All Forum Posts by: Steve Theobald

Hi Kristi.   

I applaud you for trying to stretch your cash by going into a lower price range.  The lower price range also increases your exit options.  Perhaps it won't sell and needs to become a rental?  This is much easier at $150k than $250k!

Don't overpay. In Utah right now, the good REO deals have tons of offers and by the time the dust settles, the buyer has usually overpaid. The new investors often do not factor in ALL of the costs, and if they are not careful enough to cancel before their inspection period (Due Diligence) is over, they often end up simply breaking even on the rehab. And after factoring in their own labor, they really are losing. However, if the market continues to go up, and if they are really slow on the rehab, the market could cover their mistake... LOL. But NEVER plan on appreciation on a flip. Just buy right.

How to find them? Find an agent to help or keep searching for an REO website. I just use the MLS, because they are all on there. I will try to set up a link on my website that will pull up all the REO properties. I am sure some other people will have good suggestions. But try Homesteps.com for Freddie Mac homes. HudHomestore.com for HUDS. Homepath.com for Fannie Mae homes.

https://www.biggerpockets.com/blogs/8070/51139-sea...

See my Bigger Pockets blog post for a review of the latest seasonal housing cycle data.  But I am confident the patterns are similar all over the country.  Buy low!

Follow up to my last post.  I got my first deal from knocking doors.  I ended up getting the listing as an agent, but only after I exhausted all possibilities of a cash sale to one of my best investors/partners.  There was no chance of seller financing, and the cash investor price was too low for the sellers.  So I was glad to have my license.   I listed the property on Friday morning, and did an open house on Saturday.  We had a total of 7 showings over the weekend, and then got under contract Sunday afternoon for above list price.  If I had not had my license, then I could not have seamlessly moved into "listing mode."

@Chris Watkins, Someone around here must have an interest rate crystal ball. . . !       30 years is a long time, and I would lean toward the first option.  If you spend $5000 more on the house at the current historical low rates, how do things compare to $5000 less and 0.5% more?  If you are financing the deal at 20% down and that $5000 really means just $1000 extra out of pocket, it seems like jumping in now is a great way to go.  I would say now AND later!  Get that cash flow started right away.  Just don't do it because you "have to have a deal" like I have heard some investors say.

@Chris Watkins, Thanks so much for sharing your struggles.  I am impressed with your persistence and wisdom during Due Diligence as an investor.

I have been fairly candid about a lot of issues on BP.  Your story really hits home, and I will share a bit more than normal.  

For the past 5 years I have made my living as a bird-dog and then agent (4 years) by finding deals for investors. The last 6 months have almost put me out of business because the "deals" have dried up in the strong seller's market. I have started doing some of my own marketing and even doing the dreaded door-knocking (with some success), but I am about 12 months late to the party. I had great success finding the needle in the haystack on the MLS for so long I became complacent perhaps. Last year was actually my best ever with 31 transactions, and I only have 6 so far this year, so I am woefully behind.

This being said, I also think the market is poised for a leveling off, if not a minor adjustment.  This means the deals will soon return!  And perhaps no one has the evidence like I have because I make so many offers.  I am getting more counter-offers on my low-ball offers, so the excellent litmus test tells me that sellers are becoming more willing to negotiate as the buying pressure slows.   And yesterday and just 15 minutes ago both I got agents calling me back on my offers after their deals fell through.  I like to call these "resurrections."  

So I am cautiously optimistic about the market right now.  Don't give up.  These are strange times, for sure, but the persistent will win.  Just stay the course.

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This graph shows the issue very nicely.  We can't keep going down on inventory!  The average over the last two months in Salt Lake County is less than a month of inventory (.92 months).  It must snap back a bit soon:

@Cason Fernelius  welcome to BP.  What great timing you have.  I am an agent in Salt Lake who works mainly with investors, and I just sent out a Tooele city Buy & Hold deal this very afternoon.  Not one on my list (that I know of) lives in Tooele county, so we should probably get better acquainted!   

For sure follow @Account Closed's advice and we can talk whenever.

@Jeffrey S. Breglio

Every seller, buyer, agent and inspector I have ever talked with during my 11 years in Utah has always CLEARLY differentiated between swamp coolers and the central air A/C units. Their story is extremely fishy.

@Jeffrey S. Breglio is an attorney here on BP who also works and invests himself in Utah.  Jeff, what do you say to @Saritha Reddy?

I am in Utah and DHM is in Utah, but they don't lend in Utah.  Why?  Too much scrutiny in their own back yard?  I am not sure.   I don't want to speculate too much.  I have had at least one client who had used them while they were still lending here.  He seemed satisfied.

I had never heard about DHM's $3000 education requirement before.  What a great way to top off the coffers!  (The education that DHM is offering is probably great education.)

Other investors in your area will certainly know who is worth talking to.   

Remember that the HML who has the lowest fees may not have money the next time around and may be a jerk. Find one that is willing to spend some time with you educating if necessary and doing what he can to help you succeed in getting many deals, not just one. And the HML's own opinion of value is golden to you.

@Andy F.  Thanks for your comments.  Why NOT be an agent?  Nicely discussed.  I got my license 4 years ago and I do see the downside as an agent-investor during prospecting.  

I have started to do some door knocking, and I see what you are saying!   So I changed my approach from slacks and a tie and "Hi, I'd like to help you sell and buy" to shorts and casual - but nice - button down shirt and "Hi.  I am Steve.  (Insert some sincere rapport-building compliments or questions here - about their yard or dog or whatever.)  I am a real estate investor.  Do you know anyone on this street who is looking to sell?  How about who NEEDS to sell?  How about someone that you wish would sell and move?"  That last one usually gets them to laugh.  (All of those keep the focus away from themselves and helps them relax, AND it lets me talk to people with NO SOLICITING signs, since I am wanting to BUY for myself).   

Only if they say no to all those do I say "How about you?  Are you looking to buy or sell?"   If everything is negative, then I tell them I am also an agent who also "finds great deals for investors."  And "Are you looking to invest in real estate?"   

I don't hide my agent status, I just don't lead with it now.  I don't want to generate the immediate barrier you discussed.  YES, hunting for deals is harder as an agent, but it seems to be working for me better now.   

Thanks for the mention @Douglas Larson.  Here is an update @Cindy Petersen. Things are still crazy tight in Salt Lake, Davis, and Utah counties, but looser in Tooele and Weber counties. But watch out because some deals are "too good to be true." What is the first thing that happens when I get an offer accepted? Maybe it happens to you too! Perhaps it is the most ironic thing ever, but I get a sick feeling in my stomach and I react with "Oh no, they accepted my offer. I must have overpaid!" LOL. TGTBT means that there is a foundation issue, or mold, or meth, or bad neighbors or something. And while Ogden, in Weber County, has made some great strides recently, it now has at least one officially "blighted" area, and the city is beginning to think about redevelopment. "Slum Lord" took on a new meaning for me in the last month when I encountered the landlord of some units who didn't do much fixin' and did lots of bossing to his tenants while we were there - like he was indeed their lord. Crazy. After looking at lots of higher CCR properties (cash on cash return) we realized that many of these had lots of deferred maintenance or were on bad streets. This investor and I have now changed our focus to look beyond return and consider the long-term desirability of the property. There are so many issues to consider. Stay optimistic and be prudent.