All Forum Posts by: Joe Facenda

Thanks.  Have some connections but more on the buy and hold side.  

Where are you looking and what type of investing are you looking to do - wholesale, fix and flip or buy and hold?

Which area of Texas and what aspect of investing are you looking to pursue - buy and hold, rehab and resell or wholesaling?  Thanks

Try Kyle  Von Stein with Coldwell Banker.  http://www.outoftownlandlord.com/iowa-city-investment-realtor

What are you looking to do?  If buy and hold, I have a great referral for you.  Send me a message.  Thanks

I have been a Realtor in Northern Virginia for 27 years and lived in Vienna a little longer than that.  Your strategy is an interesting one that many clients have thought of.  However, the acquisition cost usually is the number that kills the idea for owner occupant builders.  

Know that in the town of Vienna, you will definitely pay north of $525,000 for a lot and more likely closer to or even a little north of $600,000.  In other areas, you may be able to get a lot for a little less but I would think it would be the rare - very rare - single family lot in a desirable area that would go for less than $450,000.  And in those neighborhoods, you may be the first tear down, never a great position to be in if resale is part of the plan,

I do some work with Habitat for Humanity and we have been able to get some lots for under $200,000 but these are not lots that would support a new luxury build.  They are perfect for the starter homes that Habitat builds but would be of no interest to a typical for profit builder.

I am not familiar with specific permitting costs and government fees for a new build but I know the costs in and of themselves are not a deal killer.  I do know that there have been stricter rules and guidelines regarding water runoff and such since much of our ground water eventually impacts the Chesapeake Bay.  Builders I know have now had to add months to their pre construction planning to satisfy all of these requirements.

On the build side, a ballpark - repeat ballpark - number is about $200 per square foot.   I think you could perhaps squeeze by at a slightly lower number but more than likely to get the finishes consistent with a new build, the number will go higher.

And with a new build, you almost have to go something like 3500 sq feet above grade, 4 bedrooms and 3 baths up, finished basement and 2 or 3 car garage.  Not doing so would put you at a competitive disadvantage against all of the new builders who are doing that as it seems to be what the market wants.  Most of the new homes in Vienna are going for 1.3 to 1.6 - a few a little less and a couple a bit more.  It would be nice to build something smaller that came in less than 1 million but the lot costs seem to rule that out.

Also, if we did a rent analysis for these homes, I am almost sure you would not be happy with the ROI. There are exceptions to every rule but I find that anything with a value over $500,000 in our market is not the best return on investment from a rental perspective. You would be better off buying 2 $250,000s than 1 $500,000

So, not knowing anything about your family situation, finances or construction skills, in general, I think a new home would be a tough strategy to work.  Buying a rundown home and fixing it up and adding value  is certainly something that can be done.  It is just on the new construction side, the lot costs are difficult to work around.

Hope this helps

@rich baer.  Agree.  Forgot about sleep.  That is critical.  I always suggest to clients if one decision or the other will cause lost sleep, go the the way of less stress and worry and forget about which path offers the best returns.  This is suppose to be fun and rewarding.  If real estate investing isn't fun, find something else that matches your temperament even if less rewarding. 

I have been Realtor in Northern Virginia for over 25 years and lived in Vienna for all of that time so I understand your (our) market.  

I am also a record keeping nut.  I have average price points in the area since 1975. I know we have had a strong history of appreciation and would venture to guess that historically we are one of the best in the nation.  I also we only had 4 down years in all that time.  Of course the past is not a predictor of the future.  And like Warren Buffet says, he is confident 10 or 20 years from now the stock market will be higher than today but next year?  Who knows.

That said, let me tell you what I tell all of my clients in this dilemma.  If you have even a small positive, give it a try.  (By the way, saying this is, of course, against my best interests as I make a living selling property. But this advice is in the client's best interests and that is all that counts.)

You are a CPA and know that to avoid capital gains, you need to be able to say at settlement that you have lived in the home 2 out of the last 5 years.  So your true decision point is not today but 3 years  down the road.

If keeping the home is the wrong decision because a) you don't like being a landlord or b) economic factors change in the short run - what is your downside?  How much can you lose?

But say you sold the home and invested the proceeds in something outside real estate, what are your downsides there?  Likely if the real estate market collapses, other markets do not fare well either.   So it really is not a decision of losing in real estate bit one of the risk in real estate vs the risk in the alternative investment. 

Recently my kids went to college and both went to private colleges.  It was quite expensive and really hurt!  But the decision wasn't that high tuition vs zero, it was that high tuition vs a a state college tuition.  That delta was smaller and made the decision easier to swallow from a financial perspective.

On the flip side, I do point out to clients in this dilemma that the home will probably never show as well as it does now with you in it.  So that too, is something to think about. 

Nonetheless, without knowing your total financial situation, I would still be leaning toward keeping the home.

I have been a Realtor for 27 years and I believe 100% that  homes sell themselves BUT how did that home get presented so it could sell itself, that is the question.

I am not selling a pair of jeans or a car where I can "convince" you  to buy, you agree, put your money down and leave the store with the item - all done in a few hours or a day or two.  No, a real estate deal as you all know, takes weeks or months to complete from contract to settlement and if a buyer believes they have been "sold" the home, they will find a way to back out.

So where is the value?  The value is in making sure the home is presented properly for what it is.  Whether it is a stunning, updated move in ready home or the home of a hoarder, as we know, there is a market.  So how do you reach that market and what is the price that type of buyer will pay?

I believe, that a strong Realtor does not "sell" the home but "closes" the deal.  I can not make someone who is the wrong match for a home pull the trigger.   But I can, if I look at the world thru their eyes, help guide them to a favorable decision.  

And I can present myself to the other agent in a professional way so they want to work with me.  If they have 2 homes their client likes and I am one they know "plays well with others" while the other believes in strong arm tactics which home are they guiding their client to?

I believe that a Realtor's' value comes  before and after the contract is signed.  Showing homes is the easy part.  For sellers it is advising and guiding  on how to prep, price and present their home and for buyers it ensuring they understand the process, contracts and financing before they look.

For both, after the contract is signed, there are countless problems that can happen and a good Realtor will prevent molehills from becoming mountains.  

I often compare the transaction to flying a plane. If I take off from Washington DC and fly to LA, chances are 99.9% of the time I will arrive safely.  But say there is turbulence over the Midwest.  An experienced pilot will avoid the turbulence and the passengers will not even know any existed while an inexperienced pilot may fly right into it and create a rocky ride for all aboard - but they still get to LA.  

Or the weather may be so bad that an experienced pilot will know that it is best to turn around and try another day while the inexperienced pilot may push through and need to make an emergency landing.

The problem in real estate is that until you lift off you don't know what type of flight is in store.  Sellers, buyers and even agents, who acted one way before the contract can take on completely different post contract personas.   There can be inspection items or title issues that, without finesse, could derail a deal. 

Yes, if I knew upfront which deals were the easy ones and which were the hard ones, I could change my payment structure accordingly but I just don't know which are which.  I'd be happy to give a rebate on the easy deals if I could charge more on the difficult ones. 

Hourly pay?  I would love it.  I think I would have a higher income if everyone I worked with paid by the hour.  I agree I am often overpaid for my successful deals but my pay on my unsuccessful deals is $0.  And those happen all the time.  Sellers have a change in plans, markets shift, buyers say they will wait until this or that happens in their life, interest rates go up, etc.  More than once, I have seen the pressure of making such a huge decision freeze folks or put so much stress on relationships that they fall apart.  Many times after hours and hours of work, the client says they've decided not to move forward.  

All that said, I find this profession tremendously rewarding.  The people I meet are great.  Several have become friends.  The income has let me do what I want.  And they joy I get in helping folks - particularly helping folks build a secure future through real estate investing  - is priceless.

I went to a city a few years back with the intent of checking out a turn key operator My mindset was that unless things went horribly wrong I was going to buy something from them sooner or later. I had done my research and knew they were a fine company but needed to see their work in person. The turn key operator only had a few homes currently available and it was a long trip so I contacted a local Realtor to show me a few additional homes. I am a Realtor and value what we bring to the process The conclusion? The turn key properties were well done. However, they were a bit higher than comparable properties shown to me by the Realtor. Plus, a fine local property manger was a few points less per month than the turn key operator. I bought from the Realtor and have been pleased with the results So, don't just look at the turn key operators offerings. Find an investor friendly Realtor to show you listed homes. You may be surprised