All Forum Posts by: Clay Smith

In Louisville I see 2% on 40k houses and 1% on 120k houses. In between is a sliding scale. You go past 120k and you get into Flip territory. The neighborhoods you mention are 140k to 180k houses and those are harder to get 1%. 

Wether you buy turnkey or rehab yourself can impact a % based rule as well.

NOTE: There are always exceptions I am obviously generalizing our market. 

I doubt there are many wholesalers in Eastern KY. That is a pretty small market.

If you are partnering, do the LLC with an attorney prior to your closing. Then put the property into it.

Get a lender before getting under contract. Or, put under contract contingent upon financing or inspection if you know financing is a formality.

1) If I was a pin up in Playboy my poster would read, Turn Offs: gutted houses.

They just require more materials without adding resale value. They also require permits and can take longer to complete. Of course, my Turn Ons: Profit. This makes it worthwhile.

2) stay away from floodplains, attorneys/closing agents should find tax liens and you should buy title insurance. Look for cracks in exterior brick, unlevel floors, unlevel window frames...all signs of foundation issues.

Take note of the roof, are there black streaks or raised/missing shingles? Note the age of water heater, ac, hvac, and look for maxed out electric panels.

LREI LLC is looking for an intern this summer to participate in project management for multiple flips. We have several properties in multiple phases. Interns will learn to

• draw floor plans
• pull building permits
• order materials
• find and hire subcontractors
• choose finishes
• design kitchens
• create budgets
• create scopes of work
• see Financials
• work 1x1 with an experienced investor

Applicants must have flexible schedules and be willing to get dirty.

I do not see any indiction of a recession. I just see what constitutes a "deal" having lower margins for profit. To me this means that if you've ramped up your operations to handle a large volume of work you may want to consider scaling them back. 

In 2016 my goals are to get back to basics regarding system and process.

Widen my net, to catch more deals inside an expanded territory.

Reafirm my networks with other seasoned investors. Leverage our teams to reduce labor costs.

Disaster plan and complete a risk assessment. Prepare for increased rates, get out of adjustable rates, and plan for a 2% rate hike over the next 3yrs.

AND improve our property management systems. Ensuring tenant satisfaction and reduced turnover with the increase of price competition.

I see that Louisville is outpacing all other major cities in multi family (5+ unit) commercial construction by nearly 5% more than the 2nd fastest growing city. They are popping up everywhere. I am certain that a price war will ensue when supply outpaces demand. I am selling off all of my multifamily units and keeping my single family. I have always preferred the SFR because it can outcompete an apartment unit with equal rental pricing. That makes me feel safer.

Before the multifamily lovers chime in, this market is way different than California, New York, or any big metropolitan city with a large downtown population.  Not many people live in downtown Louisville, we are very spread out.

I had one bank (Loan Officer) concerned over HELOC 10yr notes being the next foreclosure bubble. Since they mostly all carried 10yr terms when they hit the market years ago. I had the President of another bank say he thinks we will continue to see very little fluctuation for the next 1-2 years; they are comfortable lending.

I see new construction on the rise.  Supply is very low, but so is demand.  I see us at the beginning of the Accelerated New Construction phase.  I am working on system improvements, leaning out my business, acquiring rentals, and flipping everything I can find to store up cash.  I will be seasoning properties soon and I plan to make sure my properties can outperform competitors and my cash reserves can weather higher vacancy rates. 

@Mike Makkar You may want to consider using the Zillow Report located here.  This is zip code level reporting.  When I look at my local community I pull up this map.  This tells me what zip codes are depreciating.  I do not buy for appreciation, but I try to avoid depreciation.  I often times see people flocking to the areas depreciating to buy properties.  I generally keep this in mind when offering on a home in that area.  The discounts need to be bigger.

While railroad volume is important, not all materials travel by rail. Barge and truck work as well. Also, correlation is not the same as causation. #2 does not sound like a solid metric that explains the "why". The rich are less than 1% and I doubt they impact liquor sales.

Even so, I still cannot refute the fact they carry the same trend. Lane's reasoning is worth considering.

Anova analysis would explain markets. However the metrics in J's example should have tangible multilinear regression R factors. 

We all know that there are too many good metrics to get a good p-value in a regression model. Therefore, the best we can do is theorize. Nonetheless, we can isolate causation enough to deem them valuable.

J. has provided metrics that impact buyers. I like them. They at least give me an educated guess at what's going on. Something tangible I could take to a bank and reference confidently.