All Forum Posts by: Joe Cassandra

Wow this is great @Michael Elefante. 

We just own long-term rentals...but have been curious about STRs. 

Those are some solid numbers...and for such a high priced house...nice work :). 

Making me for my wife and I take one of these on :)

1.) Cashflow IS NOT $310 per month...

2.) Based on valuations, the area has barely appreciated in 10  years

...

Which likely means it's a rough area...

Which means you'll be paying a ton for evictions/turnover/repairs. 

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I don't like TK, but I understand why people want to do it. 

1) Very (somewhat) passive

2) Great for people who don't want to be "IN" real estate a ton but also don't want low returns of a REIT

I commend you for jumping in especially if you're not trying to make RE a big part of your life, just an investment area. 

I don't see this as a deal. 

But what's the worst that can happen? 

You sell for a loss and learn the lessons. At this price point, you'll find another newbie who will buy it thinking it 'cashflows'.

(I withdraw any compliments if this is just a shill for this Martel TK provider...that's crappy).

Yeah, I was general in my answer...there is ALWAYS financing out there with a good deal, but you might have to dig more for it. It's not necessarily sitting on a website of a HML.

There is a lot of hedge fund money looking for a place to park...but you need to find connections to them to get in. That comes from just A LOT of networking...and luck. 

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As @Mary M stated too...HML is still out there, but I've noticed (at least in Atlanta) their rates have stayed steady, but their points have skyrocketed.

Some used to be 1-2...now it's 3-4 points upfront.

Invest in marketing. 

You could probably put 10k in and get 3 great deals out of that. 

I used to live in DFW, but not sure the market now (sure it's super hot), so depends on competition in your area...but if you can find a lesser competitive area, your 10k in marketing will stretch farther...i.e. you get more deals per 10k.

In GA, it's about 3,500 in marketing spend per deal. (GOOD deal. You could do more than that on marginal deals).

Financing dries up in a crash.

Even in March when this all started, many stop lending...some even closed down.

Hey Jacoby,

If you read between the lines from the agent comments above...

1. Do all the homework yourself

2. Call the agent to put in an offer (which takes 30 min)

3. Let them sit back and cash my commission check

...

If you plan to go after on market listing, just go straight to listing agent, get all the info from the horses mouth...and offer them double commission

That alone will open up the listing agent to hear where you need to be to get deal.

You can move faster and make more offers doing this rather then waiting for the time your agent gets sick of you when your 10th offer is rejected

( based on experience when I started)

when you approach listing agent. Act professional,  and be confident so they know you aren't kicking tires and are looking to buy asap.

1. If you're a new investor and there is a crash...HIGHLY unlikely you would dive in, as fear would keep you out just like you're afraid now.

2. Buy houses at large discounts. Closing on a house for 122k, worth 200k, needs minimal repairs (bought offmarket). Master finding deals in a hot market and you'll be shooting fish in a barrel in a normal market.

3. As Jay alluded to, during a crash, there is little money to borrow, so if you can't pay all cash, you'll miss out then too

It's not hard for most agents to slap pictures and a description on the MLS.

The best agents know how to start feeding frenzies on your listings. 

ON LISTING SIDE: 

- They know how to get people to bid up a price...even bid against themselves

- They're able to negotiate through repairs...to the point where they know the minimal you have to do to get to closing table. Some listing agents, once they get the PA, they just roll over on repairs and say "Oh, just replace the roof and do these 20 other things...it's the best option"...and they say that because it costs them $0

- THey show up to appraisals with information to push the appraisal through as appraisers are lazy

ON BUYING SIDE: 

- They can sniff out when a listing agent is playing coy or trying to white lie about things "oh, I should have 3 more offers coming in, better get your offer in." Good buying agents sniff that out. 

- They aren't spending their time sending you listings you can find yourself on Zillow. They're instead looking for a good deal for you, while also checking off the boxes. Especially when they can help you with the 'vision' for a property

All deals were offmarket. So it's marketing to sellers, going to house, building rapport and making an offer. 

The ARV isn't jumping because of repairs, it's simply I'm buying at a discount. I don't try and force appreciation as it's bitten me in the butt before.

Buy at a discount with only the repairs you need to get to that number (i.e. look at comps), then hold or sell. 

The $500 was to remove a small tree the insurance company required :D

Last couple deals over last few months (note: I'm just a bit outside "metro" ATL in Cherokee and Cobb and Cartersville, but market is just as hot)

- BRRRR PP $122k, repairs 8k, just appraised for 207k (rents for 1.5k)

- BRRRR PP $80k, repairs $500, arv 120k (rents for 1k)

- closing on another BRRRR PP 122k, repairs 3k, arv 190k-200k (rent 1450)

- Just "flipped" a house in Kennesaw. Bought for 78k, just de cluttered for 1.5k, listed on MLS and sold yesterday for 150,500. (house needs about 60-70k which I didn't want to do). ARV probably 230k. Guessing they'll just rent it or they'll try and bump the comps (which that's too risky of a strategy for me).

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All off-market deals I sourced. 

As proven by my last deal there, trying to buy on market at 75-80% arv - repairs is impossible. I don't even look anymore.