Real Estate Gurus to Avoid!

General Real Estate Investing
81

All really great comments and everybody has an opinion I see! ;D

As far as being a Moderator (Keith and others 8)) yes I agree it is a hard job. On Monday my Real Estate Investiing group with over 13,500 members was hacked into and basically shut down. :frowning:

It was 2 years old and a labor of love! No ads, just topics!

>:(Dam hackers. >:(

I do miss the group a lot (Free form) but it is (was) hard to moderate at times.

With REI CLUB having 26,000 members (maybe 12,000 active) it is good to have so many moderators!

So I feel / felt your pain Moderators.

So Anyway, wanted to ask a real estate question here? ???

So whats the details on the latest Texas deal you have done?

If you have done something in the Ft Worth area, can I please get some feedback if you have any?

I just bought a duplex in Ft Worth Texas, that had has some re-hab work done for $117K, (seller was asking $129K) and has long term tennants in place and it rents for $675 on one side and $750 a month on the other side (newer tennants). This was a no money down deal (Well none of my money) So the cash flow is good, except I feel Texas Taxes are really High or is it just me?

Each side is a 2/2/1 New carpet, windows, roof, paint, owner had depreciated it over time and just wanted to cash out. The catch I had to close in 48 hours!

This is my first investment property in the State of Texas.

(my personal goal is to have at least one in all 50 states)

Does anyone else have a property in Texas (Ft. Worth area) that is, that can give me some feedback on this area?

How are tennats in this area? Appreciation? Weather damage? Other info?

82

Wallace

unless you bought this for cash, but you stated a NO MONEY DOWN DEAL you can not have cash flow on those numbers. Taxes alone are about $3500 on the property I bet, plus 117K mortgage will be at least $1000 month and then if you have a property mgr to collect your rent then another $100-130 a month, then insurance is about $1000 I think there, and then other misc fees and expenses… Where is PCF…

But for Texas…look into the Austin/San Antonio areas. Austin is becoming the new hi tech city in the US. Avg income is about $69K a yr with the avg home under $170K. This means people can quailfy for mortgages with ease. Austin is an older city with nice charm and hills. Look into the new homes for possible flips or older homes to rehab and sell for profits if you have someone local you can trust.

Another investor I talk to is buying new construction in Houston area (of course 20-30miles from Houston they have buffer zones) and is doing well. Gets them for around 115K, mortgage are about $1000 and rents are about $1150 avg. No cashflow, but is putting all L/O tennants in and selling them 1yr later for $15-20K profits. he has been successful for about 2yrs on this now and bought and sold over 30 homes and making a killing. Maintains about 10homes at a time.

83

>:(Dam hackers. >:(

Actually, the correct terminology is crackers. Hackers is a term for people who break into systems and do good - crackers are those that do bad. Unfortunately, the term “hackers” has gotten so much bad press over the years, it’s now manifested itself into meaning people who break into systems with bad intentions.

I feel Texas Taxes are really High or is it just me?

Texas property tax rates are terrible. I own several homes in Round Rock and Hutto and the tax rates are anywhere from 2.6% to 2.9%. Some areas are even higher.

84

Think thats bad… Fl is going upto 3% in 2007 from 2%. I was looking into Buffalo market and found out if you want a good rental taxes are about 5-6% and in the crackhead areas about 2%,
I had lined up 3 great rentals and was figuring on 1.5% and then found out it was more like 5+% so I walked…

85

Crackers, humm not sure I like the sound of that term. LOL

What ever they are called they are not nice people!

Also, I am using MTA’s with start rates of 1.65% (Neg am Loans) to acheive Pos cash flow.

Example 20% down at 7.25%, 80% at 1.65% payment rate (100% down)

Closing cost I roll in, or pay out of my pocket (less than $5K)

Any other good ideas to get pos cash flow?

Also where in the country can you get positive cash flow with 100% or are those days long gone?
???

86

MTA loans… Means each property you buy will need to appreciate at least 5-7% per yr to so the you do not owe more than the home is worth. Neg ARMs are investor tools but need to be used right. They are longterm as all have 3-5yr prepays so if you sell early you have a 3% prepay manytime plus all the negative equity buit up. You will never own the home or pay it down, in fact after 5yrs on a 100K loan, you will owe about $130-140K probably. Now you banking on the home appreciating 5% a yr to cover that, but since its a multi-family the appreciation ratio is not the same as a SFH or TH or Condo. It will need to be sold to another investor.

Also I do not know anyone doing 80/20 on MTA using investor loans. If you can please provide me with the bank or broker doing these I would like to talk to them. Many MTA for investors, you will need 680-700 FICO, less than 10 properties I think and still will have a high start rate around 4.5-5.5% so the payments will be inline with many I/O deals…

87

Priceless!

Let me see if I have this straight;

You’re argument is that Real Estate Commissions in all 50 States tell Agents to lie to buyers & sellers regarding who pays Agents commissions, and if they don’t…they run the risk of having their license yanked?

BOY!!!..that’s a good one!!!

-Infowell

88

Anyone who tries to tell me that the commission is not included in the the purchase price that the buyer pays for the property, then someone needs to tell me where this commission comes from.

If they say the seller pays the commission with out saying where the money came from, then this is not the whole truth.

Then again I guess it is who your are talking with the seller or the buyer on how you reply as to who pays the commission. Since the majority of creative real estate investors are not faced with answering this question or having to watch the MLS stack up with unsold properties, the creative investors can just wait until these folks realize who can get the job done without paying commissions.

No Listing Fees - No Commissions

John $Cash$ Locke

89

Actually, the moderators…and many others…are just protecting people from the NR scam. It’s not like this song and dance hasn’t been played many times before. It’s always a rerun, new posters asks a question…other new poster gives glowing review, etc. The funny part, it’s all planned. Try somewhere else. It doesn’t fly here.

90

We don’t have a lot of brick walls to bang your head against in The Pacific Northwest…so I drop in here on occasion to get the same affect.

We’ve been over this more times than one can count. You either can’t, or won’t grasp the concept. But, by some chance someone else may read this and learn something–I’ll continue to debate this nonsense;

The commission IS typically built into the asking price (keep reading)

While the buyer pays to purchase the home…the seller has expenses they must pay at closing. Those expenses are listed on the Sellers side of the HUD-1 & Real Estate Commissions are listed there (not on the Buyer’s side).

Some self-annointed Guru’s submit, they can sell a home themselves, and lower the asking price by the amount of the commission. They try to sell this idea as proof that the buyer pays the commission.

What they’re not telling you (or what they don’t understand) is;

The overwhelming majority of homes sell with the assistance of an Agent, or Agent’s.

Therefore, the commission is baked into the marketplace.

To calculate the commission, and to sell a home for less the commission means; you’re leaving money on the table (because you’re selling for less than fair market value).

To purchase a home without the assistance of an Agent leaves you exposed and unrepresented (better have a healthy dose of experience, cause things can, and often do go wrong). Moreover, if the person you’re purchasing the home from understands fair market value…you may be paying the same amount you’d have paid for an Agent assisted purchase, or close to it, but you’ve no representation.

No reason to take my word for it…or The Department Of Licensing in one of 50 states. Dial up, or inquire online of HUD. I’m sure they’d be happy to explain who pays Agent’s commissions the majority of the time.

Or you can take the word of a self-invented Real Estate Guru. I, however, would recommend doing your homework instead.

-Infowell

91

Infowell,

An acquaintance of mine who has a very large real estate business was telling me how it works and far as his agents go, only he referred to them as minions.

The more minions you have the more money you make in this business, because I take a cut out of every deal so the more minions the more money I make. They pay for their desk space, plus various other items that are common place in the real estate agency business, which more than pays my overhead.

Here is how it is done after you pay for the privilege of being a broker’s agent.

You find a house that the seller wants $150K for, so you go under contract and add in your 6% so that when it is sold the buyer will be paying this commission in the purchase price so the seller can claim it on the HUD-1, as yes he does pay it out of the buyers money.

The house is priced at $159K with the commission added. The property is sold for $159K by an agent from a different company in the majority of cases. So your office gets $4,500.

The broker gets $1,800 and you the broker’s agent receives $2,700 and since I am not really familiar with the percentages I am told the norm is a 60/40 split. Out of this deal you wound up with $2,700 and I will not deduct the fees you pay to work for the Realtor.

Now let’s go on to how a creative investor works, he finds the same house only the seller owes around $135K on the property. Remember creative investors deal with motivated sellers so the seller needs out and needs out now. I explain how he would not put any money in his pocket if he listed it because between the realtor and closing costs this would amount to 10%, which would eat up his equity.

Even if they were to say they are not using a realtor I reply you are whether you want to or not, because most all appraisals have the 6% added. We reach an agreement and I give him U-Haul money of about $1K to get him moved.

I have bought and sold over 500 houses without the use of a realtor so this one would be no different and I purchase using the Subject To method.

I will sell on a 2 year land contract. My terms are $10K down, the exist mortgage rate is 6% and I make it 8% to give me a monthly passive income for two years of lets say $300 a month. I also add two years of appreciation and let’s say it is 5% a year to the purchase price of the property.

Here are my numbers:

$8K from the down which is less my costs.
$7.2K from the monthly passive income.
$10K two years appreciation when the house is refinanced.
$15K from the equity when I purchased.

The same house you made $2700 on I make $37.2K on, now you understand that you have to sell about 14 houses for every one I do to make the same money.

Get cracking as I have already done two this month with higher numbers.

John $Cash$ Locke

92

I

John,

Long time no speak. Hope you and yours are doing very well.

I liked the way you explained this for us to understand. “Right on.”

Just wanted to take it one more step to break it down a bit more if I may ask ???

John, when you figure in Taxes, and other Fees how much money will you actually earn or Net from the $37.2 K amount?

Also you made no mention about your repairs or rehab amounts and cost?

I have never bought a older house I did not do “something” to unless I just sold it to another investor? ???

Thanks and have a great weekend! :slight_smile:

93

Wallace,

It has been awhile, however see you are trying to own a property in every state and a very large goal, so good investing.

First of all I do not re-hab any property I purchase, only make sure it is super clean. I found that my buyers are willing to do any work that is needed themselves. Since I do not market to pre-foreclosures, only to those folks who need my help before they get in trouble and I know who they are, chances are the property is in good condition. These houses are not older houses either.

Selling or holding time is no problem as I check the days on market (DOM) and when I see that the normal time it takes realtors to sell a property is let’s say 90 days then I know I will sell mine in two weeks.

Taxes and fees vary state by state so this would be tough to estimate, I like to think of it this way, if a creative Subject To investor does four deals a year on an average of $37K gross profit then they are making about $148K a year, so pay the taxes, give Uncle his share and think where else can a person make this without all the stress and hours working for someone else.

There are so many pre conceived ideas about what Subject To investing is all about I can understand your questions.

John $Cash$ Locke

94

How can you taste my cup of tea Quai Chang…when your’s is already full?

Your method is not the only way to invest (not by a long shot).

Your path is not the most profitable, or productive way to invest (in my humble opinion).

“Get cracking as I have already done two this month with higher numbers.”

You’ve always jumped to conclusions regarding where I live, how much I make, how I earn a living…

FTR: I’ve never written a purchase & sale agreement.

My interest is in land, and to a lesser extent…emerging markets (riding the equity elevator).

We do quite well for ourselves & we’re satisfied with our income & lifestyle.

“The broker gets $1,800 and you the broker’s agent receives $2,700 and since I am not really familiar with the percentages I am told the norm is a 60/40 split.”

How come you’re “not really familiar” with the percentages?

Didn’t you once write that you were married to a RE Broker?

-Info

95

in all honesty, i didn’t read much of this thread, but i did read the first posts link -

no matter what anyone puts out there - they’re going to be judged by some as being “rip off artists” and the like.

i’m not debating whether any one of them is or isn’t, all i’m saying is, i’ve reviewed the sheets program and though i did not carry through with much of the silliness of the course, i can definetely say that the course is full of USEFUL information that can lead you in a positive direction.

in my opinion - i do not think any of them should accept ANY REFUND WHATSOEVER. unless a customer receives something that is faulty, like a CD that doesn’t play or a booklet that is damaged, etc - why offer a 9.95 “trial period”…when the person can burn at least parts of the CD’s, photocopy all the information and just return it.

dumb.

why offer people the trial period - especially, ifyou’re going to give them a hard time for doing so.

i would just charge X (i.e. 99 bucks) or whatever makes a profit and offer ABSOLUTELY NO STUPID TRIAL PERIODS.

you buy it, you own it - good luck!

success in rei depends on YOU, not the GurU.

96

kdhastedt

We deal with this daily on a level that you can't even fathom...we didn't fall off of the turnip truck this morning. We know where this goes when it's left unattended. If you don't know what happens, go to the forums at www.landlord.com. They had to close theirs down because they became a free-for-all foodfight.

so kd, you guys are constantly editing the forums to keep it clean and focused huh?

unreal. listen, for what it’s worth, there’s a reason i’ve posted (what i consider) alot of posts. i couldn’t quite put my finger on it, but when i visited some other forums, many are just…bad. basically, they s*ck.

now i know why. this is a great website, good information and you guys do one heck of a job. as moderators - how does that work anyway? are you guys compensated…are you all partners?

97

All of the Moderators on this site are purely volunteers…we do as much as we can as often as we can to keep the “noise floor” to a minimum. Somedays it is harder/more frustrating than others. Sometimes you just have to put your foot down, draw the line in the sand, and say “not here”…there are several Members that CONSTANTLY push the envelope…there are others that are blatant and they usually wind up getting “excused”…

We are trying to keep this an enjoyable/educational experience for all. We get a lot of posters that obviously can’t fathom the difference between an informed opinion and an outright commercial…

Keith

98

I have gone through Robert Allen and am very pleased in the very short least than 4 months I have gone throught it. I wealth of knowledge and alot of access to mentors, programs and ect. I just need to apply it. With our recent move $$ is tough so we need hard money to cover all to get the ball rolling am going to work on that a bit after the holidays for property in the DFW (texas) and Northern Cali areas.

99

I WISH! Nah, just kidding. I hang out here a lot and learn a lot so I volunteered to moderate and keep the spam that gets posted here under control. On average I spend a few hours a day reading (which is definitely helping me) and delete around 15-20+ posts that are advertising viagra, porn, and other junk.

100

<<as moderators - how does that work anyway? are you guys compensated…are you all partners? >>

Only Rich_in_CT gets paid for this…that’s why he’s “rich”…

…and he doesn’t delete the porn, he captures it for later “review”!!!

ROFLMAO!

Keith