All Forum Posts by: Jose Alejandro Hernandez

As Gabe asked, I would ask the same thing, if you have an agent? If so, have them hold the builder to the fire, that is not acceptable for a brand new home and that should be on them to fix that and anything else. I had a similar issue as a buyer's agent and I had to go back and forth with the builder multiple times and even back up the closing date because there were a few items to take care of, have your agent represent you on that. There are usually, plenty of issues with new homes, I would strongly recommend still having a home inspection before closing (if you haven't had a formal home inspector come out) and making the builder address any AND all issues, it's a new home, it should be near perfect. Do another walk through with your agent after the inspection and double checking it all. 

If you don't have an agent, for lack of a better term, be a pest and make sure they get those issues taken care of and show them the full formal inspection done, its a NEW house for crying out loud!!

Also to answer your question, I would not back out of the deal because of this or some other minor issue that can be easily fixed, it seems like you have all the financials thought and planned out, continue with it if possible and don't lose it because of that. 

Do you have a lawyer or agent representing you? Seems a bit of a stretch to cancel a deal because of a front door needing adjustment. 

Ask the builder for a timeline, make him commit to a timeframe and scope for repair. Who, what, when, where and why. 

side note: Are you having a home inspector walk through before closing? 

Here are some key considerations to aid your decision-making process:

1. Diversification: While the allure of Cape Coral's potential cash flow is undeniable, diversification can be a prudent strategy. Consider starting with a smaller investment in the new market while maintaining your El Paso holdings. This allows you to test the waters without committing entirely to unfamiliar territory.
2. Local Expertise: Leveraging the knowledge of local experts is invaluable. Connect with experienced real estate professionals in Cape Coral, such as realtors and property managers. They can offer insights into the market's intricacies, help you find suitable properties, and navigate the turnkey process.
3. Visit & Familiarize: If possible, plan a visit to Cape Coral to familiarize yourself with the area. Walking its streets, exploring neighborhoods, and soaking up the local vibe can provide a deeper understanding of the market dynamics.
4. Due Diligence: Prioritize comprehensive due diligence on any property you consider. This includes thorough property inspections, evaluating neighborhood trends, and understanding the local rental market. Even with a turnkey provider, a vigilant eye is essential.
5. Risk Management: While potential rewards are enticing, manage risks carefully. Have contingency plans in place, set aside reserves for unforeseen expenses, and be prepared for fluctuations in the market.
6. Investment Strategy: Define a clear investment strategy tailored to your goals. Decide whether your primary focus is cash flow, equity appreciation, or a combination of both. Your strategy will shape the types of properties you target and your overall approach.

Ultimately, your investment decisions should align with your risk tolerance, goals, and level of comfort. While stepping into unfamiliar territory can be exhilarating, remember that combining adventure with wisdom often leads to the greatest rewards.

 @Jose Alejandro Hernandez

You are essentially describing buying in cash.  Keep in mind you pretty much won't find a lender that will loan just $50-75,000 usually.  Maybe some will, but they will throw on fees to make it worth their time.  Point being... if you buy with cash, obviously you bypass the downfalls associated with high interest rates.  But the downside to that is that you have WAY more invested in the property.

From a return on investment perspective, you lose that way.  Case in point: $200,000 to spend.  You can perhaps by one - $200,000 house, or if you use financing, buy four $200,000 houses (with 25% down). 

Let's just take the example of one house for ROI purposes.

Let's say at the end of the day you net $300 in clear profit per month after principle, interest, property taxes, property insurance, and a maintenance reserve.  On a yearly basis that is $3,600 profit (albeit before any income taxes, capital repairs, etc)... but we'll keep it simple for the moment.

So if you financed and put $50,000 down on your property, your ROI is $3600 /$50,000 or 7.2%. But the same scenario where you paid cash for the house would be $3,600 / $200,000 or 1.8% ROI. See why financing is the better way? (at least until the rate is 7-8%... then you do the smart thing and say, "I'm going to wait a while for these rates to settle".) At least that is my perspective. Real estate is a long game. Realize you are at a high point in the market. It's not the best time to be buying.

All the best!

Randy

@Jose Alejandro Hernandez

One sort of hidden feature of Zillow I do like is that you can go to the map within a listing, click on the "Lot Lines" tab, and see all the houses around your target house you are looking at that have sold recently, or are for sale.  You have to greatly temper all that by date sold... but it is a convenient feature to start evaluating pricing on a broad scale for the area.

As for the 50% rule...  You can pretty much throw out all the percent rules since about mid 2022... at least until interest rates drop back down to the 4-5% range.  Pretty much none of them are going to work.  Mostly because the Fed wants investors on the sidelines so they aren't eating up housing supply.  The goal is to drive housing prices down.  But most sellers are handcuffed by the low rate they currently have on their property and don't want to buy back into a high rate environment, so are staying put.  So the Fed's attempt to increase supply is somewhat hamstrung because the regular flow of new inventory from sellers isn't hitting the market like it did when rates were lower.  This leaves only new home listings to try and help drive up supply beyond the reduced rate of people listing their owned properties... which is a slow process.  All of this translates to: Now is a tough time to try to buy into the real estate market.  But real estate is cyclic.  The deals will eventually return.

All the best!

Randy