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Anyone else in the real estate business?

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  • pronstar

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    Jul 2, 2017
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    Dallas
    Just curious.
    I’m almost at the point where I’m able to derive all of my income doing what I love.

    I’ll be transitioning from being a wage cuck this year, and devoting all of my efforts to it. Tired of building businesses and wealth for other people.

    Flips and buy/improve/rent for the short term. Then hard money lending, collecting rents passively and letting the business run itself long term.

    Anyone else make their living in RE, either as a contractor, property manager, trade professional, property investor?, or anything else that related?


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    Eli

    Well-Known
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    3   0   0
    Dec 28, 2008
    2,047
    96
    Ghettohood - SW Houston
    I've been a full-time Realtor for close to a decade, and generally advise people to stay out of Real Estate! Between the constantly-changing laws, potential for litigation, etc., most people end up losing their ass in this industry. Most people that get their salesperson license don't renew it and let it lapse when it expires after the first year.
    It's next to impossible to make money from flipping, contrary to what you see on TeeVee. I sold a house last year for about $270K; the sellers were seasoned flippers and lost about $80K - not to mention tying their money up over a year trying to move it.
    I generally advise staying the hell out of hard money lending, especially for flips - I know of one that ended up bringing tens of thousands of dollars to closing after putting 20% down to buy in the first place; they got taken by a bad agent that was excessively optimistic about resale potential and grossly under-estimated the amount of work required on the properties.
    I've also seen flips that ended in litigation between the flipper and their contractors, which is never pretty - especially if the contractor gets pissed and puts liens on the property.
    I am currently working on acquiring a Broker's License, which Texas doesn't exactly give out, so I can get into property management. Are you aware that being a Property Manager without being licensed may make you a criminal, and civilly liable for damages as well? Believe it or not, Practicing Real Estate Without A License is a criminal offense in the State of Texas!
    The only guys that really make money in Real Estate are developers - which aren't required to be licensed - and commercial investors and managers. Licensed broker/managers oftentimes get 8% of rents, plus mark-up on repairs, while the owners are accepting a 6% capitalization rate - oftentimes less.
    There is currently a lucrative market in what is being called wholesaling properties, but between the legislature tightening the rules (it may be prohibited this session) and broker competitors like OpenDoor (Lennar owns OpenDoor and the Title Company involved, they buy the properties fix and flip) it's going to become very cut-throat.
    Many people want to buy single-family homes for rental income, and oftentimes end up losing money on them long-term. While 8-14% cap rate is possible at first, having to replace the air conditioning ($8K+/- every 15+/- years), roof (another $8K+/- every 15+/- years), possible costs of foundation repair, plumbing replacement, etc., really eat into those thin margins. A lot of single-family investment properties get dumped when they need major repairs for just enough to cover what's left on the mortgage, the repair costs ate every cent of equity and the investor isn't even getting their down payment back.
    I could go on and on, but I have to get to work!

    Eli
     

    pronstar

    TGT Addict
    Rating - 100%
    2   0   0
    Jul 2, 2017
    10,540
    96
    Dallas
    I've been a full-time Realtor for close to a decade, and generally advise people to stay out of Real Estate! Between the constantly-changing laws, potential for litigation, etc., most people end up losing their ass in this industry. Most people that get their salesperson license don't renew it and let it lapse when it expires after the first year.
    It's next to impossible to make money from flipping, contrary to what you see on TeeVee. I sold a house last year for about $270K; the sellers were seasoned flippers and lost about $80K - not to mention tying their money up over a year trying to move it.
    I generally advise staying the hell out of hard money lending, especially for flips - I know of one that ended up bringing tens of thousands of dollars to closing after putting 20% down to buy in the first place; they got taken by a bad agent that was excessively optimistic about resale potential and grossly under-estimated the amount of work required on the properties.
    I've also seen flips that ended in litigation between the flipper and their contractors, which is never pretty - especially if the contractor gets pissed and puts liens on the property.
    I am currently working on acquiring a Broker's License, which Texas doesn't exactly give out, so I can get into property management. Are you aware that being a Property Manager without being licensed may make you a criminal, and civilly liable for damages as well? Believe it or not, Practicing Real Estate Without A License is a criminal offense in the State of Texas!
    The only guys that really make money in Real Estate are developers - which aren't required to be licensed - and commercial investors and managers. Licensed broker/managers oftentimes get 8% of rents, plus mark-up on repairs, while the owners are accepting a 6% capitalization rate - oftentimes less.
    There is currently a lucrative market in what is being called wholesaling properties, but between the legislature tightening the rules (it may be prohibited this session) and broker competitors like OpenDoor (Lennar owns OpenDoor and the Title Company involved, they buy the properties fix and flip) it's going to become very cut-throat.
    Many people want to buy single-family homes for rental income, and oftentimes end up losing money on them long-term. While 8-14% cap rate is possible at first, having to replace the air conditioning ($8K+/- every 15+/- years), roof (another $8K+/- every 15+/- years), possible costs of foundation repair, plumbing replacement, etc., really eat into those thin margins. A lot of single-family investment properties get dumped when they need major repairs for just enough to cover what's left on the mortgage, the repair costs ate every cent of equity and the investor isn't even getting their down payment back.
    I could go on and on, but I have to get to work!

    Eli

    Huh...I must be doing it wrong.

    My last three flips (in total) have netted me two years’ salary.

    And I make a very good salary.



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    pronstar

    TGT Addict
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    2   0   0
    Jul 2, 2017
    10,540
    96
    Dallas
    I'd say you're doing well! The biggest margins seem to be wholesale fix-and-flip, if - big if - the market stays hot. Good luck!

    Eli

    Yeah none of these were MLS-sourced.

    We can make the math work for some MLS listings, but at this point I’m being fed more deals than I can handle...good problem to have.

    Gotta make hay wheels the sun shines

    We’re scaling up operations and putting systems in place to keep the machine fed.

    But if the market dips, homes are on sale and I’ll be a buyer


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    Eli

    Well-Known
    Rating - 100%
    3   0   0
    Dec 28, 2008
    2,047
    96
    Ghettohood - SW Houston
    Yeah none of these were MLS-sourced.

    We can make the math work for some MLS listings, but at this point I’m being fed more deals than I can handle...good problem to have.

    Gotta make hay wheels the sun shines

    We’re scaling up operations and putting systems in place to keep the machine fed.

    But if the market dips, homes are on sale and I’ll be a buyer


    Sent from my iPhone using Tapatalk Pro

    A bunch of non-MLS stuff is oftentimes a sign of a weakening market, when the market is strong almost everything goes into the MLS to maximize seller proceeds.
    Be wary of wholesalers and wholesaling, Theft by Deception can come into play: I know of a situation where a young married couple deceived an elderly woman to sell her home well below market value 'to help them out' and they flipped the contract to an investor. I don't think the old lady found out about it, if she had the couple would probably still be in prison.
    While some 'wholesalers' are quite honest - many are TREC-licensed - there are a lot of outright con artists in the business as it's completely unregulated. I've seen 'wholesalers' list properties that have mortgage liens (which are generally not transferable), most mortgagors will accelerate the loan if they become aware - and they generally do.
    There are a lot of people pushing for the Legislature to end the practice, for a wide variety of reasons.

    Eli
     
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