All Forum Posts by: Robert Ellis

Hello,

I just recently bought some land for $50,000 and it appraised at $90,000. I plan to put two duplexes on the property but with this high appraisal is there a smarter thing to do to pull that money out of it or just use it for better collateral for the construction loan

Wow, Robert! That's an incredible return on investment! Achieving a 4098% IRR in just 58 days is nothing short of remarkable.

I’m curious about a few aspects of this deal:

1. Entitlement Process: Can you elaborate on the land entitlement process? What specific steps did you take to enhance the property’s value before selling?
2. Market Research: What factors did you consider when determining the potential resale value? How did you identify that this property would be a good investment?
3. Challenges Encountered: Were there any significant challenges you faced during this transaction, and how did you overcome them?
4. Lessons Learned: What key lessons did you take away from this deal that you would advise new investors to keep in mind?

Looking forward to learning more about your strategies and insights!

This is from my own personal ADU that I recently built and recently appraised earlier this year. They only appraised it for 75k. They are not appraising ADUs equivalent to the construction cost in my area, I can guarantee that. There's just not enough ADU supply (IN MY AREA) for appraisers to base off of. Though I expect that to increase in the future when more ADUs are constructed. Like most things, the value of your ADU is relative to the area you're investing in. More ADU supply = more comps, potentially higher valuation.

To all reading this thread, I am the COO of RTR and responding on our behalf.
It's important to point out a few key facts in this case since this is not simply a review. Yes, making statements about being a "scam" and using profanity like this is both unprofessional and against BP forum posting rules. It certainly does impact our business for anyone considering using our services and there are many facts that are misrepresented or omitted.

RTR serves as a turnkey and new construction marketplace that researches various investment markets throughout the country and connects investors and sellers. We always encourage investors to conduct full due diligence on any property, team & market they choose to work with. We do our best to help set them up for success with many tools and resources made available to them. We also do our best to help navigate any issues investors may encounter throughout their ownership. After all, this is real estate, and it would be unrealistic to expect that things like tenant issues or other issues do not ever occur, even in TK or new construction investing.

Some notable items to understand:
1) This investor independently chose to move forward with this Akron property on his own. Our team discussed multiple investment options with him, including new construction homes in nice areas that likely attract better quality tenants. He had the opportunity to interview the seller and mngt prior to closing on the home and chose to work with them.
2) As always recommended, this investor conducted full due diligence by having an inspection and appraisal. As he stated, the inspection came back in good condition, and the home appraised at full value without any identifying issues at the time of purchase.
3) RTR was made aware of issues that the investor was experiencing with the tenant. We communicated both with this investor and mngt to help find a solution for a tenant that was struggling to pay rent. Over the past year, RTR has over 50 emails back and forth with this investor and mngt, attempting to sort out solutions. We have had multiple phone calls with all parties, and our owner has taken time to personally speak with him as well. During this time, this investor stated he was very happy for the support. Furthermore, while not obligated, RTR financially contributed to help this investor offset missed rents from the tenant, which it sounds like the investor later recovered from the tenant eventually. We also assisted to have mngt contribute thousands to the investor as well. A resolution agreement was signed and this investor notated that he was very satisfied with this outcome at that time.

In summary, RTR has been on BP for close to a decade now helping investors identify attractive markets across the country and build investment strategies to achieve their goals. We have an exceptional reputation that we have worked very hard to achieve. We know that we have helped more people than those dealing with challenges. No, we are not perfect like any business, and we always welcome feedback as long as it's constructive and professional. This is real estate investing and there are multiple variables that affect the performance and outcome of any investment property over time, both for the positive and negative. Anyone investing in real estate needs to be prepared for that.

It sounds like this investor was able to make significant progress with this tenant to get caught up. We wish him the best success with this property and his future in real estate. Despite this negative post, we are still willing to assist in any way we can, with the understanding that everyone interacts in a professional manner.

Grant McMillan, COO Rent to Retirement

Very market dependent. There are not many ADU comps in my SoCal area YET. It's starting to catch up though. A new construction ADU will be appraised significantly less than the hands-off construction cost. A new ADU will cost over 120k to build and will not be appraised close to that from my experience and many other investors I've spoken with. You can also find many examples in the forums of people experiencing poor valuations due to lack of comps. Building a new ADU will put you in a more "negative equity position" than converting a garage for example, which only cost <200 per sq ft.

Quote from @Robert Ellis:

Quote from @Kevin Sobilo:

This is the pertinent section of a NAR Exclusive Buyer Agency Agreement from PA. I suspect contracts in most states are similar. (Click on the image snippet above to enlarge it and see it more clearly)

 I doubt they signed an exclusive it's procuring cause 

@Robert Ellis, since the NAR settlement went into effect its required to sign a buyer agency agreement prior to showing a property now.

If it wasn't an exclusive buyer agency agreement there would be no contract to cancel because it would be by definition NON-exclusive.

In addition since the NAR settlement they have removed the NON-exclusive buyer agency agreement for buyers.

So, unless this was an OLD contract from prior to the NAR settlement it is very likely an exclusive buyer agency agreement.

This is the pertinent section of a NAR Exclusive Buyer Agency Agreement from PA. I suspect contracts in most states are similar. (Click on the image snippet above to enlarge it and see it more clearly)

We recently got into a contract with our real estate agent and toured about 6 properties (2 being new builds). We are considering going with the new build, but would like to drop our real estate agent. She agreed to cancel the contract, but mentioned that she was still "registered" as our agent at the two new builds. If we go through and buy one of the new builds do we still have to give her a commission?