All Forum Posts by: Oscar Beteta

@Russell Brazil Hi Russel!  Thanks for the feedback.  Any chance you could clarify the states that don't allow sharing of commission with the buyer?  If there is a link where you can find this information, I'd like to get it.

Thanks!

Hi guys, thanks a lot for the input!  Sounds like there is room to get creative here.  I am new so I will definitely look for an agent or broker to help me with my first deal and I expect to give them the full buyer commission.

However, I would like to explore opportunities to reduce my acquisition costs when I get more knowledgeable with the purchasing process and will require less time from an agent/broker.  My plan is to buy and hold (not to flip) for a long time, so I would be looking for agreements where I can get reductions in acquisition costs, not reduction in selling costs later down the road.

@Steve Vaughan What do you mean you don't need an agent to purchase a home? I had understood that you need an agent when buying from the MLS. This is not true?

Hello BP,

I am reading "Investing in Duplexes, Triplexes, and Quads" by Larry Loftis and came across the concept of partnering up with a "Buyer-Broker." The advice is to find a broker who works with real estate investors to help them close on MLS deals. Because the broker will normally receive the full 3% commission (as opposed to an agent who must split the 3% commission with the broker), he/she is able to split the 3% commission with the real estate investor. The expectation is that the investor is doing all the upfront work to research and evaluate the property. The broker helps to formally close the deal and doesn't invest nearly as much time through the evaluation process as with a typical buyer. The commission split between the broker and investor depends on the relationship between the two parties but in general is a 50/50 split.

I wanted to do a reality check on this concept.  Is this a common arrangement that investors are able to set up with buyer-brokers?  Does it just happen in certain states (Larry Loftis is an investor from Florida)?  How does one find a buyer-broker?

@Anthony Dooley What % of rental income do you typically observe in the area where you invest?  What kind of area are these?  Low income or higher end?

I am using these rules of thumbs currently.  % of monthly rental income.  I'm trying to invest in duplexes, triplexes, and quads in the greater Philly area.

5% for maintenance/repair

5% for deferred maintenance

10% for property management

5% for vacancy

5% additional reserves 

This is all on top of the actual values for property taxes, insurance, utilities, and debt service.

What do you guys think?  Overestimating or underestimating in some areas?

@Anthony Dooley Hi Anthony, how much money do you budget for repairs/maintenance for rental properties?  Also, are you doing SFRs or also doing residential multifamily?  If so, you do budget differently for these different types of properties?

@Michael Garofalo

I'm curious, where did you get your % from for the operating expenses?  Are you including maintenance/repair expenses in with your 12% capex expense?

I'm in a similar boat as you John.  I am just starting out and am starting to analyze similar properties in the Philly suburbs.  In more cases when estimating operating costs, I'm getting between 45 to 55% of the rental income.  In a few cases, I've gone up to 60%.  Are you using your own excel spreadsheet or the BP calculators?

Andrews federal credit union had a great intro interest rate period

Thanks guys!  I had this same question a couple of weeks ago.  I am in Montgomery County, PA which is right outside of Philly.  When I analyze operating costs including 10% property management, 5% maintenance/repairs, 5% deferred maintenance, property taxes, insurance, and a 5% reserve around where I lived, I am somewhere between 48 to 60% of the monthly rental income.  I've been analyzing duplexes, triplexes, and quads.