All Forum Posts by: Tyson Taylor

Briefly/bluntly, $15k down on a $1M deal sounds super shady, proceed with great caution.

@Jonathan Twombly,

What other form of investing lets you contribute 5% of an asset's value, but let's you keep 100% of the increase in equity? Even after you graduate to 20% down/investment property financing, $100k buys you a $500k asset, if it improves 3%, you just made 15% on your cash in appreciation alone. If it's a decent property operating at a 7% cap you could probably take another $5-8k a year in cashflow which push returns on investment into the low 20% range....and that's on a pretty marginal property.

Next year I'm selling off the rest of my personally-held stocks, the only thing left in that market will be my employer funded 401k.  At that point I should have everything working for me in real estate. 

My hopes and dreams? To own a nice portfolio and keep the Debt/Equity around 1:1.  

@Devin Scott,

I have 3 properties, they all have their own bank accounts, it makes the accounting much easier for me.  I try to make sure all transactions for a specific property run through that account, then it's easy to track. 

@Ron Singh,

I'm a little unclear as to what you're looking at. Do you have copies of documents recorded against a property and need them reviewed? Or you haven't had any title search done and you're wanting to do that yourself? 

I've done lots of title work, some of it's easy, some is a major pain, I'm happy to take a look and give you my $.02

Keep in mind that most counties only have recent docs online. I've worked in some where if it was more than 10 years old you'd need to head back into the books and start reading indexes.

@Anson Young, 

It's always nice to be proven wrong with real data. 

@John Baker,

It appears the deals are out there if you know where to look...

@John Baker,

You are in a tough market with many established players that cut their teeth when deals were everywhere. The wholesalers I've talked to are all having a difficult time finding deals, and when they do they're like 80-85%, which makes it (IMO) too risky for a savvy investor.  

Denver rents are so high, vacancies are low and home prices are going up.  The economy is just booming, unemployment is low, basically, the opposite of the "buy when there's blood in the streets" mantra. 

Right now I feel like brokers will do fine, properties are trading at high prices and frequently. Maybe it's the right time to get that broker's license and cut your teeth there?

Also, I'm happy to be proven wrong here- someone bring me a 70-75% wholesale deal in Denver and it would get done before the ink is dry on the contract.

@Lesley Govan,

 I Googled it: CT - shingle disposal

Basically, call a roofer and ask. It looks like CT has an asphalt roof shingle recycling program, but they probably don't want asbestos shingles getting mixed into that. I'd imagine worst case scenario is a higher than normal disposal fee.  

@Lesley Govan, 

Old houses are in some great neighborhoods, I think you'd miss out on good opportunities excluding them.  Here's a link to CPSC sheet about asbestos. Shingles and siding are really not a big deal, asbestos becomes an issue when particles are released into the air and you inhale them...say for example if you were sanding floor tiles or cutting an old insulated duct with a sawzall. 

I've seen lots of 100 year old houses out here in Denver, every one I've seen that hadn't been completely remodeled in the last 20 years had asbestos something in it.  Being so prevalent, you'd think everyone who lived in a house in an old neighborhood would have died from asbestosis by now...I'll leave you to your own conclusions.  

Good luck.  

@Patrick RoweThat does not include commission, it's a very very rough number- I just rounded up from $2500/lot, please get a quick estimate from someone out there who knows more than me.

 We very rarely paid realtor commissions, everyone at the table on these deals shouldn't need one anyway. 

No idea about the final plat. To get that you'll have to have built all the roads, sidewalks, infrastructure, etc. basically, you have to have built everything you showed on the preliminary plat, then you can sell lots to builders.

At a glance, the numbers do not seem out of whack anywhere, it's a deal worth chasing if you're up for it.

also, tip about the forum (I just learned also) type in '@?' and a list of folks that have commented on the thread comes up at the bottom, click on who you want to reference and it'll insert the highlighted name and notify them that you're talking about them. Just typing it doesn't seem to work..

Good luck.

@Patrick Rowe, I don't have any software, though the ballpark we used was that the developed lot cost should be 20% of the finished product cost, so you're right on the money there.  Soft costs are harder to estimate without knowing the local conditions, if I had to pull a number out of the air I'd plan on spending at least $250k.  There are lots of things to get done:

-surveying

-environmental 

-traffic

-stormwater engineering

-landscape architecture

-utilities

-legal

The preliminary plat will probably be the most expensive pieces of paper you'll ever hold.

You should ask your engineer if they, or someone they work with,  handle the entitlement process.  Many firms will handle it from start to finish and could give you and estimate per acre/per lot.

I found the Baton Rouge P&Z website and had a look at their process, it's pretty similar to what I've done out here.  Here's your checklist for a Preliminary Plat: Prelim Plat and the Tradtional Neighborhood Development Guidelines: TND, which you may have to do in addition to that. 

The biggest factor in your soft cost will probably be time. Plan on having your application returned for revisions 2 or 3 times, it usually took us a minimum of 6 months work to get finally get into the public hearing queue. Subdivision plats generally take about a year to get through the process, though I've seen some take way longer.

In many of these deals we didn't take down the land until the entitlements were done. Basic argument was, "look, we're putting $2.5M into your property, you get everything we've spent if we walk away so let's close this when it's platted".

No one ever does it, but I recommend sitting in on a few P&Z committee hearings before it's your turn, just so you know what you're in for.