All Forum Posts by: Russell Holmes

@Mark Vivanco that PM you talked with sound's like he's aiming to steer you to the highest gross rent meaning the highest fee for him. I wouldn't be surprised if his idea of 'cash flow' is Gross rent minus the mortgage payment.  That's not cash flow and you'll lose money annually if thinking it is. New construction from a build-to-rent perspective might be feasible with the right connections, but going to pluck off a builder home at a slight fear-based discount isn't going to get you cash flow. 

I'm a Realtor in Apopka, Northwest of Orlando by about 20 mins. I have sold some Orlando properties, but the majority of buy and hold deals I have found have been in the areas 20-45 mins from Orlando to the North and Northwest. Commuting distance, but somewhat of 'bedroom communities' in a sense. It's a sweet spot of lower prices with enough employment to keep rents up higher. Forget BRRRR, it's hard to find a basic cash flowing rental in Orlando Proper. Stretch your search to places like Eustis, Mt. Dora, Apopka, Longwood, Winter Springs, and you start finding pockets of higher rent near hospitals, toll roads, SunRail stations, while homes are more affordable.

I'll be closing on an almost 'accidental BRRRR' with investor buyers in Eustis sometime next week. It's maybe 45 mins from Orlando, but only 15 mins from being on the 429 toll road, 10 mins from quaint Downtown Mt. Dora, plenty of employment within 5 miles. It's a 919sf 3/2 house in an improving C- neighborhood with a brand new roof and roof deck, water heater, and paint job. There's some public housing nearby, some run down houses, but overall most are decent, it's quiet, well kept, lower crime, working-class area. Not a great neighborhood, but it's not 'bad' or 'rough' either. Even the public housing nearby has trendy paint colors, new roofs, no smoking anywhere on property, and the place is almost empty on weekdays meaning they all likely work. A couple blocks to the south it gets into C+ and B class areas of larger historic homes in the $200k-500k range.

I say accidental BRRRR because it wasn't the primary goal on our search. I agree with Tyler that BRRRRs, at least ideal, full capital return BRRRRs are tough to find in this market. But good almost-perfect BRRRRs are out there, especially now that many flippers are sitting on the sidelines for a bit to see what things do. Many hard money folks have stricter guidelines and lower LTVs.

These buyers I'm closing with just bought a 3/2 house and 1/1 guest house nearby in Eustis for $196,500 that grosses $1900/mo. rented to solid and clean tenants. There's some room to raise rents in time, they'll add a water meter to split that bill and cut expense, and they got it for at least 10% less than full retail if the seller had cared to push it. He was an investor and Realtor and valued a smooth and quick sale over some messy offer that was a little higher. We closed that one 4/15 and started the hunt for deal #2. No capital-return planned on that two-unit right away, it's just a good solid rental property for a great price. With COVID fears around and a lack of good house/ADU properties (looked at several) we started making aggressive offers on little single family homes nearby.

Accepted offer price to close as soon as title can pull it off: $97,000 with a $970 credit to buyer closing costs. Cash deal

Rehab estimate based on contractor bid and materials estimates: $15,000 (New kitchen, new bathroom vanities, a little termite repair, new pre-hung interior doors, one new window, new driveway, fence repair, etc)

Time-line: 2-3 weeks

Market Rent (likely Section 8): $1150-1250/mo.  Probably higher end of that, but being conservative.

ARV: $140-150k. Again, if this were February I'd say $150k all day, but even $140k would be fine.

My buyers were going to do this with a 20% down loan and pay rehab out of pocket to refi down the road sometime, but it would have been quite a bit tied up for the time being. They wish to keep buying properties but don't have unlimited funds to keep putting 20% down forever. So BRRRR was on our mind for now, but wasn't a necessity. However, seeing that they'd spend as much on closing costs as a large portion of rehab, say the Driveway for example, they opted to go cash to then only pay lending fees/costs once on the final refi. We're searching for leads to refi based on appraisal in under 6 months, but we have one that will do it at 6 months, not the worst thing.

If it appraises on the low end at $140,000 and they can only pull 75% instead of the ideal 80%, they'll pull $105k out minus closing costs one time.  That'll leave about $7k of their capital in the deal, or about 5% of the total.  They'll have a loan for $105k meaning there's $28k of 'free' equity they built by spending $15k on rehab and buying it at a great deal.  Insurance is $650/yr, property tax, thanks to the low sale price, will be about $1800/yr.    After refi, they'll have almost all capital back and a solid little cash flowing rental in a growing area.

Not every BRRRR will have numbers to return every dime of your capital, but that's ok. If after the final refi you've only left a small amount in the property, you're way ahead of buying full rent ready properties with 20-25% down.

@Brandon Faleide welcome to Bigger Pockets from a fellow Apopkan.  I live just off Vick Rd with my wife and our kids, we might be neighbors!

I'd be happy to meet up for coffee and conversation about the area if you'd like.  I grew up just over the Seminole line in Altamonte and have lived here in Apopka for 10+ years. 

There's a great local meetup (Zoom recently, but in person again as soon as we can safely) with plenty of Bigger Pockets people that come.  We all also connect on the facebook group "Central Florida Real Estate Investment Hub".  It's a smaller meeting and group than some of the large organizations like CFRI, which are also great for networking.

Let me know if you want to chat sometime about the area. I can give you a list of the good places to eat around the area and those to avoid too, haha.

I feel that A-class luxury apartments will see the biggest declines.  That's a premium product for renters who feel they can afford the lifestyle and don't wish to buy. It is not a necessity and it involves communal leisure and other common areas that previously weren't noticed as a risky.  I feel that single family homes and small multis which provide tenants some private yard space, parking close to their front door, and other 'social distance' criteria will be in more demand.  Likewise, many employees that used to be tied to an office and as such aimed to live within a certain commute are now being told they can work remotely either indefinitely or at least through year's end.  This should make suburbs more appealing to city workers than they once were.  When they see that similar rent money can get a larger house with space for a home office, private yard, etc, it's hard to justify that luxury downtown apartment when the office isn't a daily need or even open for business.  

Some of these trends could be more temporary since renters could, more easily than homeowners, move out of a city for a one year lease and back in the next year. 

To what percentage this changes one asset class to another is extremely difficult to predict and would vary by market and asset class.  But I think we are seeing some fundamental changes to human behavior, employment, living, and personal space that haven't been seen in any of our lifetimes and will become part of how we analyze property and future risk.   This could shift residential and commercial markets in a lasting way, but I don't think it'll flip anything on it's head overnight.  It won't be things tanking across the board, but luxury apartments may see no increases or even declines in rent while single family homes, small multis, and more affordable apartments see more stability or increases in rent.  

@Brandon Goldsmith my local forums don’t get a ton of activity here since many will post questions or threads about my local area on the more general forums (like “buying and selling real estate”) rather than the location specific forums. Remember that often those who may want to buy where you are could live anywhere else too.

What’s worked well for me and other colleagues is to set up keyword alerts for some cities nearby, types of properties you like, nearby markets, etc. Then whenever someone posts about that it’ll alert you. Not every alert may be something you have value to add to, but those that you don’t you still may learn something from reading and following. Maybe a question comes to mind you can ask to learn more. After awhile of watching and engaging with threads found with those alerts and reading threads, you may see that many are on the same few sub forums and decide to follow those forums.

Definitely not an exact science though!

@Brandon Goldsmith depending on your brokerage, you may have access to some great training and potentially even some free or discounted lead gen. Seek out some mentorship, guidance, and support locally since it'll help learn the nuances of your market. 

As far as getting your name out to investors and beginning to find and close deals for them, I highly recommend being a regular on Bigger Pockets and finding some local Real Estate meetups to attend and network.  You can't self promote or blatantly market yourself on Bigger Pockets Forums, and for good reason. Even if they allowed it, that's not what's going to make people reach out to you. At least for me, I never wanted to be that 'bus bench' realtor with my headshot plastered all over town.   Instead of trying to 'market' here on BP, get involved in threads that you can learn from or contribute to.  Ask questions, offer value, research things in your local area to share with others.  It won't happen overnight and it doesn't work if you're trying to post ONLY for leads to sell property to, but if you stay consistently engaged to learn and grow while you try to add value without expecting anything in return, you'll begin to have people reaching out to you for that knowledge and expertise.  Some of the best strategies and techniques for negotiation and creative deal structure I've learned here on BP forums, podcasts, blogs, etc.  

I've been on Bigger Pockets since early 2017 and have been a Realtor since early 2018.  I don't have thousands of posts and I haven't been at this a decade like some of the amazingly seasoned experts that take time to share. I've still closed a quite a few deals with folks I've met through this forum and through local meetups that had a start on the forums.  I have new buyers reaching out every week to look for more and sometimes the thread that brought them to finding me is something I posted 18 months ago that happened to have a keyword they were searching, absolutely nothing about me being a Realtor or wanting to sell them a house.  Had I not contributed to that thread at that time, I wouldn't have been in the forum conversation they were reading.

@Eileen C Corley welcome to Bigger Pockets!  I'm a full time Realtor, but I started my journey part time.  My previous career was a local service business that I had grown tired of, so being a Realtor was my exit from that.  So I may have gone about things differently than you might if you love your job and don't plan to go full time (nothing wrong with that path either).

I will say that it'll be a challenge to properly serve your clients if you're an independent agent and unavailable during your other job. Luckily, I had the benefit of still being able to answer my phone and reply to emails so my early Real Estate Clients really didn't know that I was part time.  If you can't be on your phone during work (like most employers) it may make sense to reach out to some local teams to discuss joining what they're doing.  If you joined a team as a buyers agent, you'd have transaction support when you're unavailable, you could work some open houses on weekends for new buyer leads, and they could potentially match you with buyers who work similar schedules, wanting to see houses after hours and weekends.  You'd share commissions with the team leader, but they'd take on many things that would be on you as an independent such as lead generation, marketing, transaction management, etc. You'll often also pay a smaller cap into the brokerage when you're on a team.  It's not the route I went, but there are a lot of benefits to doing so. 

I did my pre-license course online with Real Estate Express in late 2017.  It's not the most exciting thing in the world, its actually quite dry. But I could put some time in to get it done late at night when all else was done. I learned what I needed to and passed my test, which is what matters for a pre-license course.  My wife used Real Estate Express as well for her pre-license course the next year and passed her test too.  The pre-license will basically teach you zero about how to actually be a successful agent, but all about what not to do in order to avoid legal penalties. Once you're licensed the true learning of how to do this business begins.

As far as which brokerage is right to hang your license once you have it, like many things, it depends.. I really liked starting with EXP Realty myself due to the ability to consume cloud based training from home and on my schedule and have local support and a local mentor through my first few transactions when I needed it most, but no pressure to attend something when I had other obligations.   Some brick and mortar brokerages I interviewed with required attendance to training in the office and during office hours, something that is quite tough to pull off part time and didn't appeal to me at all, especially since their splits and franchise fees were much higher. I won't name drop them or say they are bad since, for another agent coming from a different career path, they may have been awesome.  I'd suggest interviewing with a few brokerages and teams locally.  Check out the big names and the small local brokers.  Also consider whether you might enjoy using your license working with a property management firm to learn that side of the business instead of retail sales, both have benefis to investing. Many of them do some sales as well with their PM clients so you get a little of both.  When interviewing brokerages and with teams, keep in mind that two teams within the same brokerage may have vastly different environment and feel due to guidance from different team leaders. Don't be afraid to decide something isn't the right fit.  Some may turn you down saying nobody can do it part time while others will happily take on a part timer. 

The hardest part for me working part time was wanting to jump in with both feet full time right away.  I was part time for about 16 months before I made the leap to full time, losing sleep, staying up learning until 3am and out the door for work the next day a few hours later. It was a steady transition during that time putting steadily less and less time into my old business and more and more into Real Estate. It sounds eloquent now stated that way but it was brutally exhausting for an extended stretch basically being full time in both businesses before I jumped out of the old one. 

The late nights, extended hours, no weekends off was totally worth it and I'd do it over again in a heartbeat though. It is quite literally starting a business, but with planning and forethought it can definitely be a journey you start part time.

@Colin M. I believe I know the exact property you're discussing as well.  I've looked and negotiated on several of these guys duplex builds on Yak, Albatross, Bittern. I've even recorded a walk through video of 655 Yak.  Walked and offered on one on Yak and then followed up with a different buyer and another one on Yak Ct. Two on Bittern are their 9th and 10th builds of these I believe.  Taxes are going to be approximately $3800-4200/yr according to Polk Co Tax estimator.  I had an insurance quote of $538/yr for the whole building, but most of their build sites are in unspecified flood zones so you'll need an elevation certificate for accurate flood premium which could be another $800-1400/yr.  I believe Yak and Bittern are flood zone, but Albatross wasn't.  Could be mistaken there.

  There are solid comps for $1300-1395/mo in rent per side, and I've confirmed this with a couple PMs.  These sellers have a little wiggle room and I had gotten them to a pretty good number, but what held up my buyers interested is that there's been an increasing supply of rental units in this price range and in this specific area of Poinciana.  They are not being absorbed quickly enough to keep building and buying at the moment.  PMs I spoke with recommended going Section 8 with the units to have an easier time filling.  Market rent would still apply, but the other rentals sitting on the market don't look to be Section 8.

Being new construction and needing very minimal reserves for repairs and capex, the numbers worked out pretty well. It is not the same as buying a 20 year old duplex for the same price and rents.  Every single thing is brand new, so you have full lifespan to plan reserves for replacement.  Polk Co has really low taxes as well.  These guys had a similar one in Deland and estimated taxes were nearly double.  About $7k/yr.  This is why people that recite the 1% rule on every deal get tiring.  Same property, same basic rents, same price, two different counties and huge swing in taxes.  At $3600/yr in additional taxes it costs $300/mo extra for the same "rent/price ratio". So $2600 gross rent on $315k (brand new) acquisition may work out awesome in Poinciana and horribly in Deland.  Suburbs of the same metro with vastly different taxes and similar rents.

As appealing as these duplexes are (much cheaper than new duplexes anywhere else in Central FL I've seen), I ended up closing on better deals with the clients who had looked at these duplexes.  Most recently was a 3/2 house and 1/1 guest house in Eustis (Lake Co.).  It needs about $1500 in siding repairs and a $1000 water meter to properly split the water bill and add $125/mo to net income, otherwise all systems and finishes are excellent.  $196,500 price paid and $1900/mo in gross rent with existing tenants in both units.  They are below market by about 15% but paid by very clean, gainfully-employed, early-paying tenants, zero vacancy and they'll bump them closer to market at the end of the lease.  

I'm not saying the Poinciana duplexes are a bad deal, but be sure to account for estimated taxes, higher than typical rental inventory, and potentially unknown flood insurance premium.  For a zero-rehab turn-key rental, its a pretty solid deal.  I've seen similar new duplexes in Apopka (NW Orange Co) sell for over $400k with rents in about the same ballpark. I wouldn't want to have to re-sell the Poinciana duplex anytime in the next 3-5 years if these guys keep cranking out new ones, but I think on a 7-10 year horizon they'd be a pretty solid, low-headache hold. 

@Taylor L. Ha, I lived in a rental condo about 14 yrs ago that my upstairs neighbor befriended me at. He smoked weed, no biggie. Out of the blue, he says “Hey man, I’m going to be out of town a few days and have some speakers coming in. Can I have them dropped at your place?” Nice guy, he trusts me, cool. I say no problem.

“Speakers” arrive to a fake name, my address, and turn out to be a poorly packaged pound of weed in a bag, stuffed in a box. In FL about 2006 it might as well have been a narcotic.. The fun thing was it was accompanied by about 35 DEA, SWAT, and undercover police swarming the entire complex to catch “the guy” who came to pick it up. Luckily I was out when it showed up, and my “WTF” reaction when I walked up to a ragged box was genuine. I told them I wasn’t expecting that package, obviously too small to be speakers and I wouldn’t touch it. They Sliced it open and boom, swarm of cops. Neighbor covered his trail to not have anything point to him. I didn’t touch it so they didn’t come in. Cops believed me and I didn’t get arrested. Someone was out a pound though, so I moved shortly after. I didn’t want to be the victim of misunderstanding.

Door didn’t get kicked in and I did have a few grams of weed of my own....not from that guy. Whew, hahaha.

But to the OP, you can’t smoke on a rental porch if they say not to and it’s illegal, unfortunately. I moved to a duplex unit with a yard after that before buying a house. Stick around these forums and find a way to buy a house, house hack with roommates for cheap living expense, then do as you please in your own house.

@Brody A. I hear from a lot of buyers looking for deep discounts in Central FL/Orlando area, thinking COVID-19 is going to tank prices.  The problem is that data simply isn't showing that, at least not yet. I will say there likely is no harm in waiting a month or three to see what happens, prices aren't going to rise rapidly right now, it's not a 'now or never' moment, but I also do not feel they are headed down significantly either.  At least not here in my market.

 In the area of the market I watch, within 25 miles of Apopka (which encompasses most of Orlando, pretty much Orange/Lake/Seminole counties) and within the last rolling 7 days from right now, there have been 535 new residential listings, 533 residential listings sold, and 695 residential listings to go pending. Only 231 have fallen through to go back on market.  These numbers are from the last 7 days.  I just checked my market inventory report and there are currently 7005 active residential listings.

7005 listings/533 sold per week = 13.14 weeks of inventory, or just about 3 months of inventory. If I do those same numbers based on prices below $500k, it's an even shorter inventory.   This data does not signal an impending crash.  Sales would need to drop way off and/or listings increase dramatically to push prices into a nosedive. Supply MUST far outweigh demand in order for prices to fall.  The Pandemic affects buyers and sellers alike without bias, so if both decrease similarly, supply and demand will stay pretty balanced.  We've had historically low inventory for years, that is not going to go away overnight.

Sales and new listings have been remaining very balanced over the previous weeks. When supply = demand, things are quite balanced and it does not signal a crash.

Going from the Macro picture of the market data to the Micro of what I'm personally seeing in my own business, I closed a sale with investors on 4/15 that went off without a hitch despite socially distant closing, some hoops for us to jump through with buyers signing from out of state, etc. Tenant occupied two unit, tenants staying put, they paid April's rent early, and are still employed, so only ownership of the property changed. I'm working on offering on another property for those same investors now, ready to jump into another. I brought a buyer to a 4/2 listing that we put live about a week before COVID-19 became serious here. Showings slowed a bit, but picked back up and we've been fielding offers. Pre-COVID, I expected to have that under contract in 2 weeks, but it took 45 days. It's under contract for what was discussed as a very reasonable price at the listing, before COVID concerns. No price reductions and no change to opinion of value pre- and post-COVID. My buyer for that house is going to House Hack it. Moving in with 3 roommates who will cover his entire PITI payment. Multiple exit strategies and hedging risk in a major way.

I've got another Realtor preparing an offer on another listing of ours for her buyer.  Expecting that offer today and have had more showings for that property in recent weeks than before. The only big change I've noticed is that I'm getting a lot more direct buyer calls from my for sale signs.  I'd get a few before, but now it seems lots of "DIY" buyers are reaching out to list agents directly to find homes with less contact.  A few I've been able to convert into buyer leads, searching for other properties for them.  But most will bluntly tell me that due to COVID-19, they are calling list agents directly for what they are interested in and won't be employing an outside buyers agent to show anything.  

Sure fear, uncertainty, and many buyers losing employment have disrupted the normal course of business, but people are still selling property and others are still buying property.  None of us can guarantee what the ultimate impact of this is going to be in 3-6 months, but I've been watching the market data closely and I've been in the trenches showing homes, doing virtual tours, listing houses, making offers.  Very simply put, this will not be a 2008.  Prices may soften a little or stay put for a year. It may take longer to get a contract, lenders may be more strict. Rents likely won't increase this year like they did last.  But free-falling prices and low hanging fruit deals sold at pennies on the dollar does not appear to be the reality we are in currently.  We've been on stay at home orders for over a month here, but I've been just as busy with buyers, sellers, and investors as I was 3 months ago. 

Nobody knows the future and an extended shutdown stretching into the summer or fall could have much greater impacts.  For now, I feel the overall market is very similar to before but with most flippers, hard money lenders, and some financed buyers out of the picture.  That is less competition (less demand) for distressed properties, so those may see more reasonable prices and larger drops than the more 'normal' housing inventory.  I'm making more aggressive priced offers, giving more time on inspections, and making some other operational changes to adapt to selling homes during a pandemic, but that's different than expecting wide spread crashing of prices as a whole.

@Nicholas Leslie I don't work with mobile homes very often other than an occasional manufactured home affixed to owned land.  However, if you're referring to Rock Springs Mobile Home Park specifically, I will say it is the park I hear complained about most often on local FB pages and the like.  Management that can't keep the water pressure up or service on, or trash picked up.  Rampant drugs/crime, police activity, etc.  There are much quieter and more stable parks just a little to the north off Mt. Plymouth Rd and out toward Mt. Dora. If someone is over 55 yrs old, Zellwood Station is an incredibly nice country club manufactured home community just West of Apopka in Zellwood.

 From an investment standpoint if you're looking at buying one in a park for cash flow, sketchy/poor management would be my biggest concern since they control the park its in.  However, if you happened to be looking to buy an entire park to add value by pulling it up to be a nicer community, RSMHP would likely be awesome for that. It needs a lot of work/help.

That being said, there are also countless mobile homes on their own parcels of land in the Rock Springs Area, not in Rock Springs Mobile Home Park.    These being on their own land do count as 'real estate' and would comp with other mobile homes on their own lots of similar stats.  

Not really sure if that helped with your question, and I can't transact business on mobile homes on rented land anyways, but maybe it helped some.