All Forum Posts by: Martin Scherer

hi Daria,

Where is the money to replace the roof to come from? No upgrades in the units since 2005? You are going to need to sink some money into them to get top dollar rents. That will affect your COC return. How much is that new roof? Have you priced that? If there have been no upgrades for 10 years....carpets, paint, health and safety upgrades etc.

Are all the units separately metered for utilities?  Who does landscaping? Is there a fence...what is it's condition.  If you haven't been inside you can expect some surprises.

Just a few thoughts

Interesting comments.  I am just back from being off site for about 6 months.  I got tired of people arguing over the legality of wholesalers.  

I wouldn't purchase from a listing agent. My first transaction as an agent was a FSBO who just happened to have the style and floor plan my buyer wanted. I called him and negotiated a listing. It is very hard I found to represent both sides fairly. I know what each person will do and when you are only a few thousand apart it is very tempting to get it done by saying something which is not in your clients best interest. I managed to make both happy and got good reviews from both buyer and seller. That was many years ago and the home which I sold was $125,000 now worth about 1.5 million.

Since then I have passed buyers to other agents if I had the listing.  It is just to difficult to represent both and for the amount of commission it is not worth a potential lawsuit. 

@Account Closed get over yourself you may have been wronged, big deal, there are other deals.  Instead of spending time whining about the possibility that someone may or not been shady you may miss something really good.  Just know you won't deal with that agent again.  I know when something doesn't seem right I avoid that agent and his or her listings in the future.  It happens in this business.

Just curious, you were doing one a month, you hired someone you say you had to train and you bumped up what you were doing to 3  a month, I think you know answer to your own question.  

Why would you hire someone you must train and then expect them to do 3 times the work?

You should have hired someone experienced not someone you had to train.  Perhaps there is a learning curve for yourself as well in being a manager.

As to resolving this did you attempt to do 3 rehabs at once with the same crew you have been using and now expect them to do 3 times the work?  Did you hire someone and not give them the tools to do what you wanted done?  Are  there multiple crews and some of them are not people you have worked with before? Spend some time analyzing your part in this process.

Perhaps backing off to one a month with your PM to let him or her learn the process and how you want it done, or, if you feel he is learning enough go to two for a few months.  To jump up to three is a huge leap and pretty unreasonable unless you had the crews and staging set up for the PM in place.

I am not beating you up I just feel that you need to think things through before making a huge jump.

You have no equity interest in the property simply having a contract.  Nice try though!

Again, the activities you do when wholesaling require a license in CA.  People will tell you that is not true on this site but read CA real estate law and you will see it is illegal.  And, as people in Ohio found out it can cause you grief.  See "Getting busted in Ohio for Wholesaling and practicing without a license".  The link is directly below in "related discussions".

This argument rages back and forth on BP with no solution but hundreds of posts.  You are safe to wholesale unless you get caught than it can be very painful.  As you can see from the lack of responses to your post people are worn out on this discussion.  If you want to look there are lots of threads here.

This is a personal opinion.  Many wholesalers are time wasting raw newbies who do not have the wherewithal to close the transaction and so tie up a desperate sellers property.  The seller believes they have a real sale...and they don't.  What they have is someone with no resources either in terms of buyers or cash to close if they cannot find a buyer.  Meanwhile the sellers home is being foreclosed on and the wholesaler has wasted 30-45 days and then walks away.  They can't close and they can't find a buyer.

If you actually have the resources and can close on the property I have no problem if you turn around and sell it to someone else for profit.  Good for you; that's legal as you are a principle in the transaction.  You cannot represent someone else without a license.

I am not licensed in Texas but I doubt it is that different from other states. Yes, you do have to work for a broker. The split between broker and agent is whatever you and the broker decide. A beginning agent will likely get a 50-50 or 60-40 split but here are many other costs you will need to pay to belong to National, State, regional associations as well as mls fees, E&O fees as well as stationary, gas, continuing education to name a few.

You may also have an office fee and a website fee, forms fee as well.  All your transactions belong to your broker meaning commissions are paid to the broker and he extracts his cut and then you get yours. Even though these are your own properties the transaction must go through your broker per many states laws. If you are primarily working your own properties you may have a hard time convincing a broker to take you on especially if he or she gives you a bit of a break on commission on those properties.  Brokers care about making commission money and you ar not bringing any into the brokerage you won't be welcome.

Keep in mind many brokers have a minimum amount of business you must do to stay in the office.  Several here in NorCal that translates to 4-4.5 million total sales.

From my perspective it is not a hassle at all.  I have 12 years experience with several rental properties of different types and quality .  I have had great tenants because I hired a professional property management company.  Not an agent and certainly not a relative with no experience at choosing a tenant.  If you believe your family can do the job do not buy out of state. It  WILL be a MAJOR hassle.  They may be family but when they pick a loser who are you going to blame.  When they get calls from the tenant with a problem in the middle of th night who are the relatives going to blame, you.  

Property management was the ideal way for me to own out of state  I interviewed several property management companies before making a decision.  I have not purchased properties in other areas simply because I couldn't find a professional (not an agent but a full time knowledgeable PM) to manage the new property.

Even when I moved briefly to the area where the rentals are located I didn't manage them myself.  Why would I subject myself to calls from people with issues and problems?  So I could go out in the middle of the night to fish a potato the tenants kid threw in and clogged the toilet?  I have the knowledge and skill to do any of the repairs but the few dollars saved is certainly not worth it to me.  If the cost (8%) of collected rents is gong to kill the deal for you it isn't much of a deal anyway.  If you have trust issues do not buy out of state.  You won't be happy.  Again if you even consider having a relative manage for you are not out of state investment ready.

@Jay Hinrichs

Piggy backing on Jay Answer your phone and follow up immediately. If you don't they WILL call someone else.  Prime example I have been an agent since 1978 but I want to sell a couple of my rentals out of state.  After 11 years my money is all coming back to CA and I called an agent I have bought a couple of properties from years ago.  It took a week for them to get back even though I was dangling 2 listing in front of his face.  Since I got no response I emailed another agent I have purchased properties from and so on and so on through 4 agents before one finally followed up. Even though the last agent may not be my first choice guess who will get the listings.  They all had excuses about being so busy.  Are they going to be busy when an agent calls with an offer too?  If you are too busy to follow up on a call from a past client who is GIVING you two listings you are not my idea of a quality agent.

The point I believe you missed is that if a half million is the price of a starter home (read bottom of the market) than many young buyers cannot afford the added cost of the green component you are talking about above.  And, the point I don't think you appreciate, in many areas the home with the added green features do not add a dime to resale or new home value perception.  

If I have to reeducate every buyer before they understand the value that requires me either hiring an energy consultant or myself to explain to make the sale.  Do you not see a problem.  I cannot retrain everyone and it limits the number of potential purchasers if they have to be walked through their savings at every showing of the property.  That to me is a huge NEGATIVE.

I am a builder, a RE agent and an investor and don't want to sell houses like the product demonstrators at Walmart or Costco. But wait theirs more...

While applaud your passion I don't see the practicality of trying to market a flip based on a perception by a few purchasers of added value.

I hate to burst your bubble but in some areas a green certification is the kiss of death for a new home.  Not on the coasts but even here in Northern CA it's not real important to people.  They talk as if it is but many people are just trying to get into a $500,000 starter home and anything that adds "upfront" cost tends to turn them to lesser expensive options. Most young buyers cannot look beyond the initial price tag.  Dreams of savings down the road go away when they factor in the additional mortgage cost created by that extra upfront cost.

When I was still building in Northern Idaho and put in energy efficient devices advertising them was a negative and several asked if I would take out the non traditional high efficiency tankless hot water heating system.

I build to green certification standards but I am  not willing to pay the inspector for certifying them green especially since he had to approve the plans for the homes to be built.

I wish you much luck and support your intent but the reality, at least in my experience, is people are willing to talk about being green but won't pay extra or go out of there way to be green if there is even the slightest hindrance to their life style.  This is perhaps changing but  in NorCal where I live in one of the most Liberal Progressive areas in the country there is lots more talk about green and not much in the way of real attitude shifts.