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All Forum Posts by: Jason L.

Jason L. has started 31 posts and replied 214 times.

Post: Pro baseball player seeking advice

Jason L.Posted
  • Rental Property Investor
  • Delray Beach, FL
  • Posts 224
  • Votes 169

@Clayton Cook While I'm not an athlete, I can relate to getting my license in hopes to find my own properties, but then life getting in the way. As nice as it would be to get that rebate on each purchase/sale, I started outsourcing my "deal finding" to an agent again. I just didn't have the time to justify paying for MLS and driving around at properties, but I still wanted to be in the game. If you can get an agent who understands your profession, then they'll probably be willing to go to properties for you, take videos, and then you can watch them on your phone (between innings?). You also wouldn't have to tie yourself down on travel days with paperwork. Obviously it's not ideal to "waste" your license after studying for the exam, but it'll help keep you in the game while you focus on your career.

Another consideration in this is that as an agent yourself, you could refer yourself as a client to other agents. This would likely allow you to get a small referral fee while still focusing primarily on baseball. My feeling on this though is it should depend on how hot the market you're looking for is. I'd wave the referral fee in a hot market because you don't want to disincentivize agents from sending the best listings to full commission buyers before you. In a slower market without the competition, then you could easily still make it worth their time to give you a referral fee. That's strictly my opinion though.

Ditto on property managers. Most of the ones I've looked at will give you a small referral fee as an agent, even to refer yourself as a client. 

Post: How to determine ARV on Orlando building

Jason L.Posted
  • Rental Property Investor
  • Delray Beach, FL
  • Posts 224
  • Votes 169
Originally posted by @Robert Lindsley:

Hi Christopher,

Thank you for that. I did the math assuming a 6.45% Cap Rate for Orlando, along with $115,544 NOI but I don't believe this building could ever be worth $1.8M. Is my math incorrect?

Thanks!
Robert.  

Your math is correct. I imply from your assumptions that the units are currently way under-market (for my own back of the napkin math's sake, if you bought the property at the same 6.45 cap, then the NOI is currently ~$58k). So if you bring them up to market, then you'd clearly be adding a lot of value when you sold to another investor after stabilization.

Post: New member interested in Tennessee & Florida

Jason L.Posted
  • Rental Property Investor
  • Delray Beach, FL
  • Posts 224
  • Votes 169
Originally posted by @Daniel Fischer:

@Peter Palmer

Tampa market is competitive, but you can consistently get 15-20% CAP on triplexes, duplexes, and SFH rentals here. More competitive in the flipping side of the market, so there are definitely gems out here for buy and hold.

How do you plan on financing?

 20% cap rates? Are you buying houses at Walmart or something?

I worked for a residential acquisitions fund focusing on Tampa between 2013-15, which was before the market took off into orbit and property was still extremely cheap. At best, we were getting some 9s and 10s; mostly 8s. That was at literally the best time to buy in this area. Now this area has pretty much caught up to pre-2008 crash levels, and prices like those 2015 houses are largely a distant memory (I just bought a duplex in St. Pete at just over a 6, for reference).

Maybe you have an incredible wholesale business where you're actually getting 20% caps in one of the hottest markets in the nation right now, but to say that would be an outlier would be putting it lightly. I don't mean to sound confrontational, but Peter is clearly looking for information on how to buy his first house in a new market, and to fill his head with delusions of grandeur about 20 caps will pretty much have him spinning his wheels and never pulling the trigger on anything.

Peter, there are lots of nice up-and-coming areas in Tampa (there are also some bad areas to stay out of, namely Sulphur Springs and anything around North Howard Ave by Downtown). However, the prices are very mature, foreclosure inventory is very low, and investor competition remains very high. I would narrow down what areas you'd want to live in, get comfortable running numbers on cash-flowing properties, and be ready to pull the trigger quickly if you find something that works for you (if you drag your feet too much, then somebody else will scoop it fast). Good luck to you in your search.

Post: What Fee Structure Do You Pay Your Property Manager?

Jason L.Posted
  • Rental Property Investor
  • Delray Beach, FL
  • Posts 224
  • Votes 169

@Danny Randazzo Thanks for the help. The more I've thought about it, the more I realize the getting paid more on the turn is just a complete nonstarter for me. What I may do is try to interview a few more PMs to get a feel for their fee structures. If I find a structure I like, then I might go back to the agent and give him sort of a right of first refusal to match it. At least then I can say that I tried to show some loyalty, and this method of using an actual PMs structure might be a bit more constructive than trying to negotiate points back and forth with him. If he declines, then hopefully that means I liked one of the other PMs enough to sign with them, and if that makes things awkward for him as the agent then so be it (I do think he's a good agent though).

@Nathan Gesner Great response. I am going to use it to ask more specific questions as I interview other PMs. I've come to realize that I need to stick to my guns and make sure my PM's interests are totally aligned with mine. I do like the agent in question as an agent, but I definitely feel his PM structure violates that latter point.

By the way, do you guys think charging $50 for the lease is also standard? I manage another property of my own not too far away, so I know first hand putting a lease/renewal together is like a 10 minute copy/paste job. Is it weird if I just say that I'll put the leases together on my own rather than pay a seperate fee for the PM to do it?

Post: What Fee Structure Do You Pay Your Property Manager?

Jason L.Posted
  • Rental Property Investor
  • Delray Beach, FL
  • Posts 224
  • Votes 169

@Wes S. The property is actually not in the Orlando area, but thanks for the recommendation for the future.

@Danny Randazzo

@Danny Randazzo Yes, I like your idea to interview 5 more PMs. The one I quoted above is actually my agent in the deal, so I do feel somewhat of a sense of loyalty, but that's not going to stop me from hearing out others. However, I do wonder if there is some sort of intangible benefit to hiring him, since that also would presumably incentivize him to keep looking for deals for me (as opposed to spurning him for another PM)?

I am also 100% in agreement that the part that perturbed the most was that he gets paid more to turn the property than he does when a tenant renews. That just feels like a total misalignment of interests. Any suggestions for negotiating this into something more beneficial for us both?

Post: What Fee Structure Do You Pay Your Property Manager?

Jason L.Posted
  • Rental Property Investor
  • Delray Beach, FL
  • Posts 224
  • Votes 169

I'm looking into PMs for a new area that I'm investing in from long distance. I've never used a PM before, so I wanted to compare notes with other investors who have used one. For instance, one PM I spoke to has the following fees:

50% of first month's rent to initialize tenant (+$50 just to draw up the lease)

8%/month rents collected

$150 flat for a renewal

This comes in at about 12.5% of gross rents in year one of a tenant's lease, and then probably closer to 9% in every year they renew. Does this seem high? How does this compare to what you have seen?

Post: Is college worth a real estate investors time?

Jason L.Posted
  • Rental Property Investor
  • Delray Beach, FL
  • Posts 224
  • Votes 169
Originally posted by @Logan Jorns:

Really appreciate the detailed response. I think you're absolutely right, this isn't a cookie cutter decision. There are unique factors that come into play. I'm just trying to figure out if I really need a degree to scale up, or can I use 1031s / OPM to grow? I was on year of 3 of 7 of a Pharm.D. If I go back, I would switch to a business degree to help with REI. Possibly an online degree that way I could continue to work on my RE portfolio.

Honestly, it sounds like it's still too early for you to be considering dropping out. I'm envious of your REI experience at your age (hell I'm envious at my age), but you still are very early in your journey. If there's not an urgent need to scale your business today, then there's no need to stick all your eggs in that basket yet.

Think of like a great freshman college football player. You may seem like the next big thing, but there's a reason the NFL won't take you until after your junior year. Too many things can go wrong between that great freshman year and the time you're actually ready to be drafted to the pros (or as we New York Jets fans call it, Christian Hackenberg Syndrome). That's why even those great freshman players have to keep working on their degree, even if it seems they're destined to be stars in the NFL: they should have something to fallback on, and the alternative of trying to get a job without any degree is generally worse for your career prospects than having one that you admittedly overpaid for.

Keep your options open. 300 units in 10 years is a very ambitious goal. Maybe make the move full-time when you're 20% of the way there and you have that consistent body of work as proof of concept. Right now, there's likely very little you can do with your spare time that would be of higher value than just finishing a degree (especially when you're half way there). 

Post: Is college worth a real estate investors time?

Jason L.Posted
  • Rental Property Investor
  • Delray Beach, FL
  • Posts 224
  • Votes 169

The answer to this question will vary person-to-person and most college experiences aren't apples-to-apples anyway. The name/brand of your school, your legacy/networks, and quite frankly just random luck will play such huge factors into what path you take out of college. My point to this is not to take any one (or even group of) answer to your question as gospel, including mine.

That said, I'm in a bit of a unique position to lend input to your problem. I dropped out of college when I was 19 to pursue entrepreneurship, went back when I was 23, and then went for my MBA when I was 28 (I like to joke on job interviews that I'm part of a rare subset of "college dropouts who have a masters"). Without getting too much into it here, I was doing extremely well with my business when I dropped out. I already had proven a solid track record of sustainable income while doing the business part-time, and it was very clear to everybody around me (parents, college advisers) that my time was better spent pursuing that business full-time than to finish my last 3 years of college (where best case was probably getting a job making less than I was already making part-time). I had good years with the business -- much better than I would have had doing it in lockstep with school -- but I had to give it up 4 years later due to reasons beyond my control.

My college experience (at least my second one) was a huge negative. I picked a school close to home that didn't have a big brand name, which made finding a job extremely tough. Not to mention that a lot of Corporate America isn't exactly open-minded when it comes to people who took the "non-linear" path to get in front of them (Corporate hiring managers are notoriously risk averse because they'll usually have 100 other candidates who are deemed to be "safer" than you. I'd spend so much time on interviews basically having to defend myself for leaving school to do something else that they'd barely discuss my actual skills or credentials).

I went back for my MBA years later basically as a double-down on what I already had considered to be a bad decision. I was certainly heading in a much more positive direction during grad school, but ironically I might be the only person in the world who got fired for finishing his graduate degree (I got downsized because the company felt they could no longer afford the promotion they had promised me if/when I graduated). While I'm optimistic I'll be back in something in the next few weeks, let the record show that 4 of my first 6 months after getting my masters have been spent unemployed :)

My point in sharing this with you is the following:

1) Is college really worth it? Most likely no, unless you are A) going to a big name school; B) have a significant scholarship, are not paying for it yourself, or if it's at least just like a cheap state school; or C) have family who are going to gift you a career when you graduate. Anything outside those 3 are largely going to be reliant on random walks of luck, which is inherently a sucker's bet.

2) However, you need to be positive that your time is better spent outside of school to justify leaving. If you can already flip houses while in school, then are you 110% positive you can immediately scale that with the added time? I don't just mean that your plan is to read more books and attend more meetings. I mean that if you can flip 2 houses while in school now, then can you immediately flip 6-8 with the time added by removing school?

3) While you could always go back to school later, remember that once you leave the linear educational path that you're probably going to have to defend that decision for the rest of your life, and the majority of people aren't as open-minded as you would hope.

Post: Online RE Agent Course for Florida?

Jason L.Posted
  • Rental Property Investor
  • Delray Beach, FL
  • Posts 224
  • Votes 169

I'm not sure of your time schedule, but I highly recommend doing the in-person class if you can make time for it. I seriously would have never gotten through it without the instruction (I passed first time I took it, as did probably 90% of my class). The material in the study textbook is SO DRY!  I don't think I would have made it out alive trying to read and regurgitate that thing on my own.

The huge benefit of having an instructor is that they will shorten the book immensely by pointing out lines/facts that are likely to be on the state exam. This is way more effective than trying to memorize the entire book on your own (note: the state administers the test so the instructor won't know exactly what's on the test, but I'd say he was pretty accurate in pointing out what was eventually on it. If you go the in-class route for the continuing education as well, then since the school itself administers the test, the instructor literally gave us exactly what we needed to know since he was the one who made the test. I got 100% on the CE. It was cake, and I owe that to the instructor). Seriously, it was worth the extra money just for much easier it made taking the test.

Unfortunately, I took the test in Tampa (Tampa School of Real Estate), so I can't help you here with an Orlando school. I just wanted to throw my 2 cents in before you went down the online route. Good luck!

Post: Helping a friend in Tampa

Jason L.Posted
  • Rental Property Investor
  • Delray Beach, FL
  • Posts 224
  • Votes 169
Originally posted by @Account Closed:

@Jason L. I understand. My plan is to talk to him about what I've been reading and researching and see if he's seriously interested in going down this path. If he is I can take the reigns and do all the legwork for a fee. He's the type that would rather pay someone than deal with the time/effort/headache. Or I can just send him down the path and answer any random questions he may have along the way.

Thanks for the Tampa info. I see you're in Orlando. Is that area any better for MFR's? Since he has no set direction he may be willing to look in a different area.

 Orlando is not really any better. MFH is few and far between, the ones that do exist only exist in the war zones, and even then there's still likely to be multiple offers (both markets have been on fire the last two-three years). There was a thread about why there aren't many duplexes in one of the local Florida sub-forums recently. There was no real concrete answer outside of, "It's probably just not a southern thing." I think one guy said there might be a little more inventory in Tallahassee. There might be some other areas as well. However, I'd say you are most likely chasing bigfoot trying to house hack in Tampa or Orlando.