All Forum Posts by: Oscar Cardenas

 Good point. People see 100+ days on Zillow and think its been sitting on the market when it could have been under contract that whole time looking for a 1031 replacement or something. Pretty much everyday someone calls to ask about a property that has been sitting on the market for me to tell them it has been under contract for a while.

Here in Oregon I sometimes see 100+ day contracts due to the buyer wanting the seller to evict someone before closing. Usually a 90 day notice to terminate here.

These are 2 things that make MF look like its a slower market than it is. 

@White Kandlez

Forgot to answer the last part.

The sellers/realtor knowing about the end buyer can depend on how transactions are done in your state. Most of the time they do not speak with each other. If you want to avoid any issues regarding laws, end buyers, realtors, ect. You can always get transactional funding. Essentially a loan that lasts for 1-2 hours so you can buy and sell at the same time in escrow.

@White Kandlez

You will have a hard time finding a realtor that would play ball with owner finance.

Finding a realtor that would play ball with subject to would be near impossible due to its gray area with contract law. You generally need off market for that.

The realtors should * still present all offers, but that usually comes with a lot of comments to make sure the sellers says no.

For wholesale, if on the MLS you send all contracts and negotiations to the agent. The agent then presents to the seller with knowledge and experience.

In your case, I don’t exactly know if the agent is sending you off market deals where she does not represent the seller. In that case she probably hopes you use her to buy the property and probably expects you to pay her commission on purchase price.

Remember wholesaling can be a gray area in many states. Make sure you are transparent and make sure you know the laws in your state regarding what things a wholesaler can and can’t do. I am starting to hear about lawsuits coming up with bad wholesalers who can’t sell then end up sale failing and request earnest money back last second.

 Hmm, Maybe you are correct. Detroit might be a unique market with the past it went through. I personally would never turn down an ugly property to list lol and neither would any realtor I know but that is because there aren't many terribly ugly homes here. Anyway, I wish you luck!

@Nikki Closser

They probably sit on the market due to bad pricing. As a realtor who specializes in rentals, using comps for MF can be very tough because there are only so many MF homes and the quality of area, condition, current rental amounts, ect often get mixed up. Also the show style, pictures, ect has a huge effect. Many cities tend to open up multi family zoning in terrible areas like industrial or near power station or between trains.

You notice this when showing a lot of MF. There is a lot of forced expansion of possible comps and even if you do comps analysis correct you can be very wrong.

Example.

I had a client who wanted to BRRR so we found duplex that was sitting on the market for a very long time. The duplex started at market value but slowly went down. We came in and purchased it and he BRRRed easily. How?

-showings only after accepted offer.

- rents are way under market. (In Oregon that is a NONO)

-realtor phone pic of outside only ( happens a lot with investor realtors sadly)

-the only other duplex in that city for sale was even less $$ but due to terrible condition and train tracks behind it. ( you would not be able to know unless you visited it)

As you see from the points above, many times there is a valid reason for them staying on the market.

Another example was my duplex.

It appraised much higher than it should have for a refinance because I was leeching off the success of better duplexes that were in high value residential neighborhoods. There was a very small amount of MF sales in my town so my duplex rode on the success of the only two somewhat comparable duplexes lol. But I know for sure I would not be able to sell for what it appraised.

@White Kandlez

Hmm, haven't really met an active busy realtor that doesn't know what a wholesaler is by now. We realtors get flippers looking for off market deals all the time so we tend to have a small list of people to call first based on previous deals. And that's only if the seller has expressed an interest with staying off market because a realtor has a fiduciary duty to the sellers so that vast majority of deals will go straight to the MLS.

Maybe you did get lucky though and found a realtor who is breaking fiduciary duty a lot to give investors off market deals and you happen to be one of the few investor she knows. 🤷🏽‍♂️

@Marvin Darius

If you are going off the MLS and you do not plan to move in, yes they are correct.

You have two main options if seller doesn’t offer seller finance.

- conventional 15-25% down payment

- hard money loan but please keep the high interest and fees in mind when going this route. The deal must be good enough to qualify for hard money.

Well, an FHA 203k Loan is a complicated loan that pays for the Rehab of the home.This type of loan, like a regular FHA loan requires you to live in the property for at least a year.If you want to go this route make sure you surround yourself with people experienced in it and have a contractor planned out before getting into a contract because this is a very messy loan (personal experience).

Regular FHA is the same but without the complications of a rehab and extra rules.

USDA (area specific) is another owner occupied loan with zero down but needs to be verified with a lender about the area and qualifications. 

I cannot tell too much based on your paragraph, but if you will not be living in the property than you would most likely be getting a regular conventional investment loan. These require anywhere from 15-25% down based on the lender and your qualifications. 

Another way is if you are able to do creative financing but that becomes hard unless it is an off market deal you are dealing with. 

In your situation, it might be best to speak with a few lenders to see your options. At least to get educated on the most common loan types. Make sure you tell them your entire plan.

Well, most private money is still careful in that they make sure the deal is worth the risk. Most of the deals hard money is in have a nice equity cushion for a quick break even sale if a downturn comes our way.

Big difference from the crash where lenders were loaning to anyone with a pulse for any deal.Plus the full equity cash out Refis of the past... Average equity sitting in homes is very high compared to before the crash.

My main concern is how much consumer debt is now held in Student loans which cannot be cleared with bankruptcy. They will lower minimum payments based on income and stop payments based on loss of employment but they will always be there (now with accumulated interest) to prevent real recovery when someone is back on their feet. I am wondering if the next crash will be more of a small crash followed by a slow decline.

Interesting question. I have a few comments and opinions. This coming from someone who grew up very low income, undocumented, English as a second language, and moved very often.

-When it comes to real estate, you do not have to do the bare minimum. I had a client once give money to a tenant to help with moving expenses. I have heard of some investors giving more notice than the minimum. In a transaction, you have the full month of purchase and 60 days after closing to move in so you have the power to help with either more than 30days, help with moving, or get creative in another way.

Comment- Saying "for no other reason than I prefer to move in" makes this a much larger dilemma than it needs to be. You NEED to move in to be able to purchase it, not "prefer". The way I see it is that it is an obligation to become financially free for myself and my family. Since it is an obligation, simple dilemmas will not get in my way. If the dilemma is bigger than simple then I find a way to make it right for all parties.

Another comment- It is very easy to see low income students as victims that need saving, but for the most part there are way too many problems that need solving down to the main root problem which to me is familial culture and environment. From my personal experience, yes it was slightly challenging changing schools constantly but for very many students like myself it was a benefit. I am certain I would have become more of a statistic when I was growing up if I was to stay around the people I was around for too long because my home life at a young age was bad. Low income areas have a culture that seeps into a person and constantly moving essentially resets this because you have to acclimate to the new culture of the area. Myself, my sisters and a few other people I know were few that made it out of the cycle in my area and now that I observe all of our pasts and the pasts of my friends that became.... much worse.. I see parents being the number one problem. No kid wants to be around the "streets" unless their "home" is worse. Schooling made almost zero impact on us, anyway going off on a tangent that has nothing to do with the topic. Just wanted to share my two cents on what you might want to start looking at as a teacher of low income. My favorite teachers growing up before my home life became normal were the teachers that would take me away from the streets and the home.