All Forum Posts by: Peter Mckernan

Hey Scott! I would visit local meetups for real estate investing, and also network with agents in your area that work with a lot of investors. That would be the best move for you to find good contractors and reliable ones for your projects. It will take some time to vet the ones you really want to work with and that are good resources for you to use month in and month out. 

Sometimes using some contractors for one project will be good and then switching to another contractor for another project is typical because each scope of work is different. 

Yes, sometimes they have a ton on their plate and need to sell some off, and sometimes there is a better spread in their eyes wholesaling the deal verse flipping it. Sometimes the deal is not great for their numbers, and they would still be able to wholesale the deal instead of trashing it, and get some money for more income. 

You will always have a high amount of competition for real estate and real estate investors. There are always people entering the market and leaving the market all the while the many investors that do this for a living will stay and grab deals. That does not even include the one or two deals that happen daily or weekly between realtors who know the buyer/seller and make a deal happen as almost an off-market deal. You need to always be changing with the market, testing and poking to see what marketing works better and what does not work at all. 

I have an example from my own experience, radio channel is a great avenue for deals (maybe in your market, I would look into it), and in many markets, it crushes. I tried in my market which is the 2nd biggest to New York, so pricing for ads was really high and the return was not great. I got a couple of deals but lost money on the marketing campaign. I know a lot of people who started running ads on radio in other markets at the same time I did and they are killing it and it is their main marketing source. 

Your second question is in line with what I mentioned above you need to test, test, and continue to test. There is no one-size-fits-all for markets and salespeople. Something that will work in one market will not work well in another market due to maybe oversaturation, consumers, and anything else you can name.  How to mitigate unexpecting costs that come up, is a battle that happens on every deal, but how we handle it is to keep the reps up. So the more houses we see the more stuff we can pinpoint that will be an issue with the house/property. Some things come up that might be hidden which could be piping that needs to be changed out under a raised foundation or something like that for example. 

I have found a few deals on the market lately for some clients that flip, the numbers still gave the flipper a profit and the rehab time was 5 weeks. The other ways we are getting deals are PPC/PPL. Stuff that is good to look into, it does cost a good amount to pay each month, but there are people who want to sell today and need a quick offer. 

I would seek the advise of a CPA on this one.. But I will say that 1031 will not apply, that needs to be a longer-term hold/investment. 1031 applies to rentals, STRs, MTRs that are held for much longer. 

Your development deal will look much like a flip in the eyes of the IRS since it is 6-9 months as well you'll have the short-term side of taxes, not the capital gains taxing on it. 

I would look at what has sold for Prefab verse stick built.. I would assume that the stick-built is more money, but the ARV is also a lot more than the ARV on prefab. That is what I see in these areas of my market, prefab selling is few and far between, and the ones that do sell are a lot less than a SFR.

You have that built-in equity on the deals that are off-market. It is solid to look at deals that are off-market and know that the ability to buy it at a price and either hold it or sell it will be coming with less competition on the purchase and more upside. 

I am not an attorney; however, this is CYA in any real estate sale. Disclose everything! If you had a mold remediation company do all the work and mitigation, send the threatening party the reports and clearance. If you just handled it on your own/contractor self-mitigation, you would need to have some proof it was handled. I.e. contractor pulled all the drywall out, here are the before and after photos, we replaced the studs here are photos, and then show a before and after mold test that was completed on the house. This is what I would be doing and disclosing to the people looking to sue. 

If none of the above was done, then I would reach out and see what can be done to mitigate and keep it out of court to make the people happy. Document all of what you do if you are going to get it done for them, and/or if you cut them a check then make sure it is in writing that it was all done and they cannot come back to you at a later date asking for more money/mitigation. 

Use a licensed and bonded foundation company and keep the invoices, and disclose it to the buyer. If you do all that and their inspection on their purchase come out okay, you will not have a problem. Just make sure it is done correctly, and you will be good. 

If not fixed I have seen people sell for double what the work is because they need to take on the project once closed. 

I would say that 95% of PMs will not talk about adding value to properties are adding more to your bottomline/top line. These are people that are property managers not asset managers. Asset manager role would be to give advice on property that could be value added and increase the income on a property by small or big tweaks. It's like a syndication operator verse a money manager. These people are built to value add deals, you would have to look hard for these people in your market and probably pay them top end pricing to get your properties performing amazingly well! 

I would hire a trusted expert to get you real numbers, someone that does it in that area all the time (rents out properties/property management). 

With those numbers the refi is going to be good on the side of having some equity, the challenge like I mentioned is the Apprasier coming in and giving a number that may not support getting all your money out. I would think about having a local broker/agent give you a BPO on it and see what the number comes back in at..

Think this might be where Chris was going, but depending on your area and what sales look like in the end of the year months, usually sales are a lot slower, that might be a driving factor. If you can hold on till first part of January the showings and everything else should pickup.

This would be my action items: 1. hire a new agent that can sell the place, and get you numbers are rent and selling and sell the place. 2. be honest on the numbers you can get on an ARV so that you can sell it 3. start to get the conversation started with a couple lenders on what these numbers on refi would look like for you and this property 4. my suggestion would be to refi/rent before selling at a loss because if numbers work you can hold for a couple years then sell, but this is dependent on your cash position and liquidity of your situation.