All Forum Posts by: Stephen Dispensa

Any contractor worth his salt should have no difficulty floating materials for 30 days, interest free. The payment schedule for your contractor should really all depend on your funding source. If you're funding with a hard money loan with an escrow holdback for your contractor draw schedule, it's really going to be up to your lender when and how much of that is released. I would say a fairly typical schedule would be as follows:

1-3% deposit prior to any work being done.

20% after initial demo is finished, gutted materials removed, and permits are in place

20% after rough plumbing and electrical is finished

20% after flooring, cabinetry, etc. is in place

20% after exterior landscaping, paint, etc. is fone

Remainder after final punch list is completed. 

These are rough numbers and all depends upon how many draws you have set up, some lenders will call for site inspections before releasing, others will allow for just pictures. 

If you're funding the deal yourself, I would recommend no more than 30% up front. Ideally, I would do 5% - 10% at most down, and not issue another cent until permitting is done. Far too many contractors tie up your time in permitting and not doing it correctly. The more time your money is sitting in an empty house that is not being worked on, regardless of whether you are paying interest or not, it is costing you. 

Whether you are licensed or unlicensed (at least here in FL) is kind of a moot point. (For the record, I don't wholesale properties and see a lot of wholesalers butcher deals and burn sellers.) In Florida you can close either through a double close or an assignment of contract. (The assignment box needs to be checked off on the offer in order to do this and most sellers won't allow it.)

There are two types of deals that you can wholesale: on-market (MLS) deals and off-market deals (deals you find through advertising, bandit signs, direct mail, etc.)

If you as a real estate agent and you find a quality deal on the MLS, you can lock it up by making an offer. In this scenario you are a single agent representing the buyer (yourself) in this transaction. You do not owe any agency to the sellers in this scenario and they are fully represented by their own agent. In these situations, you would not only receive the wholesale fee to close the transaction, you would also earn whatever real estate commission was offered on the MLS.

I know quite a few wholesale firms in my local market who do exactly what I referenced above. Their acquisitions specialists are all licensed agents and they earn commissions from the real estate transaction as well as their wholesale fee.

If you as a real estate agent find an off-market deal, you again can legally wholesale it, however there are some disclosures that should be made. Perhaps while marketing trying to find listings you meet someone who is really desperate and needs to close quickly. If no agency relationship has been setup, you can tell them "Hey, I'm willing to buy this house of you in cash. I would be representing myself in this transaction, I'm not your agent," and make your cash offer. In this case, again, you are acting as a single interest for the buyer (yourself) and have not violated any agency agreement to act in the best interest of the seller. 

Now, let me explain why as a real estate agent, I DON'T DO THIS. There's an old saying, "Pigs get fat, hogs get slaughtered." In both of the above scenarios I have the opportunity to make almost double the amount of money by collecting both a commission and a wholesale fee. However, my ultimate goal in working as a Realtor is to make the client that I represent the most money in a transaction. When working with investors, these are the clients who I am trying to make money for. By adding in wholesale fees, I am stripping value from a house that they are hopefully going to relist with me after their rehab. Yes, I could make that extra money by wholesaling the deal onto them, but I would feel far more comfortable knowing that I got my client the best price possible and gave them the best opportunity to make money on a deal.  If I had a $10,000 wholesale fee tacked onto a house with a $40,000 profit at the end of the project, I just took 20% of the profit on the deal. Also, if the developer is going to work with me on the resale, it will be making my job harder to get them the numbers they need on the listing side. This may result in them wanting to list at a higher price, which in turn makes the property harder to sell, costs them more days on market, and results in significant carrying costs, especially for clients using hard money. 

A purchase price difference of $10,000 can also make a world of a difference when a buyer is getting their hard money in order, requiring them to bring more cash to the table. Depending on where the hard money lender's valuation comes in, this can be a significant number. 

Wholesaling certainly offers opportunities, and I can understand using it as part of your investment strategy. However, as a licensee, I see it as a short sited strategy that can cost you on the back end. I'd rather have happy investors who will continue to buy and list with me, than bleed deals out before they even get off the ground.

Based on the initial post, I hate to say it but I've seen MUCH MUCH worse out of fellow Realtors. Buying investment properties is difficult because you do have to be your own advocate in a sense. If you're working with a Realtor who is an investor themselves, you're kind of in competition with the agent representing you. Of course, by law he has a fiduciary duty not to buy a house out from under you when he's representing you as a single agent (your buyer agent agreement). But if he's an investor himself and you're looking for that "diamond in the rough" what are the chances he brings it to you instead of buying it himself?

In terms of actually reviewing the automated search set up for a client, here's what I can tell you from my personal experience. When I first setup the search, I take a very general overview of what is out there. My buyers are able to mark properties they are interested in when they view the auto emails. I look at all of the ones they mark pretty much immediately and analyze them. Anything that we're setting up for showing I analyze as well. 

If after 1 or 2 showing sessions (looking at an average of 3 houses per session) we still have not picked a home, I start revising the process. At that point I usually have a better idea of what they are looking for. I often start a completely new search based upon what I learned is most important to them during those 1st few showings. Quite often (and I realize that buyers and investors won't want to hear this) it is at this point that I start looking at homes above the buyers stated price range. It's not that I want them to go over budget, but I generally find out in the process that there are items much more important to them than price. It's a lesson I learned the hard way a few years ago:

In 2016 I was still working in NY and had an investor client looking for a two family with a budget of about 650k. The plan was to move their daughter into one unit and rent the other out. They were searching in a beach community, and wanted something beach side, in a certain part of town. This was a tough criteria to meet, in the 6 months we searched there were only 2 properties that came close to their criteria. 

In 2017 I relocated out of market. I gave them a referral to another agent in the area (didn't even ask for a referral fee because I honestly thought it was a pipe dream what they were looking for.) A month later, they bought a house for 1.5 million from her. That house had been on the market the entire time we were searching, and I never showed it because I obviously thought it was waaaay out of their price range.

The point is, I should have reworked their criteria when it became apparent they weren't going to find what they wanted at their price range. It sounds like that's what your agent tried to do at least on some level. But your agent should always be responsive to your calls/emails.

Here's the truthL you wouldn't be asking this question if you were working with a quality realtor. I run comps for my investors before they buy, I analyze the deal in every direction and help them figure out their ARV. I don't just look at what's sold, but I look at what is active and pending as well. I know the angle we're going to work to market the home on resale and stay engaged through their entire renovation.

I've done deals out of market where I don't have access to the local MLS. In these cases I use sites like Zillow and Realtor.com as a starting point to find out what has sold, double check against the county assessors office, and put together a basic CMA. But I always team up with a local agent for the actual listing, and there are always comps in their MLS that I don't find on Zillow, Realtor.com, etc.

Does anyone in here focus on flipping larger/luxury homes in Pinellas? I have a few questions and I have something that might be worth taking a look at. Shoot me a DM.

The whole interior of the house was redone after the storm. New hardwood floors on the first floor, laminate upstairs. New bathrooms, plumbing, hot water/boiler combo, new electrical, etc. It does need a new kitchen as the appliances were pulled out. 

Really it all just depends on what you want to build there, if you want to extend the existing home, etc. 

Off market opportunity here. House needs to be lifted within 2 years. Current owner had to pull out of the rehab, looking for an investor to take it over. Will include plans for 3,000 sq ft finished home. 

Highly desirable neighborhood on South Shore of Nassau County. Large bulkhead and 6 boat slips included with property.

Call Steve 516-343-0052

Hey Guys,

I'm a Realtor based on Long Island and I have a good amount of experience working on homes affected by Hurricane Sandy. There seems to be a lot of confusion for investors regarding these properties, so I thought I'd try to help out with some information.

After the storm, in which thousands of homes along NY's shorelines were affected, a number of strategies were taken to rebuild. Many homeowners repaired their own homes with money from insurance settlements, or with their own money. In other cases, contractors completed repairs for the homeowners but were never paid. 

In many of these cases, the homeowners participated in the NYS Acquisition for Redevelopment utilizing funds appropriated by both NYS and FEMA. Through this plan, NYS paid homeowners the full pre-storm value of their home, allowing them to move on with their lives. The state then took control of these properties and auctioned them off at a significant discount. The only caveat being that the houses needed to comply with FEMA Elevation Restrictions within 3 years, otherwise control of these properties would revert back to NYS. This was done through a Reversionary Instrument placed on the deed to the homes.

Many of the investors who purchased these properties, especially at the early auctions in May and November of 2015, received incredible deals. I've seen houses that the state paid over 700k for sell for 150k. And these aren't homes that are gutted shells. Many of them are in excellent condition. Unfortunately, in order to receive a CO on these properties they need to be lifted. Quite often I see the original investors selling these houses off rather than complete the work themselves. 

So the trend throughout the shoreline, particularly the south shore of Long Island, is to jack these houses up in the air, and build a new, higher foundation below them. There are a number of construction standards that must be met, but once the house is raised the reversionary instrument goes away. The investor can then sell the home. The best part is, once the houses are raised above the FEMA flood levels, the flood insurance rates plummet, making the houses far more valuable.

I hope some of you thinking of investing on Long Island find this information useful. If you have any questions, feel free to contact me here on Bigger Pockets.

Steve

Hey Guys,

Steve Dispensa here, I'm a Realtor with Spec International Realty in NY. I just thought I'd share with you something that I've found has really helped me to find both buyers and tenants for properties I've listed for sale and rent.

A little background: I worked for years as a filmmaker before getting into Real Estate. I owned my own production company and specialized in creating commercials and branding videos for small to medium sized businesses. One of my clients happened to be a Real Estate Agent working in Ireland, and so every summer I would go over and film houses he was listing. I created narrated video tours along with high end photos for his listings and it was really helping him to sell.

I wound up getting approached by a real estate company here in NY to do the same thing for them. And through a series of fortunate events got my license as well. Now for all my listings I create these films. You can check out one here:

https://youtu.be/k81MiNMi1Po

It really helps to sell the house for a number of reasons. The combination of the music and camera work are designed to elicit an emotional response from the viewer, giving them a connection to the home before they even set foot inside. The narration is designed to highlight the important features of the home the same as I would do if I was showing the house in person.

What's great about this is it helps to keep the house fresh in people's minds. While hosting an open house, I collect emails from everyone that comes through. That night they get an email from me with the video embedded in it, reminding them of the incredible home they just saw. It's also great because sometimes you have one half of a couple out to see a house. They then need to set up a separate showing for their spouse to see it. Having the video ready allows their spouse to see it instantaneously, while they're still excited about it.

I've found it's even a great tool for leasing properties. I had a landlord trying to rent out a luxury apartment that was priced rather high for the area. It hit the market in February, in a beach community. Needless to say he had no action on the apartment. My video not only helped find a tenant for the apartment, I was able to use it to rent out the identical unit next door 3 months before it hit the market.

Anyway, if anyone has any questions about how this works, please feel free to give me a ring. I'd also love to help any developers or landlords in the NY area looking for a Realtor who can help get their properties out to the widest possible audience. I also have a separate company where I offer these media services to other Realtors and Homeowners.

Feel free to contact me anytime.

Steve Dispensa

Spec International Realty

Virtual Vision Media

516-343-0052

[email protected]

Barry,

I'm a lifelong New Yorker. My family has roots in Brooklyn. My grandfather was a landlord there from the late 1950s until the early 2000. He held a large portfolio of multifamily properties throughout Greenpoint and Williamsburg. Although he did quite well for himself, I'd say the value simply isn't there now for someone getting started. Prices are exorbitantly high. The city is becoming more difficult to work with to get new development pushed through (thanks DiBlasio) and the rental market that a lot of this pricing is based off of will prove unsustainable if we hit another economic decline. 

That said, you may still find some value in Bed Stuy or Flatbush. Location wise, neither is the best but things are pushing further and further out.  Brownsville and East New York are still far too unstable to invest in. I like Bay Ridge but the prices have risen dramatically and it's still a long commute into Manhattan. 

Frankly, I don't understand why people are so obsessed with living inside the city limits. I live on Long Island and have fast access to the city, far more affordable cost of living, and plenty of options for nightlife/entertainment. On top of that, I can get to the west side of Manhattan faster from Mineola than I can from 2nd Ave.