All Forum Posts by: Keith Goodwine

$250k purchase price to rent out for $1,900 a month is not a very strong rental investment. Even if the cash flow is appealing, you could get a better ROI elsewhere with a lower purchase price.

Rule of thumb - your rent should be no less than 1% of purchase price in Arlington.  Some say 2%, but Arlington is a hot area and rentals will always be in demand with DC close by.

If 1% of rent is too high for the area, drop your purchase price.

If your purchase price can't be dropped, then it doesn't make sense as a rental investment.

Do you know any hard money lenders that would be willing to lend on a new build? If so, the BRRR method might work. New builds typically don't have as much potential for appreciation however, because you're already buying high, and the prices will stay relatively stagnant for years until the subdivision is finished (builders will attract buyers with cheaper new builds rather than older houses where the owner might expect appreciation).

Could you invest in a non-new-build instead?

 One short note - I think the house must be under contract first so that the wholesaler has equitable interest.  Then it can be shopped to investors.  Otherwise it could be construed as performing agent activities without an agent license.

Comps and recent-sold can be researched on Zillow, Redfin, Trulia, and local property tax assessor websites.  The low values are cash buy prices, the high values are retail prices

The offer should be made with comps in mind and profit built in.  Once the contract is made with such an offer, finding investors should be no problem.

 Very good advice.  It's all what's best for you and the seller.  Finding their motivation to sell is crucial, as is building rapport.  Building safety and trust in the conversation is key.

I don't mean to come off as a guy who likes to play hardball, but I do have a tough time finding someone willing to take a 30-35% discount on the price of their home. They may see sky-high market values and new builds popping up around them, and value their 2-bed-1-bath-with-avacado-water-damaged-linoleum-floors in the same regard as the other houses.  Even if they are motivated, nobody likes a lowball offer, unless they understand how the offer is calculated.

How do you approach the first offer?  Do you just float it out there hoping it's accepted, or how do you set the stage for the offer?

Free leads are the best leads, congrats!

What you absolutely need to do next is to make offers and get these houses under contract.

Disclose up front:
"I am a real estate investor that specializes in moving sales quickly.  I can help you sell your homes in as-is condition, and we can close in a matter of days.  My buyers are highly qualified and can pay cash, so we don't have to wait on financing or underwriting like you would with a realtor.  

What this process will look like is that I will make you an offer, we'll put your houses on contract for me to find a buyer, and then we'll close in 30 days or less.

To sell in as-is condition and to close this quickly however, I make my offers at 30-35% below the current market rate.  Are you interested in selling your homes quickly and in as-is condition?"

If the response is anything but "absolutely not," begin asking your qualifying questions. Why are you selling? Do you live in either of these houses? If so, have you found a new one, or when are you looking to move? If not, are they currently vacant? How many bedrooms/bathrooms/square footage? Have you owned the homes for a long time? Do you own them free and clear, or do you have a mortgage/HELOC balance that would be due on sale? Do you have any other liens or tax debts on the properties that would be due on sale? Have you made any updates to the roof/HVAC/kitchen/bathroom lately?

Then make your offers with your 30-35% discount and repair costs built in.

If she says no, you can counter with a contrasting question - "I don't want to offend you with a lowball offer, but I do want to make sure I can come to a number that helps you meet (motivations for selling) and makes sense for me and my buyer.  What that number looks like for me is (repeat your offer).  What's your thoughts?"

If her response is a number that is at or way above retail (common with unmotivated sellers), suggest that she talk to a couple other people, and that you'll call back in a week to see what she's been able to put together.  It might make sense to bump up your offer if you think it would help close the deal, but otherwise, it might make better sense to just move on to the next lead.

Hope that helps!

Hi Steven!  And hello Nolensville neighbor!

It's up to you whether you think you can time the market.  Nobody knows when the next economic downturn might come.  It could be next week, next year, or a decade from now. 

We have the advantage of being a city that has an above-average demand for housing, especially compared to nearby cities like Memphis and Louisville.  There's all sorts of figures out there about how many people are moving to Nashville, but the bottom line is it's a LOT.  We're seeing the effects on the failing infrastructure of Nashville, causing all sorts of traffic headaches.  The effect on housing market is that prices will continue to rise, especially where demand is high but supply is low, which is the city core that is more friendly for commuting.

My suggestion would be to start BRRRR in the C- neighborhoods that are within the interstate loop. And as always, buy low and sell high. I'm getting started as a wholesaler. If you're interested in seeing what properties I might be able to find for you, which you can get at a discount, please send me a message!

An investor can offer to buy quickly and in as-is condition.  They are willing to take on any repairs, as well as the trouble of offering 100% funding without bank qualification.  This will save you tons of time and money of going through the trouble of updating your home, dealing with escrow periods, waiting for inspections, and hoping the buyer passes underwriting.

For that time and money however, an investor will want a significant discount off of retail price.  Most will be looking for a 30-35% discount.  They'll also prefer to have a vacant property upon closing, but some investors are flexible.  A paying and responsible tenant is certainly better than no tenant or (worse) a bad tenant.

If you want a retail value for your home, you'll have to offer a retail-value product.  The roof, HVAC, kitchen, bathroom, crawlspace, flooring, and paint will all have to be fashionable and updated if you want to get close to retail price.  If you aren't interested in taking on this project, an investor would be an excellent route to pursue.

To truly determine your retail price, look for the purchase price of nearby homes in terms of location and square footage.  Listing price is practically worthless - the value of the home is only what someone will pay for it after all.  Zillow is just an algorithm, and doesn't pay attention to the entirety of the home value.  Zillow does an OK job of estimating retail price, but it lags behind the true market condition.  It is easy for Zillow to overestimate the price of a home in poor condition, and just as easy for Zillow to underestimate the price of an updated home.  In a hot neighborhood, it may lag behind sharply increasing home values.  Someone told me once, "Zillow is worth what you pay for it, which is nothing."

If you'd like retail value, you'll have to sell through a realtor, which charges a fee of 3% of purchase price. They'll list your house on the MLS. If your house is updated and fairly priced, it should have no problems selling. If you are selling as-is on the MLS, it might be on the market for a while, and you'll get lots of low offers, probably from investors looking for a 30-35% discount. Either way, your property will have to be vacant. Retail price buyers will not want your tenants, they'll either live in it, or want to do lots of construction work without people occupying the home.

I hope this helps!

Hi Sawyer, welcome to Nashville!

As others have said, this is a red-hot/white-hot market. New homes on the MLS will often receive full-price offers in a matter of hours. There are a lot of new condo developments in downtown and The Gulch. Hot neighborhoods like East Nashville, Inglewood, Sylvan Park, Germantown, and The Nations are a feeding frenzy right now. The hot neighborhoods rent for ~$2,000 a month, and the surrounding areas are renting at ~$1,350 a month.

The less desirable neighborhoods are in the Madison, Hadley-Washington, and East Antioch areas.  There are some that are turning around, but it will be a few years before they appeal to the general market of first-time-home-buyers.  Generally you'll find a lot of fix-and-flip investors looking to rent out with Section 8 tenants.

However, there are still deals out there. Look at the surrounding neighborhoods of the hot areas, the C- neighborhoods, and areas where people have lots of equity. There's also a lot of suburbs that are good potential for rentals , such as Smyrna, Henderonsville, and Bellevue.

Hello all!  I am a new wholesaler in Nashville.  I own one rental property.

I'm already on the hunt for off-market deals with postcard campaigns and getting some responses.  Nothing under contract yet but I seem to be targeting the right areas.  I'd love any sage advice on how to effectively wholesale in this insane market.