All Forum Posts by: Stephen Stokes

@Anna Marie Holland as @Matt Stricklen said, unfortunately the Austin REIA has been taken over by a husband and wife " real estate guru" salesman named Phill and Shenoah Grove. The fee is not $100 it is actually $10k+ just to get in and $50k if you actually want access the Phill and Shenoah otherwise you get will get pushed to one of their "trainers". They brand their program as the "big dogs" and are mostly pushing folks to focus on areas outside Austin like San Antonio, Dallas and Houston. Really does not make sense at all for them to be allowed to run the Austin REIA but I am guessing the folks at the national level look the other way to this because they bring in fresh money.

I understand that this is usually not the case and most REIA's are wonderful. It actually pains me to know that this continues and wish we could somehow overthrow their rein on the Austin REIA.

I for one choose to attend some of the smaller format and free meetups. Dan Castro runs another group called “investor underground” which started as a Facebook page. Their group also has costs associated for the meetings but is probably a better place to look if you want a paid experience. I personally do not have any experience with them so cannot comment to the value but know others have said good things.

@Jesthen Baez let’s connect

As we have all been very aware, lumber prices have been on a tare higher since bottoming out in April 2020. This has been impacting everything from new construction, to rehab projects and even quoted as being justification for some of the crazy bidding wars for existing homes. I am happy to report, per the chart below, near term lumber futures (1 month out) have finally hit pre-covid levels and we should really start to be putting pressure on our suppliers be it HomeDepot, Lowes, BMC, or any other local supplier you source from. 

I chose to use HomeDepot because this is probably the most widely used supplier and holds a very large market share nationally. One caveat in the below analysis being that if your supplier is too small to procure a full futures contract they may be buying from a wholesaler so pricing will be higher. A full futures contract is 110k ft board which equates to ~$14k 8ft 2x4's. Regardless, it will take pressure to get them to move away as it has become very lucrative business as pricing expanded dramatically over the last year. There will also be many small supplier that will get stuck with expensive inventory they cannot recoup investments on especially if they run LIFO vs. FIFO accounting and are unwilling to quickly reduce pricing to match moves in the broader market. As we learned in accounting, the tradeoffs are just that, FIFO is great for deflationary periods but terrible for inflationary periods. FASB allows for a choice of either but it is very difficult for public companies to change from FIFO to LIFO or LIFO to FIFO. Doing your research on your particular supplier to know their accounting practices will help to understand where they will and won't be flexible. 

Based on these prices, in one moth you can expect 1,000 ft board to cost your suppliers $536 which equates to a wholesale price for an 8 ft 2x4 costing them $4.28 each. Using a reasonable market observed margin of 20% (some are lower/higher), you can expect to see retail price of $5.13 each. For comparison, HomeDepot in my area is currently selling an 8 ft 2x4 for $6.48. This means we can expect costs for lumber materials across the board (no pun intended) to drop by about 20% in the next few months, maybe slightly longer depending on the inventory turnover ratio of your particular supplier. Currently HomeDepot shows to have a 65 day inventory turnover ratio. 

@Tim Wang there are always ways to take shortcuts but if you have problems later on you will pay way more than what you saved.

@Aaron Ingram did they provide you a breakdown of each aspect? If not just request line item pricing and also what is being done in house vs. outsourced. You may be correct on engineering but good to ask that of your architect and get it in writing.

@David Ivy wooooah that second chart is scarrrrrry! 

@Aaron Ingram What is the scope of the services included? Does that include custom architectural design and stamping, engineering services and permitting? Did they provide a breakdown of each service? If that is just for the design or design and stamping than seems quite high.  

@Kenneth Quattrocchi same question was posted here

https://www.biggerpockets.com/topics/969529

@Christopher Alan Rush to find a good deal for you you need to look for a way that you can help a seller in ways that others (your competition) is unwilling or unable. For example, I am working to help pro-foreclosure situation to avoid foreclosure and complete a short sale when they are deeply under water (yes this exists and is quite prevalent in many fha home buyers still to this day). Remember that houses require a lot of upkeep as they actually depreciate and If not properly maintained many properties can be worth less even with land values increasing significantly. Small banks still make mistakes and over lend to investors and even retail home owners. The big guys are and have been pretty tight for past several years so those loans are usually right side up. People still fall behind on taxes every day and that can cause negative equity situations as well and can be found if the state you are looking into has public tax lien certificates or even just posts the delinquent properties online. Additionally, some sellers just prefer not to work with real estate agents and want to avoid commissions, don’t like working with big firms and want to do business with local buyers. Whatever the situation, you are likely looking for difficult situations where you can actually help solve a problem if you want to find good deals in this market. Whenever I am not able to create a win-win I know it is not a good deal. Looking at the mls listed properties in a everything bubble economy like we have right now is not going to do you justice in the long term. The alternative is that you sit on the sidelines and wait for the winds to shift in favor of buyers but timing the market can be a difficult task as patience is a virtue that many of us do not have the luxury. Look for ways that you yourself can add value in ways your competition is not and you will find that your investing will not only be profitable but also rewarding to yourself and to the community as a whole.

Pricing is going to be almost all the same everywhere you go because title policy rates are set by the state government. However, there could be small fee differences such as remote notary cost and a few other small fees that are actually negligible. Also, you will receive a discounted rate on the policy itself if you have closed a title policy recently with that same title company so that is another consideration. Other than price, my main care about is the closer which handles the paperwork, communicates with you and the lender, and handles coordinating the closing. I personally look for good responsiveness and those that have a get S**** done attitude. If you run into a slow or lazy closer, you could be impacted on timing of closing which could risk a rate lock expiration. Hope that helps.

@Aaron Gordy condos also have not seen the rapid increase in value that SFR and MFR have so they remain reasonably priced. Cash flow hit- this is an interesting topic because I would argue that most do not really factor in true costs into cash flow such as capex for a new roof.