All Forum Posts by: David Weiss

This house is big!  It's a single story 3,300 sf 3/3/2 that sits on a double-corner lot.  The living room is big!  The kitchen is big!  The bedrooms and closets are big!  Even the utility room is big.  It has a game room with a built-in bar, a den with a wood-burning fireplace with a gas starter.  It also has an underground wine cellar / storm shelter, very unusual for north Texas.  

The large lot offers RV or Boat parking and has a dog run and a storage shed.  

This house needs some significant rehab.  I have a rehab quote (to resell; a rental rehab would be less) for $67,995.  Quote is available upon request.

Comps are challenging to find for this property; most of the houses in the neighborhood aren't this big.  I had to go out 3 miles and back 6 months to find similarly-sized post-rehab properties to forecast resale/rental value.  

• ARV based on Sold comps: $300,901
• ARV based on Active comps: $284,126
• Rent based on Rental comps:  $3,525/mo

Make me an offer!

• Asking:  $165,000 obo

I can be reached via email - David at UpliftDFW dot-com

I can be reached via cell/text - 8I7 5OO 84I2

(ABOVE:  The current residents started rehabbing one of the bathrooms)

@Isaac Blocher, I think I over-stated my case, and I apologize.  If your rehabber will accept your terms with the lien in place, go for it.  If they balk, be prepared to take the lien off the table.  There's no right or wrong way to structure your deal as long as you're both happy with the terms and everything's legal.  Lien issues are significant to me; they aren't to all rehabbers. 

I think the LLC approach is the way to go. You're probably already planning this, but in case you aren't, I'd recommend getting an experienced real estate lawyer to review the operating agreement prior to filing. If they're good they'll be able to think of more situations and scenarios that would need to be spelled out in the agreement than you and the rehabber will. For example, what happens if the rehab budget quadruples? Are you legally on the hook to fork over the funds? If so, is there any limit, and what happens to the deal if you can't or won't pay? If you aren't on the hook, what happens to the project if the rehab exceeds your limit?

As far as the split goes, In my opinion you are over-valuing your contribution to the equation. (But again, others would disagree. If you can get someone to JV with you at 45% or 50%, go for it.) While it's significant that I've never put together a JV deal, I've thought about how I'd structure one, and in my opinion you're undervaluing both the effort and expense required to acquire a good deal, and you're undervaluing the work required to bring a project to payday. In my own personal opinion, each part of the equation is worth about a third of the profits: he who brings the deal to the table gets 1/3 of the profits, he who brings the labor to the table gets 1/3, and he who brings the money gets 1/3.

I would be content with such a split no matter which side of the table I was on. For example, if you brought me a deal and the money and wanted me to do all the work, I'd say me getting 1/3 of the profits was fair. If I had funds to lend and someone brought me a deal and was going to do all the work, I'd give them 2/3. If a wholesaler wanted to JV with me for some reason, I'd expect 2/3, etc.

(Note that 1/3 for labor assumes hiring a GC.  If I was hiring and managing subs, I'd expect more like 40%, not 33%.)

These are nothing more than my thoughts on the matter.  Feel free to disregard any or all of them.  :)

To preface my reply, a thing, any thing, is precisely as valuable as two negotiators agree it is.  In this case, the "thing" is a loan, the "value" is the profits to the lender, and any informed decision you and the rehabber come to will per force be fair.

That said, JV's normally carry more risk but get more reward. Hard money lenders carry less risk but get less reward. It sounds to me like you're trying to get the best of both worlds--the JV's payout (a serious percentage of profits) with the HML's risk (a lien that could allow you to seize the property from the rehabber; you're protected, the rehabber isn't).

As a rehabber, the only way I would do that deal with you is if I thought my margins were going to be slim enough that the profit split would cost me less than normal loan terms would.  (That's not the case in the example you provided.)  

After all, if my project is going to have a lien on it either way, why would I agree to a profit split that might cost me $14.5k when I could get loan terms that might only cost me $8.5k?

Unless there's something you're bringing to the table that a traditional hard money lender wouldn't that I valued at many thousands of dollars, I would pass on your offer.

I agree with @David Faulkner and @David S.; the devil's in the details and I don't believe we currently have the same drivers in the current housing market that fueled the last real estate crash (high sub-prime lending rates and IMHO more importantly, variable rate loans with 5 year teaser rates; in the last crash prices fell due to the spike in foreclosures, and foreclosures were driven by sub-prime adjustable rate loans adjusting).  While loosening lending standards is a bit worrisome, the risk level being introduced to the market seems negligible compared to what we had before.  I don't believe bubbles are created simply by having high prices; you have to have some mechanism by which those prices will drop significantly over a relatively short period.  I'm not an economic expert, but so far I haven't seen a compelling set of cause-effect relationships within housing that I believe could cause prices to rapidly tumble.  Therefore in my humble opinion we're not in a housing bubble right now.

Comments by @Michelle Bright and @Victor Gutierrez about other sectors of the economy (commercial real estate, stocks, etc.) have me worried.  I don't know enough about the larger economy to have an opinion about bubbles in these areas, and I recognize that all sectors of the economy are inter-related and a bubble crash elsewhere could significantly impact housing prices.  Bottom line, I don't think the biggest risk to housing prices right now lies within the housing sector; if they crash in the next several years or so my guess is that it will be due to a bubble somewhere else in the economy.

One final thought: the sub-prime mess originated under Clinton when he and his congress eased regulations on mortgage lending in/around 1999; it took eight years for the subsequent crash to manifest. Even if Fannie Mae's DTI adjustment is far worse than I think, I don't see any reason to think it will trigger a crash within the next year or two. Crashes require a systematic flaw to be present and triggered. If the only thing you needed for a crash was high prices, Americans would still be paying $12,000 for houses and 25 cents for gas. ;)

Disclaimer:  the etiology of the housing crisis is debatable; I present the origins as fact because the cause-effect relationships within the theories espoused above seem clearer, more plausible and less tainted by political agenda than others I've researched.  I believe they're factual.  I could be wrong.

I know a guy looking for a 3 bed 2 bath in a good school district. His credit is around 575 and he's looking for something in the $700 to $1000 per month range (PITI). He works in Grapevine and is currently commuting from Weatherford, so he's open to anything that will get him closer to work, which is most of the metroplex....

He has $11k he can put as a down payment and is open to owner-financing or rent-to-own scenarios.

Please text me if you would like his contact information. 8I7 5OO 84I2. Thank you.

You'll have a first position lien on a $67k+ ARV Dallas, Tx property.

Your note will be wrapped.

The principal needed is $35,000.

The interest rate will be 10%. Your annual ROI will be 10.5%.

This is a long-term loan and needs to be amortized over 30 years.

Please email/call/text for additional information. [email protected] or 8I7-5OO-84I2

Thank you.

I know a guy who wants to buy or lease-option a 3/2 or 4/2. He's looking for something around $150k. The home MUST be in the Richland High School (North Richland Hills, Tx) district. This is a hard requirement. He is open to owner financing.

If you have a house you're selling in that area or will be selling soon, please let me know. Thanks!

I think a better question would be, "What creative marketing methods have you tried in the past with greater or lesser success?" because obviously there is room for creativity in marketing.

The best example I've seen so far was while researching marketing. I haven't figured out how to apply it to real estate yet, but a small business owner had a mascot that had some brand recognition, and he had a mascot suit he'd occasionally pay someone to wear outside his store. One day he got the bright idea of putting on the suit and joining a crowd of marathon spectators. When a television camera crew filming the race live came along, he joined the runners, effectively photo-bombing the filming crew. The crew, attracted to the spectacle of a mascot running a marathon, kept the camera on him for several minutes, while he hammed it up for everything he was worth.

The end result of this was that he got several minutes of television coverage advertising his business in a highly memorable way. And it didn't cost him a penny.

Though much less creative than the above, my wife and kid and I have plans to get tee-shirts with our company logo and slogan and wear them while volunteering around town offering services where distressed homeowners might congregate, such as soup kitchens or food banks. Not only will we get (some small) exposure to a population that might need our services, we can take photos and put them on our company website in the "About Us" section. And of course, volunteering for a good cause is reward in itself; the photo op and potential for getting a lead are just added bonuses.

Who else has come across outside-the-box ways to market your services?

Agreed. The value of the improvements on land appreciate and depreciate with age, deferred maintenance, quality of upgrades, changing styles, etc. with much more volatility than the price of the land itself. Also, a homeowner can contest the tax-assessed value by pointing out deferred maintenance issues, etc. but there's not as much opportunity for doing that with undeveloped land.

For all these reasons, tax-assessed value isn't going to miss the mark on the value of undeveloped land like it sometimes does with developed land.

If you're in Plano, you'd probably want Collin CAD. Type that into your URL with .org at the end and you're there.

11601 Annandale Rd., Crowley, Tx 76036

The current owner is 3/4 the way through renovating this 1456 square foot 4 bed 2 bath, reducing your rehab costs and your rehab time. This home also comes with three acres of land and offers your buyer country living while still remaining close to the city.

Though HomeSnap.com values this property at $128,300, we conservatively estimate the ARV at $115,000 (www.movoto.com/crowley-tx/11601-annandale-rd-crowley-tx-76036-402_11724692/).

• We estimate the rehab budget at $14,380 (itemized budget available upon request).
• We are selling this contract for $66,000.
• Your total investment (less carrying/closing costs): $80,380, or 69.9% ARV.

If interested, please email [email protected] and [email protected].

Thank you,

David