Where I am the going rate for a SFH appraisal is $425. Don't know if that's standard everywhere.

It's about $400 here too.

Anyone have any recommendations of how to raise new cash for a deal?

The people I have gone to in the past have maxed out what they are able to do. Any ideas of how to find new investors? Crowd-funding a possibility? Should I just simply borrow (maxed out what I can currently from the bank), or get people to invest alongside of me?

fwiw...I own 2 (soon to be 3) higher end rentals and am a licensed Realtor in a major university and capitol city.

Ok. Here's a pretty tilting story (at least for me). A close friend of mine bought a house in late '08 when she was doing well financially. It's nice house in a good area near a high school. She had a good paying job (service industry) and also had additional income from a business on the side.

She blew a bunch of money on stupid **** (gambling, luxury car, nights out etc). Income from her job and side business dropped. Still enough to barely pay her bills but nothing else. Instead of selling her car/house she kept everything, thinking business would come back and her kids would help out once they finished college.

It's 2013. Business hasn't bounced back, her income is still low and continuing to drop, and both of her kids are still in college (and still asking for money I presume). She's finally realized that she needs to sell her house. It's been on the market for less than 6 months. She told me plenty of people view her house but no one has made an offer. Her real estate agent thinks her asking price is too high. She thinks her asking price is too low. She said houses in her area are valued between 300-400k. She dropped her asking price from 335 to 315 but still no offers.

I have zero experience in real estate. But if she thinks her asking price is too low, but her real estate agent thinks it's too high, shouldn't she get her property re appraised / find a different real estate agent? I mentioned this and she said she can't because she signed a contract.

Whenever it gets brought up she repeatedly says she doesn't want to keep lowering the price cuz she wants to get money out of the house. Tbh it sounds like a whole lot of pride refusing to sell it below X because it will cut into her profits especially if she needs to sell the house soon (my guess is within 1.5 years but idk).

Like I said before, I don't have any real estate experience, and i've told her that. She doesn't ask for my advice per se, but something def seems off to me and I can't help saying stuff like maybe she should get it re appraised or find a new agent etc. I wish I could give her some sound advice cuz she's a been a really good friend, and i'd hate to see her lose her house due to her pride/ greed. Thoughts?

Her house is 100% priced too high. If it wasn't, she'd have offers. She should obviously get a new agent, if she believes what she told you. They will say the same thing though. Agents don't do anything fancy other than put the house on the MLS.

It is really common for people to get emotionally attached to the house and refuse to lower the price to what will make it sell. Tell her to spend $400 and get an appraisal if you think she might listen to the appraiser about the current value of her home.

It is usually written into contracts with the listing agent that if you switch agents, you have to pay the original listing agent some type of penalty. It will most likely cost her money to switch. The period depends on the agent. If it has been on the market for 6 months, she might be close to the end of her contract obligation. Have her check the contract.

you dont say

Several weeks to finish this thread. Wish Spex X was still around and active, granted I came across the thread 5 years after it was started!


I have a different angle that hasn't been touched on at all and wanted to get advice on.

My mother owns her house & 3 large lots in her neighborhood. My parents bought the lots 20+ years ago for quite cheap and have just sat on them. 2 of them are very near our house so the lots were purchased mainly to block others from building, and one is a bit further away. My mom now lives in the house by herself and is considering downsizing to something more manageable in the next 2 to 3 years.

She sold one other similar lot down the street about 2 years ago for about 170k, and I would guess they are worth 200k ballpark today.

So my question is this: If we wanted to team up with a builder, we provide the lot, they design and build whatever type of house they deem best/most profitable, what would be reasonable terms for this type of agreement.

Essentially I think it boils down to how much does it cost for a builder to actually build a house (labor, material costs etc) vs the markup. If we entered an agreement where upon sale of the house we got paid 200k for the lot, plus a split (what % I dunno) on the profits, it would seem to be a win-win. We make more than just selling the lot outright, and the builder gets to share in the upside without having to put capital up to buy the lot.

Maybe after the builder puts in some amount of capital to the project we would split costs, and then go 50-50 on the profits?

Obviously I have no experience in this, and this is an aspect of real estate that is totally different from the main focus of this thread, but I wanted to ask because there is obviously an opportunity here.

Thanks for feedback!

There may be one or two people that may be interested in doing what you are thinking but the trouble will be finding said people that line up with your interests.

I believe most builders will just continue to do what they do. Most of them don't think outside the box that much. And you have to see if from their point of view. The only thing you are helping them with is them not having to provide as much capital upfront, which for some (not all) companies might not be that big of deal.

My recommendation is to just ask around and talk to a few builders about your ideas and maybe you can find one that will bite.

I have heard some where that is a good idea to invest in property/land instead of keeping money in the bank.

I was looking for advice about buying a small holiday home (valued at £15k), and using that as collateral (not sure if that's the right word!) when I want to buy a family home in around 12 months.

Would this hurt or help my chances when buying a house?

Also, would I need a buy to let mortgage for the holiday home?

You have a good idea, but entering a profit sharing agreement specifically with a builder will likely end in you getting cheated. He will be in full control of the project, and understands the business much better than you. This will allow him to easily outmaneuver you in many ways to cheat you.

What you could do instead is list the lot for sale, but offer to seller finance it with a very low down payment (~$5,000) and a high interest rate, say 10+%. This will be a great deal for the builder as he won't need as much capital, and will allow you to sell for a higher price than you would get for cash, and earn some nice interest on the side.

Question: How big of a loan could I get with a down payment of 200k assuming..

I have already bought 1 200k property and paid it off within a year.

I have only mediocre credit after taking a while to pay back credit card/cable bills etc.

Would a 1.9mm loan be possible to secure 3 houses for 700k each? (if it matters, all possibly slightly overpriced, but with amazing rental prospectives due to location).

As someone trying to transition from poker into REI, I've studied this thread and lots of the advice in it. It's been a great resource for me. Thanks.

I have got one of my first opportunities recently and am hoping I can get some feedback...

Someone I know and trust is looking for a 50k loan for 7-10 months.

He's a partner on RE severance project. He's been involved in 2-3 of these deals and his partner has done several over the last few years. He needs to cover his end of the costs for a project.

He needs a $50k loan. principle + $10k on completion of the project, which is estimated at 7-10months. Additional 2% every month it goes past+min payments. He's also offering a lean on the property (which I assume is free-and-clear, but may be worth <50k in severed+disaster scenario).

Trustworthy guy, disciplined, and ambitious. He has a reasonable (30-40%) TDSR. Good credit. He has a fulltime job. I think he makes ~$70k on salary.

I'm unfamiliar with project related risks. I can cover myself somewhat here by getting the loan secured on the property.

The deal seems good.

Problem: The 50k cuts into my working capital for the year (pokers/REI). $20k-30k is okay for me.

I'm excited about doing a deal, and this one seems promising. I'm brainstorming solutions here..

Is there a way to sell part/all of a loan?
What additional information should I ask for?
Overall thoughts on this opportunity?

If you are looking to transition into REI why don't you use the money for your own REI? If you loan him that money you aren't doing REI...you are becoming a bank.

^ It's the only opportunity thats come up thus far. I agree that its not worth doing if it ties up capital that I could use to invest in future opportunities. Thats why I'm asking if there is a way to sell part/all of the loan

I believe it's going to be tough to find buyers for this type of loan. But would love to hear from more educated people on the topic.

I wish I knew people around here with problems like yours. I'm in the exact opposite situation. I know a ton about REI, and have deals I'm ready to make, but can't find any capital.

Looking for some advice on how to get started with REI:

- I have $200k in cash with excellent credit, income about $200k/yr.
- I live in Los Angeles and am looking to buy properties and rent them out (either here or in Lake Tahoe)
- I currently do property marketing for short-term temporary subleasing (through Airbnb/HomeAway/VRBO) for some homes in Lake Tahoe / Sherman Oaks, so I would most likely market the homes I buy in a similar manner as they generate about 30% more revenue than normal 1-yr rental rates at just 75% occupancy (plus I can live in them when they are not rented). If I could buy homes that come with furniture that would be even better although I understand that it is uncommon and typically something that is discussed separately with current owner.

I'm looking at Redfin and I have absolutely no idea on what criteria to look at to determine whether something is a good deal.

Where do I start?
Are there any good books you all can recommend?
Is it even possible to have an edge vs these massive REI companies? Surely they are notified when a house is put on the market way before I am, and have tons of analysis/data to determine if its a good deal. Therefore any deals still out there probably suck?

http://buffalo.craigslist.org/reo/4115121780.html

Seems almost to good a deal?

NOI = 29400 - (.45)(29400) = 16170
Cap Rate = 16170/79900 = 20.23 %

Confused on COCR.

Rule 1: Monthly Rent / Final Purchasing Price
2450/79900 = 3.1%

Rule 2: cash flow = NOi monthly - Mortgage Payments

Cash flow = 1347.50 - 425.26 ( 30 years at 7%, 20% down)
- 574.53 ( 15 years at 7%, 20% down)

Can someone help me out with this. Thanks!!!!!!

This thread was started nearly 6 years ago, before the real estate bubble burst. Is some of the advice at the beginning of the page now outdated?

I recently was approached by friend of a friend who knows several foreign investors wishing to get 30%+ annual returns in US real estate. The cut he proposes is:

-first 30% realized on amount invested per year to investors. If return is less than 30% I make nothing. Of the remaining 70%:
-50% of that to investors;
-25% to friend of friend;
-25% to me.

I will be expected to manage (or perform) all of the work to find, evaluate, legal (LLC), acquire, improve, manage (if held), and sell the properties.

Investors are in the range of $20-$50 million.

Any thoughts on if this is a fair arrangement?

So you do all the work and then don't make any money unless you sell the property for over 30% gain?

How is return calculated? Because won't you have a lot of unrealized gains/losses that are going to be difficult to value?

Yes, calculating actual % returns will need to follow some rules that we have not yet planned out. Also, I am not sure if we are going to pool the investors' money into a fund or treat each investor separately. Obviously pooling will be much easier to calculate, and fairer to all concerned so we (I) don't get accused of cherry-picking.

I sense that my FofF is probably getting something from them on the side, because I can't believe this is the going rate for passive investing.

So you don't get paid unless you return 30% coc or $9 million a year on $30 million? And you receive 25% of anything over the 9?

If that's the case good luck to you sir. You'll never see a dime. What are you going to be investing in? Holding period? Exit strategy? Do you have an excellent attorney and a tax guy? Hired an aggressive agent that will be hunting for deals and knows everyone in whatever market you are operating in? Do you know the market of whatever you will be operating inside and out? Brokers will work a whale the same way a stockbroker will if there is money on the table.

I'd also need a staff at least for a year if I was running a $60 million fund (have to borrow another $30 if you need 30%+) depending on what you want to do you would need an analyst(s) that can run pro formas, write leases, handle communication with everyone when you are out hunting deals.

From my experience that deal is getting done @10-12% coc via a reputable established fund, go north of 15% on cash and it's not sustainable or something else is going on.

I'd like to make 30% too, but it's just not realistic. With this arrangement, you'll be working for free. That's why FoF is asking you to do all of the work instead of him doing it and taking 50% of everything over 30%. He's freerolling. What is FoF doing for his cut?
I'd counter back with an offer that looked something like:
1. I get a salary at the level I expect to make annually.
2. I get x% of everything over 15%. This is a bonus for me. Because I don't expect to make more than 15%, this doesn't factor into my expected income for the term. The minimum for x is 25%. If FoF isn't really doing anything, then I make that number larger.