All Forum Posts by: Keith Goodwine

I might pass on this one then.  If they had more equity to work with, I think I would have more flexibility in the deal.  I was hoping there would be another solution out there, but maybe not?

Hi all!  I walked through a house yesterday, and talked with some very interested sellers.  They would like to move quickly from their larger house to a smaller house, and are willing to negotiate.  I think we're going to be able to strike an agreement to buy in as-is condition.

This is my first potential deal, and I wanted to educate myself a little bit on what to do with code violations.

The house has had many self-done add-ons by multiple owners since its original construction. During the walk-through, I found several undisclosed code violations.   Most of the house does not have a crawl space.  The sewer drain pipe from the washer runs outside the home, and connects around to another point under the house, due to the lack of crawl space.  There is an undisclosed bedroom as well when compared to the tax records - records show three, they currently have four, and there are a couple other rooms which could be used as bedrooms as well.  The roof was apparently three months old, but looked very poorly constructed.  The current owners started to add a garage, but it does not look structurally sound.  I'm sure an official home inspection will turn up more issues, but those were the largest structural things I could find.  (Many other cosmetic issues exist, but I consider those normal.)

What should I tell them when I come back with repair estimates and offers?  A code violation requires disclosure and seller credits to mend when selling with a realtor correct?

Also, compared to their mortgage balance, I'm not sure an offer can be accepted here.  Even a lease option would require the end buyer to do some significant updates and repairs to be able to rent out the home.  Are there any other creative solutions?

Thanks!

 I feel the assessment of Nashville specifically is bear-ish.  There are TONS of people moving here (85 people a day by some estimates), and while rent prices are higher than they've ever been before, the market is also consuming those higher rent prices.  New construction is going up everywhere, and the new builds are being filled.

I also don't dismiss the idea of a bubble, nor do I dismiss the idea that we could be heading towards a pop.  Those investing and buying new builds are going to feel the majority of the effects.  That includes consumer mortgage buyers as well.

 It's an excellent format for a model.  But I have to wonder about the data analysis, if literally every major city in the country is between 11-13.  Either outliers are skewing every city towards the middle, or there was too much averaging to meaningfully separate the data points.  Also Nashville moved from 14 in 2015 to 13 in 2016, when the life cycle suggests the natural movement should be from left to right only.

Just some thoughts from an armchair MBA data analyst :)

 I was curious too.  Here's the answer:  http://info.dividendcapital.com/rs/dividendcapital/images/Cycle_Monitor_15Q1_FINAL.pdf

Facebook groups for Real Estate Investing are a great source as well.  You can't throw a rock without hitting a wholesaler :)

 I would agree with you that many investors are surprised in the difficulty level in getting started.  I'm in the same boat myself.  

Many things can be learned from others, by taking classes, watching videos, coming to forums like this.  But the most valuable lessons are going to be the ones learned actually doing the activity, particularly the lessons learned by mistakes.

The only way to never make a mistake is to never try at all.  I can read and watch videos all day to learn more about real estate investing, so that I prevent myself from making any mistake ever, but that doesn't mean I'm doing anything.   If I keep waiting to learn the perfect way to do everything, that's time wasted not sending out mailers, not driving for dollars, not bringing in prospects, not qualifying leads, not getting houses on contract, and not closing deals.

Would you tell a child they cannot walk if they fell over the first time?  Surely not!  Would you tell them to read a book until they come back ready to walk without making a mistake?  Of course not!  You'd allow them to try and try and try again until they got it.  The child sees other people walking, and wants to walk just like everyone else.  They don't stop trying until they can walk just like everyone else.  That's the level of dedication it takes.

 You might have put it under contract too high, yeah.  It's an honest mistake that almost everyone has made at some point.  But fret not - if you make mistakes, it is proof you are trying!

Have you communicated with the sellers much?  Proactive communication will be much more comforting to them than reactive.  You might even have a chance to re-contract at a lower price if you have a good relationship with them.  Realtors do this all the time - if the house doesn't sell, they drop the price until it does.  Discuss the offers you've received, the price you'd need to drop it to, and re-emphasize how quickly you can close if you drop the price.  

"I have X interested buyers if we drop the sale price down to $18x,xxx  We can close in a week.  You need the cash quickly, and I'm dedicated to making that happen.  But it won't happen unless we come down on price.  I'll send you the new contract so we can get moving today."

 The Fed has much more influence on interest rates than any president does.  I imagine they will act in their own self-interest, no matter the circumstances.

 I just learned that today actually.  Thanks to you and the other BP post I read.  The "gurus" and their expensive training programs failed to mention such important information...