All Forum Posts by: Robert G.

That is great in theory (and is probably true in most markets), but the reality is that in a hot market that is flooded with buyers (and not the selective type), realtors just don't have to work that hard to make a commission.   Yes, you can find some novice agents that will work hard to find a deal and make it work for you.....but that is because they are desparate, and hungry, and don't know any better.  Once they catch on and realize that working with investors is more work for less pay, they'll move on as well.

There is plenty of competition for the C & D class neighborhoods around downtown as well.  Everyone has been expecting the turn-around and revitalization (seems to be happening now, finally, but investors have been buying in hopes of it since the 60s and 70s).  

Not sure you'll see much flipping activity there, though.  I think it is more likely folks buying and renting out, waiting for the appreciation as the area becomes more acceptable.

Miami is great for wholesalers, but I think the margins are a bit thin for flipping right now. There is so much competition that getting a deal with enough meat on the bones is difficult. Distressed sellers don't "need" investors to come solve their problems. They can simply list the property, either with an agent or FSBO, at 10-15% below FMV and they'll have plenty of offers within 2-3 days.

I think the real issue is all the foreign investors looking to park capital here.  They don't care about the cap rate, they are fine with break-even situations, they just want to relocate their funds into the safety of the US market.  They'll outbid local flippers 99% of the time.

So, to answer your question, the realtors have little incentive to work with flippers like us.  They can make a few phone calls and get better offers (even all cash) within a few hours.

No, practical though you may be, sooner or later one of your properties will need a new roof.  Or a new AC.  Or a new boiler (since you're up north).  Those items cost money.  And that expense was not factored into the CF numbers you provided earlier.  And 100% occupancy, year after year, is not a realistic expectation.

I'm not saying you aren't profitable, by the way.  I'm sure you're quite successful.  I'm just trying to clarify Bob's point, since his tone/form of expression seemed to be making people focus on the wrong things.

Personally, I see where Bob is coming from.....but I don't think it is feasible for most investors here.  Investing in negative cash flow properties (at time of purchase) is risky.  AND means the investor has to have significant wealth or income aside from the RE investments.  The finish line may be beautiful, but most don't have the option of losing small amounts of money for several years to try and hit a home run on appreciation.  Most, wisely, stick to singles and doubles.  Strike out a lot less often that way.

Minus vacany, minus repairs, minus capex?....and your CF is down to the $200 a month that Bob (not me, mind you) is scoffing at......his point is that, if you were buying in growth markets (and supporting yourself in other ways, because cash flow would be non-existent), you'd be better off 10-15 years down the road. 

At what price point?  You may be the exception, not the rule.  A ton of buy-and-hold investors are buying properties in low growth areas and profiting $200-$300 a month (when things go well).  I'm assuming that is what Bob is speaking out against.

You definitely need to get some local legal advise. For one thing, you need to check to see if transfering ownership (from you to the LLC) would trigger a "Due on Sale" clause. If it does, your lender would have the option of calling-in the remainder of your loan amount. Not common, but it is a possibility you need to be aware of and prepared for....

I think Bob is saying (among other things), that he prioritizes appreciation.  Therefore he is buying in growth markets.  Location, location.  These growth markets tend to have higher purchase prices, making positive cash flow from day 1 nearly impossible.  Think Miami, Austin, Seattle, etc.

So, from his viewpoint, those that are buying in Jacksonville (for example), MAY see some appreciation, but in reality, those investors are prioritizing that $180 a month positive cash flow.   Which is the less profitable venture, in his opinion.

You're missing a lot of numbers (as others have mentioned above), and your ARV range seems a bit broad for my liking. At 210k, it is a definite loser.

Ballpark guess, I think you'd need to get this property for around 160k or so to make it worth your time.  Maybe 170k if you could trim that rehab budget a bit.

It means time to get a new Realtor.