All Forum Posts by: Rodney Smith

@Jim Genis

I could also use a property inspector type - especially one who would be willing to let me pay for them for the day rather than per property since i'll be looking at 16 properties over the course of 3 days. I dont need full written up reports, but someone to come along and be an extra set of eyes and point out anything of notable concern.

property inspectors in Kansas City Missouri feel free to contact me :)

It seems to me that maybe the easiest (and shortest) way for me to point out what I think @J Scott is saying; is that in order for the renter/consumer to gain value in this hybrid owner/renter model it will have to come at the expense of the developer / landowner ... there is only so much VALUE built into housing. It looks to me like you are trying to split up the existing VALUE in a complex or new way.... What I think you need to really focus on is rather than trying to divide the pie in a new way, you need to create / add NEW VALUE. 

Lets face it, any developer who has the ambition to build out such a community has 0 incentive to give away control, profit, etc. to the renters by giving them a share of the pie via better rates, or profit sharing. In order for the owner to gain value the developer has to GIVE it to them. UNLESS you can create added value to the context of homeownership. If you could change some legislation or tax loophole that incentivised the landowner to give away more of their piece of the pie you may have better luck, but like J Scott said, i'm sure youd have no shortage of customer interested in something new, but i think you'd be short on investors chomping at the bit to build something like this.

Maybe i'm being naive or missing the point, but if i'm following along correctly it seems like this is the missing ingredient in my opinion.

First off congratulations on thinking outside the box, this is something people dont do enough of, and even further sharing your ideas to be scrutinized which takes a bit of courage. We will go through 100's of bad ideas / revisions to get to the gold, so this is a great process!

Having said that I will play devils advocate a little and just point out some of my thoughts where I think there is difficulty. First off I would say that simply spreading out 'ownership' wont diversify risk well, because all of the diversification is in the same sector/industry (housing) ... If you look at a mutual fund or ETF's which are designed to be more 'diversified' you will find a percentage of holdings across various industries - housing, manufacturing, tech, medical, etc. My point is that when the market pulls back everyone will still lose equity, but now you've got someone in the midwest who is losing equity far faster than normal because they are absorbing west coast markets far more dramatic market swings. I would see this causing frustration for all of the midwest to bear burden of the coastal markets, and likewise coastal markets will be frustrated that their gains are distributed among lower risk (thus implying lower reward) markets ... Now maybe a lot of people are ok with this, but let me look at the same context of equity swings from another angle ...

The reason most people got into trouble to begin with is because they bit off more than they could chew -- losing equity is really not much of a 'risk' because really I havent REALIZED and gains or losses until I sell a property. Let me be more specific - unless an owner intends to do a cash out re-fi and buy consumer goods (because this homeowner is probably not of the investor mindset) then equity swings are really irrelevant because they cant use equity to buy groceries. Whats important is can they fulfill their initial promise to pay the monthly mortgage amount ... period. Appreciation is a bonus, but as @J Scott said, your sell price should reflect and inflated purchase price, but if your wise many people can capture gains above this, but I wouldn't expect it as a given.

One other large problem I see is that you mention maintenance being handled by the 'company' ... This would imply that an owner would have to TRUST the governing entity to be wise with the money it collects in an HOA-like fashion. It is very possible that an owner neglects to save money for repairs because it will be handled by the 'company'. This requires a lot of trust that the 'company' can remain liquid & solvent and not be prone to corruption. I would say that human nature tells us that although this is certainly possible, it is putting someone in a position of power which in turn puts them in a position of temptation and potentially harming a lot of others in the community.

On another note, this sounds quite similar to many Communal Living situations that I think try to achieve sort of what your describing (minus the ability to relocate easily). I hope this feedback is helpful to your thought processes and not simply critical. As I said earlier I am happy to see you thinking out of the box. Perhaps with enough thought and revisions there may be a model that makes sense.

Rodney

 This would be great, I really appreciate it!

I'm looking for referrals for great:

- property managers
- handymen (non licensed preferred for cost reasons on the majority of small repairs... even more specifically for laminate flooring and painting)
- property inspector / contractor
- a local attorney would be nice to know

Thanks so much Jim I really appreciate it!
Rodney 

@Troy Smith (anything else?)

Chris, thanks for reaching out, I will message you in regards to meeting while i'm in town in a few weeks

 The strategy is long term buy n hold for cash flow.

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Ramon, it is actually coming together quite easily. I found the deal via networking initially here on BP (and the other places that leads to). Ultimately I was talking to a property manager in Grandview (who i found through a series of connections originating from @Mike D'Arrigo). Property management is probably going to be our most crucial contact in the KC area since I live in Oregon which is why I was first looking at PM's before properties. However, after chatting for a bit the PM mentioned an owner of a 16 unit portfolio that the owner was toying with selling. We were able to talk with the seller and the PM and analyze the deal pretty extensively and just submitted our offer yesterday. No guarantees but it's looking very promising that we will be able to buy these for a price that really makes sense for our REI strategy.

We are really pumped to hopefully get a great launch into the KC market and continue to grow from there.

I am in process of closing a deal on a group of 16 properties in Kansas City Missouri. I would like to build up my rolodex - i'm looking to meet with people who I could hire as part of our "Crew" (handymen, contractors, inspectors, and general hands on repair and mgmt people). 

Also I would love to meet some local investors (new and seasoned), property managers & lenders, who I can brainstorm with and bounce ideas off of and get general advice.

I look forward to doing business with you and growing our businesses together!

Thanks,
Rodney

@Lalo Arenas Welcome. I sent you a colleague request - I am actually in process of closing a deal on a group of 16 properties in Kansas City MO right now! I hope to be in town in a few weeks to meet people and network as much as possible (as well as inspect a bunch of property ha)

Best of luck to your start!

@Dion DePaoli - Thanks for your feedback. We are a little uncomfortable doing a 'funny loan' ... I will look more into the child gifting thing. Perhaps even (if the gift is per child per parent) we could really be effective in this way since there are 6 kids (including spouses)... just a thought.

@Marcus Johnson - I didn't really clarify, but we would be paying cash for the properties (with family money) so there wouldn't be any underwriters to look at the loan. The entirety of the loan would be behind closed doors and privately written from parents to kids - and there is no legal requirement to record the loan publicly anywhere. Given that a default on the loan and the ensuing 'police work' to collect collateral or repayment would be complaint driven and the parents would obviously not object or complain I doubt that anything would ever be a problem or be scrutinized. People loan friends money all the time that never get paid back, but obviously this is on a different scale and not apples to apples, but you probably see my point. Frankly it is tempting to almost do it this way and I'm sure it would probably work out OK, but still I feel like there is probably a better / more legit way to do it. I will take a 2nd look into the $14k / year gift scenario.