All Forum Posts by: William Hochstedler

@Luke Bloxham

Did you do anything with this?  Be curious to hear what you determined, particularly for SE Idaho.

We are hearing about lawsuit after lawsuit because of this (and often for bigger money than your case).  However, usually the problem is that the only clause in the builder's contract is a force majeure (act of god).  Builders are trying to use this to justify different terms.

But the more established builders (with better contracts) all have a cost increase clause.  Many buyers are backing out and the builders are simply selling the homes to the next buyer.  Your Realtor erred in saying it wouldn't happen (much in the same way that bankers insisted that CDO's were risk free in 2008).

A good lender should help you close on the house with a smaller down payment. If your DTI won't allow this, consider closing and "flipping" it with your agent giving you a great deal on the listing.

Definitely dig into the contracts and have an attorney look it over.  But this is an everyday occurrence in Utah right now.

The bottom line is that prices have very much increased but so has the price of real estate.  So the equity is still there.  You just need to decide if you can stomach the higher dollar amounts.

Welcome to BP!

Two Ogden networking events are:

Northern Utah Real Estate Investors Association (NUREIA).  The Ggden meeting is the 1st Tuesday of every month at the Refined Brokerage at 2326 Washington Blvd #204, Ogden, UT 84401, from 6:30-8:00 pm Mountain Time

On the last Wednesday of the month, there's an investor meet-up at Pepito's on 25th St from 7-9pm.  Here's the Meetup link or @Gay Lloyd might have better information.

Hope to meet you in person!

For Ogden, UT, you're at a popular price point for a popular asset class in a small market.  There are plenty of local dollars hovering around the few deals like this that come up that show any value.  Most of them also require work.

I know very little about the Provo market except that it will be much harder to find anything that meets that criteria there.

People are parking cash in Utah and the cap rates reflect it. 

Great question.  It certainly depends on the type of investor.  But I often form a non-exclusive relationship with my investor clients. This doesn't limit them to paying me a commission if they buy any property--just the ones I present and negotiate on their behalf.  If they find a deal somewhere else, it's their choice whether or not to involve me.

Others here have mentioned that they sign agreements on a per property basis.  I don't like this method because it's an administrative hassle every time a deal comes through.  And there's no relationship when we don't have a specific property to talk about.

To answer the original question, the idea of an exclusive buyer-broker agency relationship is typical in most markets.  The exclusivity can be limited to a geographic area or even a transaction type.

Remember that this is a contingency arrangement; if the agent is successful in finding you the home of your dreams, only then to they receive any compensation.  And in the vast majority of cases that compensation is provided by the seller.

In what other professional services industry can you hire someone who is a legally obligated fiduciary, who puts tools and knowledge at your disposal, spends evenings and weekends showing you homes, writes any number of unsuccessful offers (in this market) on your behalf, and risks not getting paid a dime if their efforts do not deliver you a house you love enough to spend a third of your income on?

It's one of the best service deals out there.  Just make sure you do your homework and find a good agent before committing.

Get your HELOCs in place before you quit your W2 job.  Borrowing is much much much harder without a paycheck to show the bank.

Think about pivoting to a career that generates income in a real estate related business.  Go work for a flipper or become a real estate agent.  That way you can make money independently of your properties. They should be your seed that you cultivate into something bigger rather than sucking the money (Income or equity) out of them now.

You're still young so you should be in the growth phase.  You've got a few years before you want to be living off your portfolio.  Now's the time to build it.

It's as bad as I've seen it.  Snowpack had mostly melted by early June when in a good year it can make it to late July or even August.  Farmers are rationing water.  And ticket-happy Ogden isn't writing violations for brown lawns!

Is there such thing as a deal in this market?

The bottom line is that similar properties are selling in days for all cash at this price.  If it get's listed, it will sell for at least what you have it under contract for.  If that's your definition of a good deal--that other people will pay more for it--then it's a good deal.

Remember that most of the building systems will be at or near the end of their useful life cycle.  You already mentioned the roof.  You might have $25K worth of repairs in the next few years.

Even that makes it more attractive than many properties that are currently available.

I'm telling investor clients that it still makes sense to buy real estate if you have a too-much-money problem (which many people do).  But buying for appreciation or cash-flow in Utah is getting less and less interesting by the minute.

A couple of factors are at play.

First, rents trail purchases because it's a less efficient market.  This is because of typical year-long leases and independent landlords that aren't as efficient charging market rent at every turnover.

The second factor is that rents are a function of monthly payments not purchase price.  Because of the dropping interest rates, mortgage payments haven't gone up that significantly.  So cashflow hasn't gone down as much as real estate values have gone up.

We see it in the commercial and multi-family sectors as well.  Cap rates are very low right now because appreciation has been strong (which drives up prices without corresponding cashflow) and interest rates are down (which increases buying power per $ spent).

Going forward, rents will probably climb as the inefficiencies in the market catch up, interest rates climb, and a greater percentage of the population is unable to purchase homes.  In more expensive markets where the rent to value ratio makes renting much more affordable than buying, rents go up and a greater section of the population become tenants.