All Forum Posts by: Jay Hinrichs

@Eric Mulhern 

  Get your real estate license this would solve any of these issues. And please share the 3 options it would be very interesting to all that wholesale in Florida to know the DRE's position in this matter.

@Wayne Brooks 

I think this whole industry of wholesaling and flipping contracts ( and we have beaten it like a dead horse)  but it really comes down to if you have someone file a complaint against you then I think most state's will take the position that your selling RE without a license if you are just tying up a property and then advertising it for sale.. with the only intentions to close on it is if you can find a buyer.   But for everyone person that may be in Eric's position there are probably 100 doing the exact same thing every day of the week.

@Peter Grosso 

 my pleasure I would have liked to skip some of the pain I went through getting my PHD in that style of investing but it was an experience and I made the best of it.

@J Scott 

  Ah yes Atlanta great memories of those style of homes.. I bought a few that were never lived in for less than 50k .. it was just insane.. Also houses without garages was a new concept for me as well.

My new build in Charleston I did not build a garage ( its an Extra) and it sold in a week with no mention.. in our market here in PDX you must have covered off street parking :)

I do believe Atlanta because of what the hedges did and the heard mentality has basically topped out... price's are back or close to pre crash in many areas.. And there are builders that loaded up on lots for 1 to 5k finished form 09 to 2012.. And with prices were they are can build new construction that will compete well with existing... we all now the key word in RE  NEXT 

I like cash flow RE if I can own it free and clear. not a big fan anymore of leveraging to my eye balls just because I can...With the exception of construction loans of course.

@Terry Hershberger 

  you make excellent points and as a business owner you were or are well equipped to step into RE which is a business of being self employed and you run your own business with no one's help other than guidance from others and what you learn..

And there is no question that one can make money in ANY market in the US  that's a fact.

I know for me personally I have business in Portlandia and Charleston SC so those basically can't be any father apart.. And for me my flights are fine I always fly 1st class :). And stay at Hilton products..

I think the big point with regard to regional investing is asset class's and the brand new investor that has never run a business they have been a w-2 employee, so just do your job get paid etc.. Where with many in this industry and my self included I have never once in my 40 years of working had a w-2 job.. With the exception of a bag Boy at Food Villa in Cupertino CA circa 1971...

So  what happens is because the coasts are so expensive IE New York area and CA by and large and the Mid west is dirt cheap by comparison you have a legion of new investors that are influenced by what they see on TV hear from Friends etc etc that the way to get rich is with Real Estate. And by default because of this phenomenon of Turn Key investing were the owners of these companies take the product to the West and East coast and to Austrialia and Hong Kong and London and Singapore... those opportunities are sold to investors that are really least equipped to handle these type's of assets right out of the gate.  So for everyone like you who has succeed far a field or like myself that has had success out of state there are just as many if not more that have had a very bad experience and lost money and quit.. It happened also in CA and Vegas and everywhere else in the GFC I know I got my rear handed to me through those times.. However just the nature of the asset class's vis a vi where many Turn Key and other wholesalers work compared to the more expensive areas are just really tough to take on if your not fully prepared to do so and you have an illusion that a sales and marketing company has sold you on.

 Unfortunately those that do well at the business which is most of us from what I can see we all like to talk about it.. those that failed well you don't see any threads or very few ( there was one this weekend of a guy underwater and trashed house etc what do I do) but generally those investors just slink  away into the night never to buy RE again. 

@Derrick Craig 

  Derrick your so right.. but I have a Portlandia frame of reference.. many homes here in Oregon do not have Air-conditioning. There are about 10 to 15 days that you will be miserable but the rest its no big deal..

So to your point about missing condenser units.. I am sitting in my closing attorneys office in henry county just south of Atlanta. and these were class B offices single level but very nice in a great area, right down the street from a big country club development .. And I asked him why is it so hot in here.. He replied and you guessed it.. Our condensers got stolen last night... LOL  So yes it happens all across the board out there and its just not something a west coast person would deal with or be cognizant of.. My guys I do business with out there. It goes like this.

Second tenant moves out the condenser is removed and stored.. house re rented.. Nothing of value goes in until the day the tenant moves in or the HUD inspection.. So they let the tenant in before the HUD inspection .. The day the tenant moves in Hvac water heater and appliances are put in... Other wise if you do it and those items sit for a week or so there is a good chance by the time you get back there they will be stolen. I am sure you operate in the same manner anyone who has any experience in those markets does.

@Account Closed 

  for sure they exist  but the collecting regularly is the issue. But I have clients of mine that do this and do it we..  But they are local.. It is their lifes work they all handle all aspects of rehab they self manage they place their own tenants.. ( some will pay a fee to do this) the jist is they buy TRUE WHOLESALE and do not pay 20 to 30% of their cash flow to a for profit company so yes they can hit those metics with some regularity and success.

But your not going to sit over on the flanks of Diamond head looking out at the blue ocean and have this all done for you like you can in the Bay Area.. Just not going to happen.. Now that's a blanket statement and some do fine but many many do not so if you just happen to be that one who is sitting in their cube in Menlo or Mtn.View and its your house the thieves targeted that night well your just out.. you get the dear Investor e mail from your PM 

@Wilson Churchill 

  I am all for locals that live in a market loading up on rentals and cheap rentals as they are in a position to make them work and over see them.. The issue comes from those that are out of area and thinking they are going to create some great wealth strategy buying 2 to 5 cheapie rentals... the pain to get to the wealth component usually outweighs the benefits.

there was a thread a month or so back were a person ask anyone who had own Mid west cash flow rentals for 10 years or more and lived out of state to chime in about their experiences there was either no one or maybe one or two.. the reality is for those living 4 states or 5 states away this is just a really tough road to hoe... There is a thread today on BP of a person who owns a home in MI he owes 44k on it tenant trashed it needs 7k to be rentable yet again.. and he is at last out of money because of this one property, and to make matters worse he financed it with a national lender so his credit is at risk the best offer he can get of course is from a wholesaler for 17k this scenario happens hundreds of times a week in the mid west it JUST DOES  but we never hear about it we only hear about the blue sky and those that sell the dream...

@Derrick Craig 

  point taken... although its an art what you do if you get those properties to perform that way and I bet you work as hard if not harder than you ever did at Wells...

And I agree if I lived in one of the mid west towns  and could get the buys you local guys get I would own 500 of them. have the business scaled and have middle management so I never EVER had to deal with a tenant. What I don't agree with is that someone from out of area is going to create wealth by owning 1 or 2 or half a dozen of these homes compared to nicely purchased assets on the west coast.. again based on my experience of owning rentals in ORegon and a few in CA.  The major thing with the BAy area and it cannot be over looked is that the 500k exemption when you sell a home ( if your married ) Is tax free and that is huge.. I did it 4 times in 30 years.. And I had to live someplace right.. Just would not happen or will never happen in most mid west markets.. Save the better high end areas of Chicago, and New York

I did that very thing I bought 350 of them they were C and B  I sold my position in Oct Last year.... I like a nice liquidity event as opposed to dripping in income.. But that's just me.

However you must admit that what I talk about happens every day of the week in your market at those price points.. IE condenser getting stolen.. Needing to cage condensers. and other issues.. Sec. 8 is fine I had 200 of them.. and I agree but its 1k to 2k a year easy to keep those homes in the program...

@Mark Ferguson 

  I personally do not consider CO mid west and the correlation between mid west rust belt rentals is not there.. I doubt you can drive down many streets in Denver and see boarded up home after boarded up home.. And buy homes for 5 to 10k or 20 to 30k..

Your market in my mind is a west coast market just sitting east of the Rockies.. by  the way I spent a lovely year at CMC Leadville in 1974.... LOL

@Manch Hon 

  and let me know the next time one of your Bay area rentals gets it air conditioner stolen and when you are going to bar the doors and windows.. Then let me know when your bay area home there in Cupertino gets all its copper ripped out... And when thieves brake in multiple times while your trying to rehab it ( see another BP post of a nice lady experiencing that) and let m know when you have to buy security systems so your houses don't get trashed.. Or when your front door is kicked in because some crack head wants to steal 5 dollars worth of copper.. ETC ETC.. this is reality in the low end markets in the bigger east coast and mid west markets were houses sell for 35k.

Now you can find mellower towns hey being little satellite towns were this criminal activity is not as acute.. but the rents are still sporadic. I have a duplex in Kokomo IN. no thefts but we pay hell getting the rent every month.. and If I get rent 6 months of he year then that's about what I expect.

Those that live and work these markets are on them like a hawk and its their business they can make it work but a busy engineer sitting in Palo Alto and relying on a third party that's another story.

On my thread were I am giving out my e book  on the do's and don't of out of state investing my personal experience's of owning hundreds of these and foreclosing on hundreds more.. I got a ping from one of the prominent  Memphis turn key guys.. And as wet talked it through he said he will not even manage a 35k home ... I mean be logical what PM wants to walk into constant drama constant thefts constant evictions and down right dangerous circumstances.. If I was in those markets in the PM business I would consider those type of properties asset management not PM management and I would charge 200 a month flat fee regardless if I collected rent.. You need the battle pay to put up with this type of inventory