment for buy and hold with prices being so low.

As you know there is a ton of useful info on this site but I would look to incorporate additional forms of marketing to aid in locating deals that are not currently on the market.

@Stuart Strow - We have come to agreement with buyers that is acceptable for both parties. Thank you for offering further guidance.

@Ken Latchers - Very true. This was a major oversight on my part and will not make the same mistake in the future. With that being said I purchased at such a discount provided a great product/price that overcame most objections with it being currently zoned in a flood plain.
I would do it again if the numbers were the same.