All Forum Posts by: Joe Facenda

How did you find that Realtor?  Did you know them from when you lived there or find them through another source?  Is their work mostly investments or mostly traditional sales?

Joe V. is correct.  In some markets you just can't cash flow and they should be avoided.  But sometimes folks want to buy a mid range or upper range property in their market and the numbers don't work but the entry level properties do.  So using the same funds it is better to buy 2 entry level homes than one mid level home.  But, I agree, if the entry level homes don't cash flow than go to another market. 

I don't know the prices in Quincy but in my market, (outside Virginia suburbs outside Washington DC) there are just about zero cash flow opportunities with traditional financing at $500,000.   I have had many investors come to me saying they would like to buy a cash flow property at $500,000 and I suggest to them that it won't work but if they want to buy two at $250,000, they will have decent cash flow.  Are you starting too high?  

As to your comment  Ryan about major markets always seeming to appreciate, I agree but I don't want to gamble on that.  But you know what?  Two at $250,000 will probably net the same as 1 at $500,000 over time and you will have had cash flow while waiting.

Lots of tremendous tips in this thread.  I have been a Realtor for 27 years and still learning something new everyday.  It's a great profession.

I will say that in some ways this gets easier with time.  I no longer need to aggressively prospect for new clients as over 85% of my business is past clients and referrals.  How did that happen?  I would like to think by following the strategy of one of the writers above - giving each transaction more priority and attention than if it were your own.  I have always thought that by providing superior service,  the money will follow.

As to who to prospect to build your career?  Well the traditional advice is "list to live."  Nothing wrong with that but when I started I took the long view.  Sure I wanted listings but I wanted people who would use me again and again over their lifetime.  Who were those groups?  First time buyers and investors.  

First time buyers are typically younger and have decades of life changing events ahead of them like marriage, children, job changes and sometimes, sadly, divorce.  Almost all require a residence change.   Older buyers getting into the "dream house" tend to stay for a bit.  

Of course we are here because we love real estate investing. And what investor do you know that has done 1 deal and quit? They are some of the best clients for Realtors yet you will find not many Realtors actively work this niche. 

I got into the investing game late.  But I will tell you that one reason I did is that I saw what some of my clients were doing and I hit myself in the head for not doing it myself.  So many of the clients I helped had built portfolios that provided enough cash flow that they could choose not to work or do whatever type of work they wanted.  

As a Realtor working with investors you are not only generating income but getting an education as well.  For me it took forever to learn the lesson that real estate is a  path to financial freedom. And  I am still learning new tricks and ideas  from my investor clients.

I can think of nothing else I would rather do.  Okay - professional baseball player but that ain't happening in my 50s.

I am a Realtor in Virginia.  In general, I know that the investors I work with are looking for the best deal that fits their model.  I do not expect with 10,000 agents in my market and thousands more unlicensed wholesalers, bird dogs and the like that I will know every great opportunity.   However, there are some boundaries I have when deciding if I want to continue to develop a relationship with an investor.

If they are a flipper, I tell them upfront that I will not have all that many opportunities for them. In our market, almost everything that gets to the MLS gets bid up so high and so fast that I can't see a profit in most of the deals. I tell them they need to find off market deals to make money. There are a few situations where I get inside scoop on a property before it goes to market but to be successful, they need to network far and wide. My expectation here is that if I do bring the property, they will list the rehab with me. If another agent brings them the property, they should list with that agent. If an unlicensed person brings them the property, they should list with me. If they list that home with another agent, I would think our future is not bright.

I expect a little more loyalty from buy and hold investors. Here the MLS offers a multitude of opportunities. If I heard that an investor bought a MLS listed property from another agent, I would not be happy. Again, if they found an unlisted property on their own or an agent brought them an unlisted property, I would understand. But I think it is wrong to have 2 Realtors scouring the same MLS for deals. It takes a ton of time and energy to not only research the price and condition of potential rentals but to also put together rental comps and cash flow statements which I do before suggesting to an investor we look at a home.

My buyer agency with investors will state that for anything in the MLS they use me. If it is unlisted, they can use me or not.

Really, bottom line, the investor is not here to make me money or make me happy.  It's not about the Realtor.  It's about them and the deal and finding one that fits their investment strategy.  Sometimes that involves me and sometimes not.  I can't be offended when it does not unless they selected another Realtor to help them in a situation when I could have easily been their representative.

Hope that helps.

I am a Realtor in Virginia.  The answer to this question as stated above is very state specific and those citing OK law are providing proper direction.   Of course, any buyer off the street can make an offer on a home without their own Realtor.  Putting aside commission issues, I think John and the Realtor need to have a conversation about the term "dual representation."  Again this is governed by state law but it is a very fertile ground for lawsuits on both sides of the transaction.

In Virginia, dual representation means that while I need to keep confidential whatever either side tells me, I can not be an advocate for either buyer or seller.  Very specifically, I can not tell a buyer what to offer and I can not tell a seller how to counter or structure a deal in their best interest.  That is a tightrope I will not walk.  I do not practice dual agency as the seller hired me to be their advocate and protect their interests.  I can't do that as a dual agent.

That does not mean I don't sell my own listings.   How do do this is state specific but let me tell you how we can handle it it Virginia.

If an unrepresented buyer wants to write on a home I have - they saw it on the internet, are a friend of a friend of the seller, etc - I tell them I can not represent them and they have 2 options.  First, they can find their own Realtor.  Or second, I can write the contract for them but we will have write in multiple places that I represent the seller and they are unrepresented.   The choice is theirs.  The one choice they don't have is compromising my representation of the seller. 

I just settled on a listing where the buyer came through an open house unrepresented and I had several conversations with them over the course of a couple of weeks but when it came time to make an offer, they got their own agent.  Found money for that agent.  Lost money for me but I sleep better at night knowing I was able to have open and honest discussions with my seller client and be their advocate throughout the deal.

Hope that helps.

Please have a straightforward and honest discussion with your Realtor and lender. Yes, you can get a loan with 3.5% down. They are probably talking about a FHA loan. But these loans are strictly for owner occupants. There is no restriction on renting the home later but at the time of purchase it MUST be owner occupied. As part of the loan process, you will be asked to state (on a federal form) that your intent is to move into the home. If you say no, you don't get the loan. So it must be owner occupied.

And by the way, with $30,000 available, most people would not use a FHA loan. Only if the more liberal qualifying ratios are needed would one use FHA with that much cash.

As to which community to buy into for rental purposes, unless you find an owner financing situation, you will be limited to properties at $150,000 or less so you can put down 20% and get an investor loan.  Your agent can run some options for you and they will be either smaller condos close in or other types of housing much further out.

it should be easy for your agent to show you your monthly payment in comparison to rentals in the area.  

Hope that helps

Ali,

Are you buying a personal home for your family or a rental investment?  It sounds like your goals are not clearly defined.  

I have been a Realtor in this market for over 25 years so I am certainly familiar with the area you considering. Obviously, since we are on Bigger Pockets, I work with many investors. And, of course, I do owner occupied transaction with other clients. I will say, South Riding has not been an area where my investors have found the best returns. On the other hand, it is a wonderful place to live. So which is more important - a great community to call home or maximize ROI? Or is this townhome priced way below market?

Without knowing the specifics, I am 99% certain that $30,000 down on a $420,000 will result in a negative cash flow situation.  Also, while there are certainly creative financing options, I am not aware of a traditional lender who does an investment loan for less than 20% down let alone less than 10% down.  

Can there be a middle ground?  Yes.  I had a client several years back who built a very nice  portfolio by buying a property as a principal residence, living there for 2 years or so and then buying another while keeping the prior one as a rental.  He did this over 8 years and those investments turned out quite well.

However, you really need to plan worst case.  Our area is one of the strongest in the country and I am comfortable saying that in 10 years, the townhome will be worth more than today and rents will be higher.  But next year or the year after or even 3 to 4 years out, who knows?

Hope this helps.

Welcome.  I live in Vienna myself and happy to help on any way.  Message me with any questions or thoughts.

I am a Realtor in Northern Virginia.  Many first time buyers are locally driven and subject to the rules of that organization or governmental authority.  In general, my experience has been to qualify as a first time buyer one needs to not have owned ANY real estate in the last 3 years.  So, yes if you are looking at a 1st time buyer program, an investment property would probably disqualify you.

Also, know that most lenders will not count any income offsets on that investment until you have been had it for a year or sometimes more.  That means the entire mortgage will count against  your debt ratio and the rent will not be credited back.

I have seen many people buy that "investment" as a personal residence.  They live there for a year or two and then move on to another.  I have one young client who moved thru 3 condos in about 7 years, never selling but keeping each as a rental.