All Forum Posts by: Victor Gomez

Markets are very effective to correct prices both ways - overpriced or underpriced. As everyone is aware we are currently in a sellers market with 2-3 times more buyers than sellers (just my observation, not based on stats), short days one market (often under 7), almost no expireds - why would a seller take 20% less than FMV?

It is still possible to get some discount. Even on MLS. Typically there are circumstances around the property or the seller that will provide an angle. But it's not a deal served on a silver platter, you will have to work for it. Listings with poor pictures are always worth a closer look. Properties with flaws that are less relevant to a renter than a buyer or easy to correct. Combine that with a strong offer, negotiate well and you will pick up a few % below FMV - probably not 20%, but some. The good news is that in a market like we have right now appreciation may help you close the gap in a couple years (as long as you don't get caught at the peak). This is the flip side to a market where you can negotiate 20% you will probably not see much of appreciation. In a way the market is like the wind, much easier to sail with it than up against.

@Victor Gomez The terms of your financing matters, interest rate is less important than terms, everyone only talks about full term fixed (I.E. 30 or 15 year secondary market) that fine if you qualify, have the required reserves, ect. but in the real world or when you have more than 10 mortgages or have your money deployed instead of sitting in a bank account, many of us choose commercial financing (aka in-house or portfolio loans) they are usually lower cost to close, slightly higher interest, and terms of 3-5-or 7 years with amm of 15-25 years depending on the bank. my morgages ar $50K and below each its hard to spend $3500 to close a note for $50K for a 15 year fixed on the secondary market, when it costs me $600-700 to close a commercial loan I dont need the reserves and the income from rent is what qualifies me for the loan. BUT the risk of needing to renew as markets change are real, I never borrow more than 60% LTV (thats where im comfortable my banker will give me 75-80% if i want it) lets say the market starts tanking this year and I have notes due to renew next spring, and values drop, there is a risk my loan to value will not be adequate to renew the loan if I borrowed at 80% but at 60% i have some insulation from that. I also have rate risk at renewal, as it adjusts to market. Sounds risky right? Maybe a little BUT you can borrow in your LLC's name, and the loan can be done quickly, and I dont need massive cash reserves on top of my down payment in the bank for each purchase. and in my case, I buy with cash (or line of credit) rehab and then do the final loan using the additional equity as my downpayment. here is an example, I buy at $30K do a $15K rehab (all in $45K) it appraises at $85K I take a loan for $50K (59% LTV) pay my line back and pocked an extra $5K. now with the 4 units you are looking at this will be harder to do, and the numbers will be bigger, but its still an option. my point is "the bset loan" is not all about rate, terms matter as well. if you can get the long term fixed loans, get them, but just know there are may other options that may work for you as well.

If there is anything you are having questions about, just ask them. We started like that one and a half year ago in Barcelona, Spain as a foreigner from the Netherlands. Good luck! 

if you are paying cash or getting fixed full term financing its ok to pay closer to market but you wont get that equity you need to weather a storm if your note needs to be renewed in a down market cycle. this is why the right financing is key.  Personally im pretty much watching and will buy if a good deal shows up but I will not over pay, and preparing to buy like mad when the market tanks again.   Just my thoughts

Hi Victor,

In most of areas of my  state (Wisconsin) 20% discount won't get your offer looked at by the seller.  The only people getting 15-20% discount here are usually paying cash and/or waiving various contingencies (or dealing with an inexperienced seller).  

My thought is if you are 100% confident in your property calculations you don't want to pass up a good deal because you are falling short of 20% discount. With Quads we can do more to affect ROI down the road thus reducing the affect of not getting the 20% discount on the property.

Brandon's "rule" per say is good ear mark but it's really more of a guideline.  If you're market it is very competitive start with a discount between 15 and 10% see if the seller counters.  

@Victor Gomez

Welcome to Bigger Pockets.

@Victor Gomez welcome to BP.  Lots of people here are ready and willing to help you get started on you Investing career.

Hi Victor, 

Thank you for sharing your story. Hope everything worked out with your medical treatments. 

What made you move to Silicon Valley, work? And where are you now in your real estate adventure?

Regards,

Erwin