All Forum Posts by: Toby Munk

I always think that the deal I am on is the ultimate and that there will never again be a deal this good. I am slowly learning to relax. There will always be another great deal.

I think over the next 2 years cash is king and being liquid will offer you opportunities that will not be around again in your life time.

I would hold off on that dream house and invest in other great deals with income.

I have looked into Homes Discovered. They just did not have the high end leads that I need.

They create a custom website and funnel leads through their 1000's of capture sites. My understanding was that they give exclusive territories.

I think a industry norm is more like $25 per lead. Absolutely makes sense in a high end market like mine here in Aspen. Another factor is conversion. The rate from lead to closing is said to be about 3%. So it takes 30 lead for a closing. That is $750 or so. Depends on your market if that makes sense or not.

The high end second home market is somewhat shielded from the trouble. People always had to put more down (20%) and people that are in the second home market are at least moderately successful to even be thinking about a vacation property.

I think in a moderate economic down turn, the wealthy will actually diversify out of stocks and into real estate, into markets where they feel their money is safe.

Here is the tricky issue. People that look for real estate in a certain area are either in that area or look for websites featuring listings from that area.

The real estate websites are all powered by their respective Board of Realtors MLS feeds.

So even if you have website ranking first for a competitive search term (Aspen Real Estate, if your property was in Aspen) you would still miss out on the 100's of website from local real estate agents that could feature your listings.

If the project is big enough it could work to just focus on web advertising with pay-per-clicks on the major search engines. Otherwise seeking the help of a real estate agent might not be the worst of things.

Just make sure you are clear what you are getting in return for your commission. Marketing package, website etc etc

I am a real estate agent in Aspen, Colorado. We have a pronounced shortage of good construction workers in the area. We are also competing for un-skilled workers now finding well paying jobs in the gas fields about 1 1/2 hours away from Aspen. It cost between $500-$700 per sqft to build in Aspen. This will be high-end but by no means top-end quality.

Sounds high? Well not if you consider retail residential starts at $1,500/sqft in the Aspen Central Core.

If you are thinking about getting into the market bring a stack of check books. Land starts at $3m for residential lots.

Hope this adds to the picture

I have thought about seller financing. The listing agent stated that the owner carries a mortgage of about $2.5M on the property. He might we willing to hold a g and note for the balance but would need to redeem the first mortgage to make the deal work.

On your market analysis at the end. The property is on the market for $1150 or so per/sqft. New built like those are selling for $1000/sqft in the current market. I would be payig $880//sqft. So it is a discount of 12% to market price. I have to invest about $25/sqft to make the house more appealing and change a couple of things.

I was thinking about offering to rent with a delayed closing (lets say 24 months).I am positive that I can raise the 20% until then. I am real estate rich and cash poor...haha. Can’t pull the money out of existing properties for various reasons. Yes I would be putting my head on the line. I cannot talk to the owner directly and he just sais he wants to sell. The lease option did not fly as the owner thinks that property prices are going up and he might be able to get a price closer to his asking price over the next 2 year where I would hold the option at today's market price -12%.

The only option I see is to offer to rent with a hard closing in 24 months.

Any ideas are appreciated.

Hi all,

here the situation. As I am an Aspen Realtor looking to buy a home for my family in Aspen I came accross this deal.

Property offered at $4.4m about 4000 sqft. That is a normal price. Just above $1k/sqft. The oener has indicated to me that he would sell for as low as $3.5M the property is also for rent at $9000/mth.

So I offered him a lease option deal...as it would be much better to pay the rent then the mortgage on the $3.5M ($3.5M x 5.5% = $16k/mth)
I offered to rent for 2 years and to buy in 2 years or pay $50k penalty if I did not buy then.

He would not entertain that offer he wants to sell now. I don't have the cash to pay 20% down.

Can anybody come up with a different offer that I can put infront of this guy? I have thought of owner carry for 3 year, but might not be all that interesting for him. By that time it would apprais for much more and I could finance with no money down.

ANY SUGGESTIONS???

Since nobody has replied since October I am not sure how far along you are.

Here a couple of thoughts

1) The NY times writing something is a very general statement. Real Estate markets are much more local. One market can be hot and 100 miles away its a buyer's market.

2) In my oppinion it is much easier to make money on fixing and flipping. If you know how to use some tools and a paint brush you can do a lot of the things yourself = cheap labour.. haha

3) Your question implies that you might not have that much investment experience. If you can not stand to loose some money you should not be geting into building spec homes.

4) As you seem to have no track record it will be tough to figure the total cost of a project... hence you will not know what your profit margin would be and what your downside could be if the market turned on you.

The beaty of flipping is that once the place is renovated you can rent or sell. Rent with positive cash flow or sell for a profit. Either way you can move to the next project and so on.....

These just my 5 cent.

Ok here some advice I learned the hard way. I was moving to Houston and needed a house to live in. The Woodlands, which is north of Houston seemed like a nice place and it still is. Coming from Europe I was not used to these subdivision builders. So I look at a few houses and decide to buy from one builder. The house was under construction already and the move in date was exactly when I needed to move there. OK so far so good.

This was one of the last houses to be built in that sub, so no more building noise etc...

Here is what happened after 2 years when I needed to sell.

1) The builder had relocated to a subdivision close by and was still manufacturing the same style house and floor plan I had bought
2) There were only a total of 3 different types of houses on my street
3) For some reason and I think because the community was not organically grown there were 20 homes on the market, so I was competing with 7 other identical homes. Yes, there were minor differences but basically the same.
4) The builder was undercutting his own product. He sold new construction with greater incentives than wat he sold me my house just 2 years ago.

Here is what I think:

1) I will never buy another property where I will be competing soly on price when it comes to selling. With custom-built homes there is ever only one home of that style. If a potential buyer likes your home he cannot just play you off against the guy down the street that owns the same type of home. He likes and wants your home he has to negotiate with you and can't play 7 other owners against each other.

2) Expect large turnover in not organically grown communities. Here is what I think is going on. Somebody builds a subdivision. To fill all the houses with families it takes families that are mobile, otherwise they would not move in the first place. The fact that there are mobile families moving into this brand new subdivision will almost guaranty a high turnover in the future. After all they are mobile and will likely stay that way. That means a lot of competition for the same buyer in the future = lower sales price

3) With a custom home the market determines your sales price. With a cookie cutter home it is not only the market but also the developer. He has a certain profit margin built into his product. For whatever reason (he lost money in Vegas, he is a bad business man) he can find himself in a position to be forced to reduce the prices of his product. So not only the real estate market determines your sales price but a completely new kind of influence that you have again no control over. The developer. As long as he is still manufacturing the same style of house in your area you are exposed to factors that influence the developers pricing strategy. And you will have to compete with him when it comes to sell your house.

So I learned my lesson, cost me $20k and I think it was better that I learned that lesson early on.

By the way I am now a realtor/investor in Aspen Colorado.

Started in Real Estate on a professional basis about 6 months ago. Aspen real estate is hot, unfortunately as I still need to by a home there in the near future. And I think we have not seen anything yet.

Real estate in Aspen is under priced.....WHAT? Yes, compared to other markets the per sqft prices are not as extreme as they once were. Aspen has long been the pinnacle of real estate value. Now it is trailing prices in towns like Vail, Beaver Creek, even New York real estate can make Aspen properties look inexpensive. Anyway... from an investor stand point I can't wait to get into the market.

I consider myself relatively web savvy. So the first thing I did get a website out there with streaming video and virtual tours. I have produced a 30-minute TV program that was shown on the local Aspen channel. I provide it as a HD video stream on my website. If you have a Mac with QT7 you can view it is 960x540 resolution, which is better than TV resolution. On windows the size is a little smaller but still HD.

In any case, in a February 2006 I will have a link exchange function on my site that offers other real estate related companies to put full-page information on my site. If you are interested in real links not just a big list that nobody is interested in, come visit my site then.