All Forum Posts by: Robert Haney

I would be surprised if 1 out of 20 new investors living in one state and investing in another state are glad they did it.  

If you can pay cash and are happy with a 5-6% return on cash, then go for it like the foreign investors do from outside the US.

If you think any RE Agent is going to bring you great deals, good luck with that. There is less than 1% chance of that. If paying retail MLS price is your goal then almost any RE Agent will do fine with that. PLENTY of landlords seem happy to pay top dollar retail like consumers. I owned for 6 months and then sold a remodeled property last year that I had $125k invested that could've rented for $1350/mo. I had multiple offers and an investor bought it for $180k with a RE Agent who thought that was a good perfectly normal investment deal. Go figure. That's crazy in my opinion.

Where do live?

Jeromy,

Since you are from Houston, do you have family or friends there that could help you?  Even though they may not be RE trained - someone you can trust to be honest and put their eyes on things to give you feedback?  

I have been successful in local SFR investing, but doing SUCCESSFUL investing remotely is a whole higher level IMHO. Your ecomonic importance to any of the core 4 will be so low that getting quality attention will be difficult at best.

Let me give you a couple of examples.  First, I have called Property Managers listing properties for rent and left messages and they never called me back.  Then I list my property nearby and it rents within 2 or 3 weeks.  2 months later I see the property I called about still advertised for lease.  Of course it costs the PM nothing to sit vacant and eventually they may find a tenant so they can "double end" and make twice the commission than they would make on following up on a phone lead from another agent.  Meanwhile, I paid no commissions and had only a couple weeks or 1 month of vacancy because I was motivated to get make ready, showings and releasing done quickly.  Assuming your investment purchase criteria is sound, vacancy is often the biggest factor to determine a property's profitability.  Depending on a PM or RE agent for this will be costly.

Second, finding good properties using a RE agent is more than difficult.  Lifestyles Unlimited teaches students to find 20 RE agents and maintain 20 agents simultaneously to scout for properties.  Why? To increase the difficult odds of finding a good property using RE agents whose bread and butter money generators are cunsumers who pay full retail prices for everything.  That is not what a talented investor is.  If you pay retail price your likelihood of success is low.  

I've not had a single house in 70 purchases brought to me by a RE agent.  Wouldn't they be smarter to 1) take a good deal themselves 2) take it to family or a friend 3) take it to known quick cash buyer that takes little (hand holding) work?

I wish you the best and success is possible, but the cards are stacked....

 Ethan,

Please share your numbers: 

All in purchase cost, sale price, and net ptofit.

or,

All in purchase price, rehab cost, and monthly rental amount, monthly cash flow.

I ask this PLEASE to learn what a positive experience really looks like.

Thanks.

 I largely agree but disagree in that they do know exactly what they are doing.  

They double close to hide their profits from the investor while increasing the investor's costs by having him pay for both closings. 

I've looked at many many of their offerings, but all were to highly priced for me.  I don't want to spend $200k to make $10k.  I stayed on their list for about 3 or 4 years thinking surely 1 good flip would come around. No.  I had about 6 different young agents handle me and all of them quit due to being underpaid at a dead-end.  The turnover is horrendous for good reason.

Ironically, I have sold them 2 houses in the last couple of years which they quickly sold to investors!  So there are plenty of investors willing to pay high prices and they have that profitable list of them, which is why they have a good business.  

Either the investors buying these are much more talented than me or much less talented.  I honestly don't know which.  I'm serious here. I do know I've made a lot of money flipping without buying from them.

They are making so much money that they MUST combat posts like these with "mile-long" explanations.  

 David,

I am curious.  How would you handle car parking?

a. Assume owners would drive off and leave home?

b. Assume owners would let cars flood?

c. Elevate the cars?  (Very difficult & costly)

???

Ehud,

Obviously you can see listings, sale prices and and as-sold rents for the Houston Metro area.  What does your proforma look like?  Why not list the numbers you are expecting to make your properties profitable for you?. This would help us point you in the right direction.

Purchase price?

Remodel Max you can manage from CA?

Total ALL-in ready to rent cost including finance, closing, etc. costs?

Monthly rent?

Property Management cost?

Maintenance & vacancy budget?

Etc.

It sounds like you have tried to look for some of the mistakes you made in this example.  I'm not persauded that you have been throughly critical enough to learn much.  Yes, the guy "took you to the cleaners", but what could you have done to have avoided this?  Have you listed out all the ideas YOU HAVE to never let this happen again besides having someone else ("a man") manage it for you?

I'm not "pulling any punches" here.  If you are not able to use your common sense to know what to do to avoid this happening again, then you likely should get out.  If you already knew the steps to take to avoid getting taken but didn't take them, then you likely should get out.  

Did you consider:

1. Getting 3 bids?

2. Asking each bidder exactly what their work steps would be (and ask questions until you have some basic simple understanding of those steps)? What materials they would use? How much materials? What challenges do they see?  What options are available to work differently to save money? How many people will be on the job and for how long to calculate man hours (so you can estimate a labor cost range)? 

The vast majority of RE repairs and modifications are not difficult.  It does take a desire to learn, which is work not for the lazy  Ask the SAME many questions of 3 contractors and you will learn a lot free of charge BEFORE you contract the work.  If you think this a man's territory you are wrong.  This is a LEARNER'S territory.  If you don't see that and want to apply yourself, then you know what to do.  

There are 3 ways to make money in RE.  

1. Positive cash flow rental income.  

2.  Price Appreciation 

3. Both 1 & 2 above.

I like #3 above.   All my buy-and-holds made nice rental money on day one per #1 above.  All of them were also saleable on day one for a profit without any appreciation (could be flipped for a profit).   All have appreciated too per #2.  

Buying RE for #2 only is called speculation.  Speculation is just gambling.  Why gamble when you can you can make a profit immediately with smart investments?

Buying a $345k property in Ft. Bend county to turn into a rental later is speculation #2 above.  It will not cash flow if you have a mortgage.  This is a very poor RE path compared to sure investments.

If you sacrifice and buy 2 properties less than $200k, live in one and rent the other for a couple of years, then move and rent the one you were living in - you'll have 2 money makers instead of one money loser.  Then you'll actually be a RE investor on his way to success.