All Forum Posts by: Patrick Britton

@Kyle Pepple  About this time last year I tried to look for an appraiser to train me. This was shortly before COVID-19 and even before I purchased the pre-licensing courses.

I was discouraged after speaking to about seven or eight appraisers, all of whom told me that they are not taking any new trainees for various reasons. So I spent the next year wasting my time as a real estate agent and then as a loan officer. Frankly, I should have just stuck with it and continued to search and search and search until I found an appraiser willing to train me.

I know it sucks and it's not fun and it's discouraging and this and that, but consider this: the harder it is to get into something (or the greater the barriers to entry), typically speaking, the easier everything will be once you get your foot in the door. Said another way, all one has to do to become a real estate agent is convert oxygen to carbon dioxide, but then the process of getting clients and doing deals and whatnot can be long and arduous and there's so much competition in certain areas it begs the question, maybe they should make the real estate exam a little bit more difficult? After all come up there are some real estate agents out there right now who have the IQ of Forrest Gump and should really be digging ditches, not helping people buy and sell houses.

By contrast, most appraisers have so much business they have to turn down a lot of work, are able to increase their fees without resistance and frankly, getting paid to do a job as opposed to getting paid for a certain result makes a huge difference in the quality of your life.

There are a couple of tips on YouTube about how to find a trainer. I'd start there

@Patrick McCandless @Bob Okenwa  

These sorts of things have happened to me many times as well. Frankly, I find it bloody frustrating and easily avoided, so easy to avoid I'm astonished when these issues come up. I really hope you guys informed the lender that because they chose a moron appraiser, they're not going to get any business from you or anybody else you know for the rest of existence. 

Lenders and appraisal management companies need to be put on notice that if they choose to use morons to do the appraisals, it is the lenders who will suffer.

@Shannon Turner

There are a multitude of reasons why one would prefer conventional loan over FHA and while I'm not going to list all of them, it would take too long, here's the hardest-to-overcome reason: condition of the house.

With a conventional loan, so long as the property appraises based on its current condition, you're going to be good. If you choose to use an FHA loan, the property needs to be an absolutely 100% turnkey condition. That means no chipped paint.

So as a seller, I'd rather deal with a buyer who doesn't have to deal with that nonsense/garbage than someone who does and is going to have an appraisal and then ask me to do a ton of repairs. Especially now, considering how low interest rates are for both FHA as well as conventional loans, there really is no reason why one would choose to do FHA over conventional apart from the paltry difference in down payment requirements.

Also, and this is just based on my personal experience over the past five or six years, most people who need an FHA loan do not have substantial assets to make up any appraisal shortfall.

in short, too many reasons for an FHA loan to go down the toilet compared to conventional loan.

@Brittany Wasmus  Obviously my comments are based only on what you have written. I'm not going to make any assumptions here. 

Based on those numbers, looks like a pretty good deal to me here. But keep in mind, at the end of the day it's all about whether the deal makes sense for you. Some people need a certain cash on cash return, some people need a certain net income for door, others are in it for the long haul and just want to see appreciation and the property paying for itself year after year. I know it's tempting to ask others for their opinion but deals are highly subjective.

As for instance, $40,000 for property like this seems like a good idea, except you may want to consider diversifying just a little bit and putting a few $1000 in Bitcoin or some other individual stocks. Just in case, you know? I certainly wish I had!

In the past three years I have spent over $40,000 in property management fees. While there has been some value in their management, I'm wondering if perhaps the value does not exceed the expense. Of course, this doesn't account for the markups made for repairs, maintenance, inspections, etc., so the actual expenditure is probably > $50,000.

Anyone self-managing a lot of properties out of state successfully here?

While it might be difficult at first, I'm wondering if it would be worthwhile in the long run to self-manage, or at least use an independent third-party contractor for various things.

Anybody have any recommendations for a property manager in the South side of Chicago?  Preferably not the cheapest but also not the most expensive.  

Also preferably a property management company that doesn't kowtow to tenants all the time...

@Theresa Reynolds with only 4 days to respond frankly, i think your options are pretty limited. for starters, the original offer would have to be amended so that the buyer is your name or LLC followed by "and/or assigns." you would need to stretch that inspection contingency out by several weeks but since you've already had the inspection, the seller will ask why. Then you get into a very gray area ethically since you know that you are not going to purchase this house yet are still, as far as the seller is concerned, intending on buying. Heck, the seller could see this post right here and file suit for fraud.

So given the incredibly short period of time you have at your disposal, I would walk away. Foundation issues can be unbelievably expensive so unless you're going to be getting $30,000 off the asking price, call it a day and look for something else.

Just my 2 cents. 

And I know, it sucks and you feel like you're missing out. But trust me, there are lots of houses out there.

@Jackie Smith thanks for sharing.  companies like that need to be pulverized into oblivion.

Fortunately those who adhere to the 1% rule are idiots.

If it truly is brand new construction for $150,000 and could rent for $1000 a month, I would want to know a couple of additional pieces of information: estimated annual taxes and estimated annual insurance expenses. Also, are there any other significant expenses pertaining to rental properties in that part of the world?  For instance, or the registration or license fees or anything like that?  

New construction is very interesting because presumably, there will be no major capital expenditures required for at least 10, possibly even 15 years.

Truly though, that whole 1% rule of thumb is totally meaningless to anybody who knows what they're doing. 

So yes, while the 1% rule of thumb might not get met here, the gross amounts are totally irrelevant. All that matters is the net, after-expenses take-home cash. And the easiest way to cut into significant net income is with a major expense which again, probably won't happen with new construction for a few years. That is incredibly attractive even to me and I am in no mood to purchase real estate for the foreseeable future; too many unforeseen, costly and rage-fueling repairs.

If I were you, I would consider roofstock.com when it comes time to selling.

Seems like you have a pretty good problem to have. :)

I might suggest you look at it both from a quantitative point as well as a qualitative. for instance, the numbers might tell you that hanging on to the property is the best move financially, but do you really want to be a landlord going forward with this property?  

And assuming you actually could sell and walk away with a nice chunk of change, are you only interested in other real estate investments? I know certain things like Tesla and Bitcoin are a little bit expensive right now but there are a couple of people on this planet who think that those prices have a long way to go yet…perhaps something truly passive and headache-free might be an option? In other words, make your money in real estate and put it in something that isn't quite so involved or risky?

Also, just getting back to some initial assumptions here, how do you know your home could sell today for $530,000? And what evidence supports the notion that over the next few months this estimate will increase? Oh, wait, you said Boise ID? Never mind, enough said :)

but seriously though, you purchased the property four months ago and it's now worth $120,000 more?  I would get a couple of opinions on that from independent, unbiased sources.