Rants And Raves – Part 1 – Hot Marke...

Editor’s Note: Dennis Fassett is a former corporate finance executive turned real estate investing “Cash Flow Mercenary.” Dennis specializes in single-family and multi-family cash flow properties and thoroughly enjoys assisting his fellow investors with their own strategies, including how to buy your first apartment building.

As an ongoing contributor to Mogul’s “Market News Updates,” Mr. Fassett provides us with his own unique, lively, and thought-provoking commentary on the timely industry news and events of today that are impacting our industry. And be sure to check out his other super-helpful Market News Updates. For now, enjoy...

From Dennis Fassett, Cash Flow Mercenary...

I have a confession to make.

I’ve been a real grouch lately.

Work has been difficult – being the boss is no picnic no matter what anyone tells you.

And don’t get me started on this real estate market. It’s enough to drive you to drink.

Like it hasn’t already.

So I decided to vent a little here.

I’ve put together my top 7 rants and my top 7 raves with respect to real estate investing in 2017. Since I primarily do rentals and wholesaling, mine pretty much revolve around those areas.

But I want it to be somewhat interactive though – and so I’d like to hear your rants and raves as well. So do me a favor and let me know in the comments section below.

Today, I present my top rants…

My Rants

1. Sellers wanting to list no matter what condition

This one is driving me batsh*t crazy. We looked at a rundown property recently that was chockfull of “handyman self-improvements.”

For example, Mr. Seller tried to extend the bathroom to make it larger and ended up buckling the floor in the hallway. And they were hoarders.

We generously offered them $12k for the property. They declined because an agent told them the should list for $45k. And list they did.

rant 2. Title companies dropping the ball on wholesale deals

I think I’ve seen this more in the past 90 days than I did in the past 9 years. What the heck is going on?

We’ve had 3 wholesale deals get stuck in the mud to the extent we had to shift to another title company at the 11^th hour to meet our closing deadline. Oh, and I had a check bounce from one as well.

3. Wholesalers acting like cash buyers to try and steal deals from other wholesalers

I know finding deals is tough right now, but this is getting ridiculous. I’m shocked by the unethical behavior I’ve been seeing.

Thankfully we build great rapport with our sellers, and we protect our deals so we haven’t lost any of them.

4. Wholesalers using out-of-area comps to justify sky-high ARVs

I saw a deal a wholesaler was pitching in the area that I target for buying rentals. But the ARV the guy was claiming was a little over $30k too high. So I asked him for his comps.

Turns out that every single one was the city next door, an affluent high-demand community. When I asked the wholesaler about it, he said that the comps were valid “because they were within a mile” of the house he was wholesaling.

He was brand new in the business and had never done a deal. And it will be a while before he actually bags one if he keeps doing what he’s doing. And he’s far from the only one – I think one 1 of every 4 or 5 deals posted to our local Facebook group have the same problem.

5. Wholesalers using hype-filled language to market their properties

This has gotten so bad that it’s become a running gag in our Facebook group. Not a day goes by that we don’t see a wholesaler post a deal IN ALL CAPS using the worst agent hype phrases like MUST SEE, WILL GO FAST and PRICED TO SELL.

My favorite, though, are the guys who include SERIOUS ONLY in their posts. In a private group with a ton of active and “serious” real estate investors. Cracks me up every time.

6. Entitlement mentality in tenant prospects

This one is pretty funny, actually. And it really helps with my tenant screening.

We’re in the midst of the hottest rental market in probably 12 or 13 years. Vacancies are almost non-existent, we get flooded with applicants the day we post something that’s available, and I’ve even started having people come to my rental open houses with wads of cash to put down then and there in order to rent a home.

And even with all the qualified people to choose from, some prospects get offended when I walk through my requirements and my no-nonsense pay-rent-on-time policy, like it’s “unfair” (their favorite word) and that it shouldn’t apply to them.

I even had one prospect ask me what I was going to do for them in order to get them to rent my house. In the best school district in the state.

You couldn’t make this stuff up if you tried.

7. Newbies seeking free mentoring in exchange for “partnering” on deals

This one has become rampant everywhere I look unfortunately.

I’m constantly seeing posts on various social media platforms seeking free mentoring in exchange for partnering on deals. I’ve even been approached multiple times about it myself.

I get it that training and mentoring is expensive. If you’ve ever done either, you know how time consuming it can be, and in my book that justifies the price tag.

The crazy thing, though, is the offer to exchange mentoring for partnering…

teacher So someone is supposed spend their time, effort and energy teaching another person everything they know about investing, and create a local market competitor in the process, all in exchange for part of the first deal?

One person I saw looking for this arrangement was offering a whopping 20% of the first wholesale deal as the payoff. Who in their right mind would sign up for that?

I spent 6 figures on my MBA from a top-20 business school, and I’ve made my money back many times over from that “investment,” and it continues to pay dividends 25 years later.

When it comes to education, especially tactical training and education on real estate investing, you get what you pay for. So bite the bullet and pay to get the proper education and training. It will be worth the money in the long run.

So those are my top 7 rants.

Stay tuned for my top 7 raves next week…