Quotations by Brandon Turner
Small multifamily properties are any property that contains two, three, or four units. Large multifamily properties, therefore, are those with five or more units. Smaller multifamily properties are considered "residential" to most lenders, and are thus seen as no different from a single-family residence (SFR). Large multifamily, however, is considered commercial real estate, and the rules change drastically. [2015] - Brandon Turner
The terms "REO property" and "foreclosed property" are often used interchangeably, but both refer to the same concept: a bank-owned property. Today, REOs are usually listed on the MLS. The homes are listed through local real estate agents and sold to the higher or best buyer. REOs can be exceptionally good for investors for two reasons. 1. There is usually something distressed about the property. Many people simply avoid these properties, because they don't want to deal with the problems. 2. Banks are not likely to get offended by a low offer and will look at your offer analytically, not emotionally. For this reason, banks are often willing to drop their price fast to get the property sold and off their books. [2015] - Brandon Turner
Offer on deals on Friday, when most agents and investors have already begun wrapping up for the week and are planning their weekend fishing trip or barbecue! The same principle applies to holidays and especially to the end of the year. Savvy investors know that this is the best time all year to find deals, for two reasons. One, during this season, banks are in a hurry to unload their properties before the new year; and two, there is less competition for properties! [2015] - Brandon Turner
Perhaps the easiest and most passive way to use Craigslist is to simply search the site for real estate postings in your area. You can even automate the process so new posts that contain certain words that you choose are sent directly to your email inbox (you can do this through IFTTT.com). You can use Craigslist to search for rental listing that appear to have been placed by "mom and pop" landlords (not professional property management competencies). Call them and explain that you are looking to invest in real estate in their area and may be interested in buying a property. [2015] - Brandon Turner
Wholesaling is one of the most difficult real estate "jobs", because you have to be great at almost every aspect of the transaction (marketing, analyzing, communication, sales, negotiation, etc.). However, if you are able to connect with a great wholesaler, you truly can get hot deals delivered straight to your inbox. To find wholesalers: Call the numbers you see on those ugly "bandit signs" on the side of the road; Go to every real estate club in your area; Create a Marketplace posting on BiggerPockets; Train your own wholesaler on how to find you deals! [2015] - Brandon Turner
It's hard to get long-term tenants in a one- or two-bedroom house. In my experience, three- or four-bedroom houses tend to make the best rentals because they attract long-term tenants. Furthermore, three-bedroom houses are generally the best kind of property to sell. If you are looking for a multifamily property, two-bedroom apartments are acceptable, and incredibly common. Single-bedroom and studio apartments are also common, but they tend to attract a more transient tenant, so expect more turnover in that style. [2015] - Brandon Turner
When looking for single-family homes, look for ones for which all utilities (including water, sewer, garbage, electricity, and heat) can be paid directly by the tenant. When shopping for multifamily, at least look for ones where heat and electricity can be paid by the tenant, and if you can find properties that can be converted to a "master metered" system to allow tenants to pay for their own water, you've potentially struck gold! [2015] - Brandon Turner
Problems to Look for When Shopping for Rental Properties: 1. The Bigfoot smell; 2. The hidden third bedroom; 3. Ugly countertops and cabinets; 4. The bad roof; 5. Mold; 6. Compartmentalized configuration; 7. Jungle landscaping; 8. Junk. Problems to Avoid When Shopping for a Rental Property: 1. Neighborhood; 2. Foundation (including water leaking) issues; 3. Location-specific problems, such as being directly below a flight path or next door to loud/angry dogs. [2015] - Brandon Turner
There are several places where you can go to get a purchase and sale (P&S) agreement: local title company, online, office supply store or other investors. No matter how you obtain your P&S form, I recommend that you have a local attorney take a glance at it. You want to be sure you are covering all the necessary bases, and a lawyer can help you do that. You can also simply get a P&S agreement from an attorney, though this might be the most expensive option. [2015] - Brandon Turner
If the home has been sitting on the market for a long time, and you have a good indication that the seller is eager to sell, there is no real danger in submitting a lowball offer to see what happens. However, if you are in a competitive market and a new listing hits the MLS at a great price and you know that is't going to sell quickly, you may want to cut out the chase and simply offer your highest amount. Sometimes, you may even need to offer more than the asking price. I would never pay more than asking price just to win a bid if the numbers didn't pencil out, and you shouldn't either, unless you have some dramatic future reason for doing so. [2015] - Brandon Turner
Sometimes, the secret to getting a "yes" is as simple as being the first to offer on a property. Be sure to have automatic alerts set up with your real estate agent. Rather than playing a game with the seller, offer your maximum offer right up front. If they counter and try to make you go higher, just say no! If you want to get your deal accepted, get that person to like you! I think the best way to do this is to include a letter with your offer. Include your family in the photo for added benefit! [2015] - Brandon Turner
If you'll be using bank financing for the purchase, be proactive and include a copy of your pre-approval letter with your offer It's one thing to tell the seller that you can qualify, but it's another for them to physically hold the pre-approval letter in their hands so they know that the sale will go through. [2015] - Brandon Turner
An escalation clause can be included in an offer and is used when a property might have multiple bidders. It essentially says, "If someone else bids higher than me, this offer will automatically increase to $X above theirs, up to a certain point." The danger of an escalation clause, of course, is that it tells the seller exactly how high you will go! Therefore, only use an escalation clause if you know there will be multiple offers, and never make your maximum price higher than what you should pay. [2015] - Brandon Turner
You can negotiate for any of the following: price, close date, closing location, contingencies, financing, closing costs, home warranty, repairs, credits, possession date, items left in the property, etc. [2015] - Brandon Turner
The red herring tactic is meant to drive the negotiation to focus on something inconsequential, distracting the seller from what you really what. [2015] - Brandon Turner
You can help your negotiation by making it a little more uncomfortable by instituting a penalty whenever the other party asks for a concession. A penalty could be as simple as not responding for several days or requiring your lawyer to look over the issue. This will train the other party to stop asking for concessions, because they'll quickly realize it hurts them every time they do. [2015] - Brandon Turner
When negotiating in person with a motivated seller, one tactic that works almost every time is simple: ask the seller what their lowest price is. They'll usually tell you a number, but this is never their real lowest price--this is their starting price! Then, ask them a follow up question like "Okay, but what if I could pay all cash and close next week?" They will almost always go a little lower. If you wanted to push it one more time, you could say something like "So, if I were to offer you $X and get you the cash you need in the next ten days, that would be unreasonable?" No one likes to appear unreasonable, and there is a good chance they'll respond with "Yeah, I could do that." [2015] - Brandon Turner
When investing in real estate, there is a very good chance that someday, someone will try to sue you. When you own a property free and clear, this is typically evident on the public record, because there is no bank lien on the property. Therefore, you are essentially holding up a sign that says, "I have lots of money that you can try to take!!" Lawyers (especially those paid on the outcome of a lawsuit, as most lawyers of this type are) are reluctant to pursue rental owners who have a lot of leverage. [2015] - Brandon Turner
Investment loans are usually .5 to 1 point higher than owner-occupied loans. [2015] - Brandon Turner
Conventional lenders are not very fond of loaning on properties owned by an entity, such as an LLC or corporation, especially for residential loans. You could, as many investors do, buy the property in your personal name and then transfer it to your LLC, but you put yourself at risk of having the "due on sale" clause called by the bank. Be sure to talk to a lawyer and CAP who can help you sort these types of issues out, or speak with your bank and get permission, in writing, to transfer your properties to an LLC after buying them (this is the only way you'll be truly protected from that dreaded "due on sale" clause). [2015] - Brandon Turner