All Forum Posts by: William Jenkins

In Missouri, as a licensed broker/agent it is ok to purchase off market properties on your own behalf.  You do need to disclose that you are licensed however, and to avoid any appearance of skirting that you should have a disclosure clause in the contract.  

@Ross Bowman - I completely agree with you.  There is no doubt that some of what you are seeing is influenced by your viewing profile, but the sheer number of gurus is staggering.  Its a cycle phase for sure. 

@Daniel Fridrij - I would highly advise staying out of $50k rentals as an overseas investor (or out of town investor for that matter).  I own these types of properties in the St. Louis, MO area.  I have done very well with them but it is not a passive investment and not one that I would hand a checkbook over to a "team" to invest for you. 

In order to succeed in these types of properties you need to be able to personally inspect them for needed repairs, know the City literally down to the block, have a local rehab crew, and be able to screen tenants by yourself.  Turn key companies will claim that they can do all of this for you, but it ends up being a disaster every time, and I guarantee you will be cash flow negative over a 5 year period.  This type of business requires hands on work and experience. 

Just last week I went to go look at a couple of foreclosures from a turnkey investor out of Texas.  It looks like they purchased about 6-7 properties in 2015 from a turnkey provider and just let them go back to the bank (burned out landlord). The two I visited were disasters and needed full rehabs... I didn't bother with the others because of the terrible areas that they were in.  There were no substantial upgrades that were done when they bought them (they had old roofs, windows, doors, HVAC, etc.).  They were paint and carpet flips by the turnkey provider, and sold to an out of town investor at an absurd price.  This is still going on by the way, and I think a lot of these properties will be going back to the bank, and coming back on the market in the next few years.

Take your money and play in a different sandbox.  You will thank me.

Lots of very optimistic people on this forum that want the $1M.  I like the drive, but many are vastly overestimating what their true returns will be with that invested capital.  They are also assuming the market will be the same as it has been in the recent past.  Also, like others have pointed out, that capital is "at risk," as opposed to the guaranteed annuity.  Markets go in cycles and 10 years ago I think the consensus would be completely the opposite.  Makes me wonder if we are getting closer to another inflection point.
 
Does anyone here have a risk free $1M investment that is offering a ***RISK FREE*** 12% return.  I don't count proforma appreciation, rental appreciation, etc. into the risk free category.  There is a reason the 10 year (a true risk free asset) is trading at 1%.   

I'll take the $10k for the rest of my life for no work all day long.  FYI...If you really wanted to go out on a limb in terms of leverage, there would always be a bank that would be willing to lend on that income.   
 

Mary, please PM me with the location.  I am a St. Louis MO broker.  My primary business line is cell towers and I would like to check it to see if one is needed in that location.  Thanks.  

@Peter Kozlowski - I just checked rates for the weekend (very generic search).  On hotwire you can get a 4 star hotel in a good location for mid $70s night.  On AirBNB it is in the 90s-100s (before cleaning fees etc.).  There are reasons one would go for an AirBNB but on just outright price for a place to stay, its just not happening in this market.

The STL market as a whole is extremely overbuilt with hotels and there just isn't a whole lot of tourism based travel to cater towards your traditional AirBNB type establishments.

@Andre Taylor -   A couple of nights ago on the news I saw a story where a local woman owned a home that was frequently visited by Elvis when she was a child (their families were friends).  The place is now an AirBNB and she restored everything to the way that it was when Elvis visited (including photos).  I don't see her getting rich on it, but these are the types of places I see being successful here.  The property itself has to be part of the draw, and not just a "house" in a residential neighborhood furnished with ikea furniture.    

On another note, be careful with the City.  I know they did (and may still be) look through short term rental listings and go through and reassess "non owner occupied listings" as commercial buildings.  That will raise your property taxes from about 1.5% of market value to closer to 3-4% which is a big difference. 

I don't think I would write off the "country" at all.  I think that is exactly what listings people are gravitating towards... Think stay cations.  

@Andre Taylor - I think it’s going to be a tough road to go down in the stl market. I could see success if there is a property specific draw or unique feature for the property that draws occupancy but just a generic furnished house will be a problem in my opinion.

Look at hotel competition in the area and what rates they are charging. Many will be going BK but in the mean time that is pretty intense competition.

@Michael C. - Yep... and that in a great market.  Now throw in overhead with the "win some lose some" and you have a money loser.  Maybe they can make it up in volume... :)  

Redfin is obviously a different animal, but I am not sold on that model either.  1% (listing side only) doesn't go very far to pay their "salaried agents", managers, overhead, and that other important thing..... investor/owner profit.

Big tech is really good at driving efficeny and scaling on easily distributed commodity products, but real estate is not a commodity.  

@Account Closed - I am a broker, but I do relatively few residential deals.  I really don't have that much skin in the game when it comes to changes in the industry. 

As stated above, Opendoor has basically broken even since inception and this has been in one of the BEST real estate markets of all time.  You could have literally bought anything in the last few years and sold it for more just a few months later.  What happens when the market slows down or god forbid goes breakeven/negative?  They are picking up pennies in front of a steamroller and it will flop in my opinion.  Same for Zillow.

A property isn't a stock with a real time quote.  There isn't an exact market value that they can use to write a discounted offer on, close, and then just "relist it" for a profit.  If the 5% spread stated above is true, then I worry even more for them.  That could be a rounding error on a valuation.    

@Account Closed - Real estate is inherently an inefficient market and I don't see that ever going away.  I could certainly see some efficiencies coming into the industry (blockchain title, etc.), but the overall business of buying, selling, and brokering is and will always be a people/personalty/deal making business.  I don't see brokers, investors, or developers going away anytime soon. 

Every example you mentioned is a commodity type business.  Real estate is not a commodity and never will be.