All Forum Posts by: Kevin Zimmer

@Kyle Pelech   

To be clear, I am a Broker, so I can profit in different ways depending on the deal. I did property management for a while, but I realized I only really want to bother with my own tenants. It is tough as a property manager to make everyone happy. That being said the rental market in Northern Burlington and Mercer counties is fantastic. I put clients listings on the MLS (cost to them is 1 months rent) and I also put my personal ones on Craigs list. By properly vetting the prospective tenants, I wind up with other opportunities. One applicant had to move because her landlord is being foreclosed on. Turns out the landlord was her parent, and I got that listing for a short sale. Another applicant for a different house just wants to start their life over, without the bonds of a mortgage. I am selling that house too. In my opinion, as long as the house is priced right and in good shape finding good tenants is not a problem.

I work a lot of short sales in NJ. Deal direct with the realtor that has the listing, show them you have the funds, but do not put any money down until after the offer is accepted by the bank.  Then I would put down a higher amount (3-5%) 

Good afternoon Kyle.I live in Burlington County NJ, right near where Monmouth and Ocean come together.I became a broker because when I got involved in investing over 10 years ago the gurus said you needed a good realtor on your team.I decided if that was such an important component, why not just become one.So while I am happy whenever I do a retail real estate transaction, my bigger objective is to work for myself and with other investors building a portfolio.Residential real estate is great for some agents, and it is important to stay involved with it to know what a home buyer wants, but for me there are too many emotions involved.Investment property is a business.It can be approached rationally, and the numbers either work or they don’t.There are many posts on Bigger Pockets stating the pros and cons of local vs long distance investing.I personally invest in areas that I know and can visit.If I were you I would not be discouraged about investing in Monmouth.You may need to use more of the creative financing techniques. That is not a bad thing, for it will move you into your investing career quicker.Not having money will reduce your opportunities, but could increase your returns.You just need to look at more deals and make more offers.There are 4 ingrediants for real estate investing.Knowledge, Time, Money and credit.Not all of them are necessary in each deal…For example, if you have enough money you don’t need credit. I’m not sure how much knowledge you have obtained in the last 5 years, but it sounds like at least enough to analyze an opportunity.My point is that as long as you take action you can succeed.If you want to talk further or need help looking at a potential investment property send me a note or call me.In any case good luck.

While it is a short sale the property owner is the first person that needs to accept your offer.  It does not make it through to the lender until the seller signs.  Then the lender evaluates the amount they will receive, and compares it against any liens that may be superior to theirs.  The priority is IRS liens, property municipal tax liens, and then the 1st position mortgage.  Second mortgages (especially if by the same lender as the 1st mortgage) often take pennies on the dollar.  The most important factor is your offer price should have nothing to do with what is owed.  The offer is based on what value the property has  TO YOU...whether it is fix and flip, hold for rental etc, or if you need that land to do something else.

OK.  Just because you paid 47 on the dollar does not mean it is a good deal for the buyer.  If it was only worth 40 on the dollar, you overpaid.  Who does your negotiations?  You said it took 4 months, but how many man hours went into that waiting on hold or coordinating the paper trail?  If you were doing the waiting/paper pushing, and you could have been finding more deals you may have lost out.  You will sell for 390, but your buyer will be paying holding cost and commission on the 390...so he will not net the entire 145.  But, if the numbers hold up a good deal for both of you.

Do you know what the current zoning is, and the procedure for getting it changed?  An appraiser is supposed to set the value at the highest and best use.  Most people won't want a residential property in a commercial area.  Once you have a better vision for the potential of the property you should have ideas where to find buyers.

How handy/skilled are you?How significant are the repairs? How quickly can you get the work done if you are doing it alone? What are your holding costs while you are doing the repairs?Do you enjoy doing fix up work?Do you have another source of income?Are you knowledgeable about how much the work would cost doing yourself vs outsourcing?

I agree with Adam on all points…you can save a lot of money doing it yourself, but you can only do one thing at a time, and you will miss other opportunities while you are working “in” your job.

It is possible to do a little of both.You act as the GC, and sub out the major repairs, while being in the building working on little things and overseeing the project.  

I wouldn’t worry about the short sale either.If you have not run any credit, why not do it and see where the rest of her bills stand?Just ignore the overall score and mortgage payment items.  And maybe pay a visit to her current house to see if she is at least neat.  I am not familiar with Iowa rental law and how difficult it is to evict. I am in NJ, and in the counties I am a landlord in it is relatively easy to evict for nonpayment of rent. Based on that,  I love multi year leases.  Typically my initial lease term is a minimum of 2 years.Too many costs/aggravations associated with getting a new tenant…vacancy, repairs/painting, new C of O requirements, headache of security deposits etc.

I am a realtor and whenever a client asks me to help them buy a short sale, and it is not a listing of mine, I have the buyer sign a brokers agent agreement to compensate me directly out of their own funds for the purchase. That way the listing agent is able to take the full commission from the bank and will be more willing to fight the bank for the lower price that you want.

For example, normally commission is split between the listing agent and selling agent.If the house sells for 100k, and the commission of 6% is split between buyer and seller, here is how the numbers play out:

Cost to buyer: 100k.Listing agent 3K, buyer broker 3K

If you have your buyer broker negotiate the deal for a sale price of 75K, with you paying the buyer broker 5K from your pocket, here are the numbers:

Cost to buyer: 80K (75k purchase price + 5K commission), listing agent $4,500(6% of 75K), Buyer Broker 5K

Net result is listing broker has more incentive to fight for your lower price.

You are just starting out and it is fantastic that you already have choices.  Ask the right questions to get to the right answer. What/who does your team consist of?  Do you have support staff in place to give you honest estimates of time and money to complete? Is this your only job or are you doing it on the side?  Do you need to generate quick income, or can the entire process be a learning experience?  Where is the funding source, and how expensive will holding costs be? For the short sale, is it an already bank approved short or is the negotiation with the bank just starting?