All Forum Posts by: Steve Milford

@Whitney Breedlove

Go for part-time imo, and then if you REALLY love it go full-time. Keep day job and reduce hours os the way yo go!

Personally, I hate leases. It's from being a renter for 10+ years, so I am MTM asap and only if renter requests a lease in first place. Initially, re raising rent, I felt bad for people from their stories, then my costs went up AND I had a few conversations with renters about how their budget was so tight. I don't initiate those conversations, but I hear why rent is high but then they tell me their cable is $300 because they subscribe to all the options, or they have little to no savings. etc. I can't control if they are bad with money, but I can control what I charge for rent. Now I raise rent $50-$100 mimimum every year. I verbally tell them it is coming up in 90 days, and then send them their letter. I bring it up when I am asking about maintenance. Now, they ask me, "Isn't this about the time we talk about a rent increase?" Lol, yep! Lesson learned, train them to your expectations. My area requires 60 days notice, but I like 90, because if they need to figure out new options, they can.

The simple answer is, unless this is a primary home, no lending is available because it is not within Fannie Mae guidelines. Google "Fannie Mae Matrix" and you will see it in black and white.

Hey Patty, I can coach you, feel free to reach out. I am licensed OR & WA, and call Vancouver home.

Like others have said, as you learn you will just want to start "doing it". Lol, it sounds funny to say that.
The biggest mindsets I see that are beneficial, 1) Be very organized and efficient, cut the busy-work. 2) Don't be afraid of the "No". 3) Be self-motivated. 4) There is no prescribed way, just work at what feels best for you. 

You will hear from lots of naysayers, just ignore them, they are just another "No." Lol

@James Hamilton

I'd prefer to learn in my backyard first. Far away problens are still problems after the sale.

FSBOs Sellers are a mixed bag. I work with a lot of them and I have to say most are quite unreasonable because they believe the kool-aid that media spits out to grab eyeballs; few look at raw data. Plus many times I find that they don't read the contract they are signing or make assumptions by what they read after searching on Google.

Is it possible to find a reasonable FSBO seller? Sure, but it just hasn't been my experience.

I.e. Most FSBO sellers see the list price as the "true sales price", versus realizing that most of the time it is the price agreed that paid for all fees, NOT the value of the home. And most are pretty firm on price. I looked in an area near me, took all of 15 mins. The avr 3 bed / 2 bath / 1,900 sqr ft home is actually selling for 10% less list price in my area that I searched. One of those homes sold, one was a FSBO, yet it was a renter that bought the home from their landlord after 5 years of on-time payments. Every other contract, each party had an agent. And all non-FSBO homes sold with seller-prepaids and closing cost concessions averaging $10k or 2.5%. Since all other transactions had agents and buyer closing costs were paid, the true net to the seller was 7.9% less (incl commissions) than list prices avr $475k = $437,475. If I was an unrepresented buyer buying from a FSBO seller, if home was $475k I would offer 12.9% less list to account for lack of realtor fees too, not counting potential repairs. $475,000-12.9% = offer of $413,725 true net to seller. But getting to that number is rarely a straight line. Imo, a good negotiator is what most people need, even if they save you less. A savings of something is better than nothing. Good luck.

@Christopher Pearson

I'll coach you.

First read this:

My reco is that you go get your license, hang your hat under an experienced agent. Your supervising agent gets paid also. Your gumption to find deals and getting paid gross commission, which they take a cut of, is the win for them. You will also be on a different playing field than the avr investor. You just need to work with someone you identify with; interview a lot. Many brokers will want to work with you if you reach out to them first.

Want to be better? Keep asking "What if..." and trying new tactics.

I've found that most people want a how-to with processes, not a coach. A coach will push you to learn and grow to develop your our process similar to a framework and help you deal with rejection while a how-to are the steps without the experience.

I know a guy that bought a house, then went searching for a coaching program to "get rich", to which he paid $8k. Then he started asking me "how-to get leads", "where do I...", and other stuff, so I quoted him my fees to help him build systems. He didn't want that, he wanted actual "leads" lol. He thought calling expireds was the same as having the "coveted" leads. He wasn't getting coached in a process, he was being taught a how-to. Anyone can learn the steps, but actually doing it is entirely a different story. I will teach anyone that asks, but there are costs of time, efforts to build process, tools and LOTs of rejection. I mean a LOT.

At a recent REI meeting I met a burnt-out Realtor of 20+ years. Turns out she hated the commission saga and she recently completed a personal 1031 exchange and felt the Realtor she hired screwed her over. So I suggested she just do consulting... she was like, "You can do that?" It was a totally foreign concept to her. She plops down next to me, hoping for the how-to with processss and asks, "Tell me more..." I responded with "Not hard, just change your pricing model. Ask people for money up-front. If you want me to teach you how to do it, $2,500, 1/2 due when we get started." LMAO. I essentially just told her how to do consulting, but that is not what she wanted. She wanted the systems to get it done and a client. She doesn't even say thanks, just gets up and goes to talk to someone else. She just saved me a ton of grief! Lol.

It kind of feels that way because it isn't very dense. Regarding rentals, just like anywhere else, the numbers have to work out. 

I bought my last home after shopping 7 lenders. Yes I had a few point hits, but the lender I finally found was golden. Pros and cons.

Like others have said, don't pile good money on top of bad. Maintain your walk-away factor. If Realtor is not fighting for that as well, then you might need to walk away from them too if this doesn't work out. Education can be costly. I suspect your rate lock is going to expire and you might not get financing. That is the easiest answer. But you also state that "there is no other option", which means that the Seller can take their sweet time, they have you by a hook. I would expect that your occupancy permit contingency has a time limit on it... Listen to the lender answers here. 

It is doable, but here is my caution. 

I have had listings where the seller has asked contractors / friends what they think, will their home sell? The answer always is "Yes, I would buy it. That seems like a no-brainer." The problem is that person usually is NOT a real buyer. It all sells eventually if parties are willing, just often not at the initial price. I don't know about your market - but there are so few buyers in my market, great homes are just sitting, even at lower price points, and we are still faring fairly well compared to the national average. 

Considering BAC, you should go find an agent that will actually do both ends of the deal - they are few and far between - those willing to be the only agent with a FSBO. Even with myself included, in my metro area (the whole Portland - Vancouver area) I have only see two handful of other agents / brokerages willing perform that. When dual agency gets created your Realtor turns into a facilitator and a messenger since negotiation as a service is lost per state rules (your state might be different). It cracks me up EVERY time whenever a person tells me they are planning to only use one agent. I save my clients MORE than my fee. I always think, "Dodged a bullet there, cause they just told me they are smarter than me, lol.

FSBO with BAC is doable, but it is not for the feint of heart. I am straight up with my Buyers, when I tell them that the state requires me NOT to provide negotiation as a service in a FSBO scenario, many tell me they want my expertise, and that is what they are paying for. I have also found that many FSBO sellers have unrealistic expectations and don't have the experience of the industry to know what is the norm. And that works against them just to save a few bucks initially.

I have listed good homes that sit as FSBO 3-4x market average that sell quickly once listed and there are two agents in the deal. I would recommend looking at an agent like a paid friend where you should be willing to accept the truth from (that is why not every agent is for every person) who has access to marketing tools and negotiation experience. Maybe hire an attorney to help you instead, at least you can get negotiation experience.

Lol, last year I had buyers who put an offer onto a FSBO, where the seller verbally said he would fix items from the inspection though he was unwilling to put that on paper. Well you know where this deal went? Into the toilet. He was calling me every month for three months after asking why it failed. I gave him the same response every time, "You were unwilling to put it into writing the items you verbally said you would repair. So they buyers went and bought elsewhere." The back-end is that he kept agreeing to fix things, verbally, because he wanted to be done with the property, but then would go talk with his wife and she would beat him up. These weren't outlandish requests.

I had another I listed, where three offers came without an agent, back-to-back, so dual agency got created in these scenarios as well. In all three, when the deals failed after defects were found that the seller was unwilling to pay for, the seller kept asking me why he didn't get to keep the earnest money even though I explained it AND it was in the contract. Imagine having the same exact conversation three times, lol. Here is another chuckle, when I listed this property, I said, "Ok, this price is a good starting point. Just be aware, if we get an offer and defects are found, the price usually goes down." So we get an offer, and the seller counter offers at a higher price than the list price. His reasoning was that he would raise the price after getting an offer to deflect defect costs, as this was a "starting point". The buyers actually agreed, but then it did eventually fail because of defects. Property finally sold but at 65% of the list price from all the defects found along the way from other contracts.

The most recent buyer I represented with a represented flipper, they got the home for 82% of list price. Negotiations!!!! I always maintain the walk-away factor.

Looking at the scenario, is your down payment correct? You can only have one primary residence. Is your wife comfortable with it being a construction zone? 5% down is a personal residence. The lowest I have seen with an investor loan is 10%. Also if it if personal, remember you only get the personal exemption once every 2 years +/-. Since you are buying another house, are your numbers right?

Here is my reco - buy the home with the worst case that you get stuck with it for a year. And if you can get out from underneath it sooner - BONUS! Be sure to include utility costs and insurance costs too. New appliances seems low too. PMI prepayment cost? Closing cost is appropriate imo. I am usually cautious whenever I see 00s in projections. GO find the actual numbers.

And then compare that against how you can use the money in other ways. Essentially, you are buying something for $46,000 to sell it at $69,000. Then take capital gains out b/c it is short term gain, so you lose $4,600, with a gain of $18,400. $46,000 + $4,600 = $50,600 true cost in your scenario, or $18,400 in profit. If it goes south, you are underwater in 12 months just from the mortgage payment, since the first mortgage payment usually comes 45 days after the loan is closed.

That is a good enough return according to my standards but with it comes a LOT of work, and my wife would probably kill me just from the stress of it and all the other projects going on. Then I gauge this against other income streams, and in that case it is just not worth the stress for the money. The biggest problem really is that I don't trust those numbers.  

Good luck!