All Forum Posts by: Richie Thomas

Hi Michael. I've seen many of your comments as well, and I always learn something from them. Thanks for following my progress.

To answer your questions: I visited the Huntsville and Madison areas in 2020, but not the Triana area. My agent has references from multiple investors here on BP, but I don't actually remember whether she herself is an investor. The answer to that question may have gotten lost in the shuffle of all my initial research. Another thing I'm kicking myself over now.

When we were deciding whether to pull the trigger on the deal, I mentioned "The numbers work if we can get a minimum of $1900" (incorrect in retrospect, I admit). She replied "$1900 could work!". I grant there's some wiggle room with the word "could", but still I get the impression that I'd be better served by another realtor on my next deal. Specifically, one who (as you mentioned) is a) an investor themselves, and b) is willing to tell me those hard truths you mentioned before we pull the trigger on a deal. Investing locally is not an option for me (I live in a state whose prices exceed my down-payment budget), so I need a "boots-on-the-ground" team that I can rely on to help me avoid the mistakes of this deal.

Thanks again for adding your thoughts to the discussion.

At first I was fully convinced on the idea of using an agent who is also a PM, for the reason Dena mentioned.  However the agent who sold me the property also owns the PM company I use, so now I'm not so sure that it's the fail-safe I thought it would be.  Although to be honest, even if we *had successfully achieved the monthly rent we mutually targeted, it wouldn't have been enough to achieve the cap rate Peter mentioned, so it's not completely down to that error.  On my next deal, I plan on simply looking up comp properties on Apartments.com.  That alone would have likely saved me from making the mistakes mentioned in this thread.  

After having completed my first deal a few months back, it's becoming increasingly clear to me that off-market deals are where it's at if I want a cash-flowing SFH rental. If there's no wholesaler operating in my farm area, or if there is one but they're not a good fit for me (unresponsive, keeping the best deals for themselves, etc.), then it seems to me that I'll have to take matters into my own hands and start my own wholesaling campaign. I'm open to doing this, but it seems like an area which would be fraught with legal risk. Ideally I could go "straight to the horse's mouth" and talk to a real estate lawyer in my area, but I feel like a lawyer's time would be charged at a rate of hundreds of dollars per hour, if not more. If I have to invest that kind of money in order to put my wholesaling campaign on a solid legal footing, then I will. But before I do so, I thought I'd ask the Bigger Pockets hive mind for advice.

With the explicit stipulation that no one in these forums is acting as my lawyer, what are some legal ramifications I should be aware of before jumping into the world of wholesaling?

I think I heard this on a BP podcast episode at some point, and it always stuck with me.  The guest said that you want the best house on your block, not the best house in your city.  It seems reasonable to me that a block or a neighborhood is only as attractive as its worst / ugliest house.

So an investor who focuses on buying those "weak link in the chain" houses, and makes them *slightly* better than the current best house on the block, creates a win-win for themselves and the community.  In addition to the obvious value-add play for the investor, this increases appraisal values for adjacent homes, helping the members of that community build their wealth without having to lift a finger.  Not to mention, those neighbors get to look at a newly-remodeled home instead of an eyesore when they open their curtains or drive down their street.

Thanks @Dmitriy Fomichenko!

 Thank you for talking through your thought process, Peter.  This is the kind of information which newbies like me really need, in order to level up.  While reading through your post and Googling some of the terms, I learned about things like what negative leverage is and how to determine whether it is present based on comparing the cap rate with the interest rate.  And yes, you're quite close on the interest rate- 4.625%.

I appreciate you taking the time to craft a follow-up response.

@Mark Cruse thanks for speaking up for us newbies, I thought I recognized Peter's negativity from a previous post I made here.  Not sure what his end goal is with his repeated tactlessness, I think he could have conveyed the concerns he mentioned in a more professional way, but I have a pretty thick skin.  I'm happy to take the useful info from his comments and ignore the rest.

@Andrew Syrios thanks!  Yeah this is at best a base hit I think, but for a first deal that's good enough for me.

@Nick Shri thanks!

@Caleb Bryant thanks for your post!  Happy to be investing in the Huntsville area, it's a great community.