All Forum Posts by: Steve Milford

@Cody Furry

Ok, there are a few issues here to unpack.

1) In the Realtor contract there are probably damages owed to Realtor if you don't terminate the contract in a particular fashion.

2) Do you understand that in the seller financing component, YOU are the bank, so they are financing the other $30k with you assuming that they assume the VA loan. So you are telling me you are willing to take the chance that this person you met off the internet is going to give you $20,000 and promises to give you a balloon payment in 3 years. Now they can assume your loan, but this doesn't give you your entitlement back until the lien is no longer backed by VA. Now let's say this all works out initially. What happens if they default? You have to foreclose, which could take a year.

Just a thought or two.

Yes you can. Most of my initial meetings and conversations happen after 4pm and on the weekend. It is a mindset, where do you spend your time? Rather than spend an hour doing something that others consider fun, I spend it on prospecting and educating myself, to me that is fun. Like others have said, scheduling is the hardest component. 

Something to consider, just keep raising the rent within the confines of the rental code and see how it plays out. You know you want out of Portland, so when the unit turns, sell it. When that happens, I have a service that helps sellers maximize their returns. You can decide what to do, but with relocation fees what they are - it doesn't make sense to offer it for sale, on the hope that it sells, with the current mortgage rates. 

It sounds to me that you let the rent stagnate for whatever reason - to be nice, to not create problems/conflict, whatever. Your letter to them doesn't ask, "is it ok if I raise rent?" You relay, "The rent is raised to XYZ on March 1st, 2024, thanks for your cooperation." 91+ days from now. Stop worrying about the "rent for the area". As you implied, if it was vacant you would sell it as there would be no relocation fee. Just keep raising rent each year. If they don't like it they can always move voluntarily. Tenants move when the rent gets higher than the hassle of moving across the street.

Rent-control is perverse - it forces landlords to keep raising rent in fear of something happening where they must use all their reserves. Personally, I am not a fan of property managers. Not saying that I like conflict, but I work it through, but I don't see a need to hire a property manager to make 10% off me to be a messenger. Now if I had 10 properties, that might be different. Being a landlord is about business perspective imo - too many landlords put emotion into it. If you don't like it now, you probably aren't going to like it elsewhere. It's a business, sometimes there are costs of time and money. Last week I was visiting the neighbors of a tenant asking for consideration of parking. Yes, I had better things to do, but it is what it is.

Just be aware, that your estimates may not match their estimates. It all depends on how much you want the house. If you offer your list and want a reduced price to $230, if it was my seller, I would just advise them to either 1) let this one fail, and see what the next buyer offers, or 2) let this one fail, and then lower the list price to say $275k and change it to as-is so the whole world can take a crack at it and let it play out. 3) take it an run to closing as fast as possible. You might be getting a steal at $250k, and they just want to be done with the house. Again, it comes down to your walk-away factor. Every home gets "inspector-ized" in some fashion and then it is contractor against a contractor. I have seen offers to remedy roofs for $20k from buyers whereby the seller finds a lender-approved solution for $1,500.

That being said, the seller also has a walk-away factor. You think the seller might counter with a $240, but that is a guess at best. I have represented many sellers where the buyers conduct all sorts of inspections on the house they want, in an effort to build a case for lowering the price. Then after the buyer presents their list the seller says no to all of it. Just because you spin your wheels looking for ways to lower the price doesn't mean the seller will go with it. A lot of this also depends on the Realtors negotiating as well. If you are within your inspection contingency, then spend all the time you want inspecting it. I've seen it where one buyer makes a fuss about a roof, so the deal fails, and the next buyer says the roof is acceptable. One thing that I have found that holds true across the board, the longer a buyer is in contract, the more they want the house, even if there are major defects. I had a recent seller who agreed to reductions only if they closed by a certain date, and any delay was a $1,000 reduction of closing cost assistance per day. Most everyone knows there are delays, well the Seller was able to get back some of their closing cost assistance money; the buyer was really scrambling.

What is the point of all of this? Don't get too greedy in my opinion - it might not go in your favor. But if the numbers don't work, don't bother with it. You could always walk away and come back to it if it stays on the market. Flippers and professional rehabbers offer onto lots of homes, and that is why they offer so low. They only need 1 or 2 to stick at any one time.

Always find the money first. No different than car buying, find something you really want, and potentially get suckered into a crappy loan. Agents often want you to get enamored with the house, because if you really want it, you will convince yourself that the money spent is "worth it."

Every investor that lasts has a "buy box" or what they want to buy. Some buy lots, some buy big, some buy small, some buy fixers, and some buy it all lol.

It depends on what result you want. Sometimes we just learn, and sometimes we earn. The amount we earn is often based on how much skin we have in the game. Now the amount you learn is based on time invested. If you want to earn, think about what you can leverage. Some house hack, some flip homes, some perform bird-dogging, some become agents to sell or for property management, some obtain and sell contracts. All different, but all in real estate. To learn, jump both feet in the same, stalk these forums, or shadow someone, or offer a trade of time, etc. Again, lots of possibilities.

My reco is that you become an agent to help you get the inside scoop. You can go see and sniff homes you think would be viable right away, and then "guestimate" what you think they would sell for. After you view 50-100 homes, you will get a feel for what you want, and what kind of offers are appropriate and "out there". Print some cards, go to some meetups, and start making friends. Even if you find someone who wants to do a deal, yet you don't feel comfortable doing it, you can farm it off and still make a few bucks while you learn. 

Imo debt is only good if you can use it to get higher and better leverage elsewhere. And frankly, that is hard to do right now. Some people like many doors, and some like few but with depth. Everyone has their own quirks. The problem I see is that you are looking for guaranteed growth, but real estate investing is also speculative. Who knew COVID was going to shut down the world? But is it more speculative than stock market investing? I know people on BP who sold it all a few years ago and are only in T-bills right now. 

Re gurus, they offer a version of what they did as education. That is really their model. Even Pace admits if you watch enough of his videos. He doesn't do deals himself anymore, he just helps those who have trouble who have paid him $8,000 for his "program". 

Realistically, you already have data from your prior deal. Now evaluate it to make sure you don't make the same mistakes - if you can call them that. I call them learning experiences. That is the mindset - we learn fastest when we fail. Some fail and get stuck. Some fail and move on.

To get started in any of them, you buy something, then rework it for higher value, and sell "it". I.e. You buy a duplex, fix it up for traveling nurses or other corporate people, put it on Airbnb, learn about the fees, and see if it cash flows. Most tell me, in the STR space, many quickly realize it is NOT even close to passive. Maybe you convert to MTR because STR gets banned. Maybe you go for a long-term rental. Everyone is a little different. Heck, I am studying for my MLO license because I want higher knowledge and found I like the numbers side more.

I would say, go buy that next house, and see what kind of rent you will get for the current house. And rinse and repeat. There are so many things that may or may not happen. 

i.e. Some people find that they don't like being landlords. Some people find that they make better income investing in the stock market, or like the liquidity of stocks better. Some people find that tenants can be unreasonable. Some people love it. The possibilities are endless. Many people have similar experiences, but no one's journey is the same.

The biggest issue I see with this plan is that it really only works best when the market is hotter, or there is more demand than there is now.

The answer is...go talk to a lender and find out how much $10,000 costs, your APR, and what your closing costs will be using a TBD property. And then talk to another one. Every lender is a little different with the fees and rates they charge, which also plays into their compensation. Most people look online but don't understand that online rates are usually quoted for someone putting 20% down, with the best rate, paying points, and having the best credit among other items.

The thing is, most people buy from the first <person> they talk with, whether that be a Realtor, lender, insurance agent, contractor, etc.