Results from Certified Letter to Unknown Occupant [Letter]

 

Shortly after the letter was delivered via Certified USPS mail (signature on delivery), I received a phone call. Although short-lived, I was excited to learn the current occupant was willing to sign a lease.
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Back in November I wrote a blog titled My First Tax Deed Purchase and described the situation of an unknown person living in a property I just acquired through the Escambia County Tax Deed Auction in Pensacola, FL.

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After consulting with my attorney, I rectified the situation by drafting the letter below. This is a copy of the actual letter I sent to the person occupying the property.

Shortly after the letter was delivered via Certified USPS mail (signature on delivery), I received a phone call. Although short-lived, I was excited to learn the current occupant was willing to sign a lease. Two months after signing the lease the eviction process began. Related Articles below go into more detail on how the evicted tenant destroyed this Pensacola property and our improvement efforts afterwards. Spoiler Alert: we rid the kid filled neighborhood of one of the most worthless human beings I’ve ever met. A drug dealer/user who allegedly was stealing his mother’s disability checks.  

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AH BANKS! Pardon My French – Part 2

Given that it has been 2+ years since we went through the process of purchasing our primary residence (and the Pensacola real estate market seems to be recovering), I was optimistically hopeful dealing with banks wouldn’t be as painful this time around…boy was I wrong!

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real estate investing Pensacola

In AH BANKS! Pardon My French – Part 1 I discussed our primary residence purchase and the struggles of doing business with our chosen lender. Below is a recap of our conventional loan process to purchase a long-term duplex rental property in Gulf Breeze.

Given that it has been 2+ years since we went through the process of purchasing our primary residence (and the Pensacola real estate market seems to be recovering), I was optimistically hopeful dealing with banks wouldn’t be as painful this time around…boy was I wrong!

Our Gulf Breeze Long-Term Rental Property Purchase:

  •  Down Payment of 20% (check)
  •  Credit Score of high 700s, low 800s (got it)
  •  Pre-approved with a regional Credit Union with a large local presence and really good interest rates (check)
  •  Occupied? Yes, both units of this duplex are under long term agreements with no indications/desires to leave.

A side note: while many Pensacola realtors require you to be pre-approved before showing you a house, you can certainly find realtors who don’t require this proof. Just know, obtaining pre-approval shows the realtor you’re serious about buying and typically is painless (mostly just a credit score check by your lending institution).

 

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Timeline (the boring details):

  • February 24: Pre-approval received from chosen Pensacola credit union
  • February 27: Entered into contract with a 30 day close date. Escrow provided to closing agent and copy of contract sent to our chosen Pensacola credit union.
  • March 7: Loan application process started (YAY!!)
  • March 14: I followed up with the CU to see how things were processing and promptly received “We are all set for now.” Hearing this during AH BANKS! Pardon My French – Part 1, my internal warning sirens start to go off.
  • March 22: paid for property appraisal through the CU
  • March 28: received confirmation that all initial qualifying documents were received and will now go through pre-underwriting process. Unfortunately this was accompanied with a need to extend the closing to May 9th. of which the seller did not want to do. Thanks for a great realtor for making this happen but my internal warning sirens are starting to get louder.
  • April 1: my loan application is transitioned from the Loan Officer to now the Loan Processor
  • April 12:  no communication in weeks, I receive notice that my loan processor is working toward final loan approval.
  • April 21: where the real fun begins…the loan processor comes back to ask me for previous years tax statements (which I’ve already supplied) and to let me know the appraisal has not come back yet. Since we’re 30 days past from when the appraisal was ordered, no sign of it being completed was frustrating. What’s even more frustrating, the Loan Processor didn’t know what to do. C’mon man?! I immediately sprung with questions like: Who ordered the appraisal within your firm? What’s there #? Who’s your boss? Who can we escalate that to? Give that to me and I’ll do it!
  • April 27: ONE WEEK LATER! The appraisal was finally received, but WAIT, there’s more! We still need your most recent tax return!  Ummm….no you don’t. I’ve uploaded to your portal twice now and receive the thumbs by your boss twice now Ms. Pensacola Loan Processor. Here I’ll upload again for you, just so you don’t have to look for it. There, you see the date of today’s date on the document in the portal? That’s it. Click on it and tell me if that’s what you’re looking for! Needless to say I was pissed.
  • May 1: I start daily calls to the Loan Processor and to the Branch LO Manager to receive status updates. If they don’t answer, I leave them voicemails and start emailing them, CC’ing their bosses. Not to mention my Pensacola realtor and his team start dialing their way up the CU’s corporate chain.
  • May 7: after a week of daily phone calls, emails, and borderline harassment for someone to take my business, I finally receive the good news my loan application was approved. However, “due to new regulations…. there is a 3-day seasoning that has to happen, putting your close date on May 10”. Again, here is where having a great realtor on your side helps. They kept this deal together.
  • May 10: Closed. Two and half months after going under contract, begging this credit union to take my business, we finally closed.

If you’re exhausted from reading this, I don’t blame you. I let a couple months go by before typing it up and I’m just as exhausted reliving this horrifying lender experience. At one point during this process, I felt like Mr. Regional Credit Union was enjoying messing with me. They wanted to show me who had the power.

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Now that I can sit back and non-emotionally reflect, part of me still believes that, but part of me really believes the process is just that broken. I feel for the branch managers and loan processors as their lives are more stressed from guys like me because their system is broken.

Bottom line is this: If this is the new norm for lending institutions, then our buy & hold strategy is going to be a gold mine. Even with continued lower rates, banks and lending institutions are continuing to make it more difficult to do business with them.
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Should I or Should I Not Get My Real Estate License?

 

It could have been that my wife passed the exam on her 1st try and I was convinced I wouldn’t – we like to compete!

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real estate investing pensacola

 

Many Pensacola RE investors are also licensed Realtors. Being a life student (PMP, MBA, Six Sigma, MCP, BS, etc.), I thought it was only natural for me to have the certification that tied to the industry we have started to invest in. For years, not having my realtor license weighed heavily on me – so much, that at times, it was a distraction from our investing business.

I pondered it for years, passed the pre-exam, submitted fingerprints, interviewed with a couple of Pensacola Brokers, ready to schedule my state exam and then…I stopped the pursuit. And yes, my background check came back just fine 🙂  It finally clicked with me that I didn’t need a Realtor license to grow our Pensacola real estate investing business…OR…it could have been that my wife passed the exam on her 1st try and I was convinced I wouldn’t – we like to compete! 🙂

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Some experts say having your Realtor license is a must to be a successful investor – direct access to MLS listings, better control on viewing properties/making offers, keep commission for buying/selling are some of the main points realtor investors boast about. I think it depends on the type of investing you are doing. We focus on buying & holding or what I like to better call: short term cash flow, long term wealth. 

Other than my fear of not passing the exam on my first try :), one of the leading reasons I wanted to have my license is because I felt like I was abusing realtors. As the Pensacola market has warmed up, it is possible I’ll have to look at 100 opportunities to make an offer, and 10 offers to have one accepted.

I’ve been through a couple of realtors and rightfully understand why those I worked with back then, don’t work with me now. Although still in its infancy state, our business was much more immature just a couple of years ago versus now. And now that we have a clearer direction of where we want to go with our real estate investing business, I can equally explain to our team what we’re trying to accomplish.

We have a great relationship with our chosen realtors now because they understand what we’re trying to accomplish. Jokingly my nickname has become “Mr. Low Ball”, but the type of investing we do it’s all about the #s. Similar to fishing, although I wish I could yell FISH ON! once in every 100 casts, you don’t know what opportunity is out there until you make a cast.

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Maybe I’ll grab my license further down the road, but right now our business is growing just fine without it. Maybe the perfect opportunity to grab my license is when we start to trade up or our investing strategy changes, but we’ll see.

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Product Review: Kwikset Smartcode 913 Deadbolt

One of the best and simplest home improvement things we’ve done & for our sanity!

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Why we own it: It’s inevitable. We pack up to leave, day trip for shopping, the beach, out of town for the weekend, a short trip to the grocery store or to grab a bite to eat…it never fails. Once we’re loaded in our vehicle and out the gate, one of us will remember something we forgot inside and have to turn around and go back in. I used to carry an extra house key in my truck just for this reason.

<Enter the Kwikset Smartcode 913 Deadbolt…the problem solver>

real estate investing pensacola fl

I installed, re-keyed and programmed in about 30 minutes. Operationally, it is one of the smoothest dead bolts I have. Over 300+ customer reviews on Amazon. 

Kwikset Smartcode 913 Deadbolt

What I love about it:

  • ease of installation – really, it only took me about a 1/2 hour to install, re-key and program and I’ve never re-keyed anything.
  • 16 programmable user codes – who needs that many codes? 🙂
  • equipped with the SmartKey Re-Key Technology – I re-keyed this myself to match the dead bolt on our back door; one less key to carry
  • A set of 4 AA batteries (not included) are supposed to last a few years (we’ll see)
  • One touch locking.
  • Price – These electronic keypads can get very expensive so I shopped around a few months before buying one. A $100 is about the middle of the road.
Other features highlighted on the box:
  • 20 minute fire rating
  • Tamper resistant interior cover
  • Bump Proof / Pick Resistant
  • Compliments any Kwikset Product (knobs, levers, handlesets)
  • Lifetime Warranty on the Finish and Mechanics
  • Automatic door locking after 30 seconds – this is an optional feature. I can see where this will be a huge bonus in certain scenarios. We originally turned this on, but not an option we appreciate with our current setup.

What can improve: while the automated lock is faster than me fumbling with my keys, I wish the motorized opening happened faster. Don’t get me wrong, it’s not to be compared with a turtle. I’ve actually timed it – it beats me fumbling with my keys every time because my hands are usually full. Also not something that will deter me from purchasing another one for one of our Pensacola rental properties.

We’ve had our Kwikset Smartcode 913 Deadbolt installed for about a year now. Great value and function for the money.
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2016 Results & 2017 Focus

Starting this year I thought reaching $1,000/month in cash flow was out of reach, thought I was shooting high, but early mornings, late nights, and a great team made our goal a reality before I knew it.

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real estate investing pensacola fl

Put me in Coach! We started 2016 with only one unit and set out with a goal to increase our cash flow to $1,000/month.  We didn’t have a specific number of units in mind, just $1,000/month in positive cash flow.  If we’re following our rule of $200/unit after all expenses, then we needed 4 more units. By May, we closed on our 4th unit of the year allowing us to do just that. I initially thought $1,000/month in cash flow was out of reach, thought I was shooting high. I’m consumed by my day job and couldn’t imagine how we could get there, but early mornings, late nights, and a great team made our goal a reality before I knew it. What now? 

The next several months we spent getting those properties in shape and our last acquisition of the 2016 year was a Tax Deed purchase in August. This tax deed property and inherited tenant situation started out strong, but sad to say we eventually had to evict him and currently going through stabilizing that property. Nonetheless, from one to now six units in our portfolio…wow!

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The Pensacola Market is hot and has been hot for a while. Many local and regional experts that I’ve talked to are expecting a down turn in the next 12-36 months.

There is also some solid supporting evidence that a local down turn is imminent:

  • volume of sales in Pensacola – at & above 2005 levels (see graph below)
  • Price of properties
  • # of new RE Agents
  • Amount of new construction for both SFR & MFR in Escambia & Santa Rosa counties
  • Veteran REIs (regionally & nationally) starting to offload assets
  • Two small MFRs hit the Pensacola MLS last month, both were under contract in 2 days of being listed
real estate investing pensacola fl
Above graph provided by Emerald Coast Realty

It could just be the paranoid side of me, but I have a hard time seeing how this will last much longer in Pensacola. However, as I mentioned in How We Use Our Tripod of Adopted Investing Criteria, we are focused on Cash Flow and not so much on appreciation / price. That said, with the predicting market turn we’re going to be more patient and focus on learning more about midsize multi-family properties (15-20 unit apartment buildings).

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2017 Focus:

  • Building Relationships / Expanding Circle of Influence
  • Stockpile Cash / Reduce Expenses
  • Increase Credit Lines
  • Build Knowledge Base of 15-40 Unit Apartment Buildings
  • Patience for great deals

When we first started thinking about seriously investing in real estate (2011) I found BiggerPockets.com [great site, join it, connect with me]. One of the first articles I read, published by BiggerPocket’s VP of Business Development Brandon Turner was How to Make a Million Dollars from Real Estate. This article laid out a 7-year plan to make a millions dollars in REI. That story stuck with me then as much as it does now. Starting 2017 we are effectively starting year two, in which the article suggest to not do any acquistions. Lining up with Pensacola’s expect downturn I’m fine with sitting on the sidelines…as long as I can be patient.

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Successful REI Takes A Team: Our Roster


Hopefully this relationship will continue to build, but playing a key role on the team, I plan to start interviewing additional companies now, identifying that backup option just in case.

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real estate investing pensacola fl

Our Pensacola Real Estate investing is focused on buying & holding (B&H) properties for short-term cash flow and long-term wealth building. While the team members discussed here pertain to our focus and are the team members we’ve discovered to successfully invest in B&H, different investment objectives may introduce different and/or more team members. I discuss the various types of investors in the Advantages of Selling Your Home to a Real Estate Investor blog post, but here I’ll discuss what our current roster looks like to make our buy & hold investing a success.

The current players are:

  • Realtor: someone who is used to working with investors or a young go-geter who has just gained his/her license and ready to tackle the REI world for you. Nothing wrong with interviewing realtors to let them know how you plan to invest and the direction you want to take your REI. Don’t be shocked if they all say Yes to everything you ask of them – after all, they are sales people. If you’re just starting out, work with 2-3 or ever how many it takes to find that one that truly understands your investing goals.

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  • Property Management: a must for Buy & Hold investors. I started our investing wanting to play this role and I still do for a few properties in our portfolio, but the tenants are AWESOME. As I started searching for PMs, I called and left messages with the top 3 Pensacola Google magic results and 1 that I met in person. In the voicemails I left, I let the prospective Pensacola Property Manager know that I had 4 properties I wanted to transition to them. I went with the only one that called me back and so far it has been a relationship where we’re learning a lot about each other. Hopefully this relationship will continue to build, but playing a key role on the team, I plan to start interviewing additional companies now. Because this is such a key role, having the backup option identified will prove to be key.

 

  • Tradesmen (electrician, roofer, plumber, HVAC, handyman): if you have a PM in place do you still need these? Yes. While your PM should have a rolodex of tradesmen to provide quotes on needed repairs & upgrades, having your own list isn’t a bad idea. I started building my list when I first thought wanted to be my own PM and just like any other team member, it took going through 2-3 of each to find the right one. The right ones for us are ones who provide quality work for a fair, consistent price.
  • Lawyer: just a no brainer. At some point in time you’ll need a lawyer for a very important event (title searches, evictions, closings, asset protection, lawsuits, etc.). Interview early, let them know your REI goals, but start this relationship before an event happens. I have a great one in Pensacola if you need a referral.

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  • Accountant: also a no brainer…at some point. Starting out or having <7 properties this is probably not a need but as your portfolio builds, it is a must have. Ensuring taxes and tax advantages are properly gained, a licensed CPA will do a way better, legal, job of this than you will, unless of course you are a CPA :).
  • Wife / Family: support groups are key, and my wife provides the positive reinforcement needed when facing challenging times and level-headed thinking when I want to invest outside of our criteria. The MVP of our team!
real estate investing pensacola fl

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My First Eviction Turned Into Greater Cash Flow

I received the email no landlord wants to receive. “It’s the 11th of the month, Unit A hasn’t paid rent yet. Do you want us to start the eviction process?”

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real estate investing pensacola fl

 

Being my first eviction and at times a hard ass, my initial reaction was, rent is due on the 5th, it’s the 11th, why are just now bringing this to my attention? Why didn’t you already file the eviction on the 6th and just let me know that you’ve done it? But, as I get older I’m learning that sometimes cooler heads do prevail and in more ways than one, this is certainly one of those examples.

A week later I followed up with Pensacola property manager to find out the status of the eviction. “She’s fighting it”, was their reply. “She paid rent through the court and now’s she fighting it.” I thought, that certainly sounds strange to me. If Tiffany Tenant (Tiffany is not tenant’s real name BTW) had the money to pay rent, why didn’t she? I’m now out $400 court costs. Again, being my first Pensacola eviction and trying to be wiser, I let it roll.

Before I go any further, I must admit I assumed Tiffany was a “professional renter.” I inherited these tenants with the purchase of the property and at the time of the eviction they had 2 months left on their lease that was signed with the previous owner. I assumed the worst.

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Toward the end of the month I receive a call from Tiffany. How she obtained my # I still don’t know, but I appreciate her determination. We had a lengthy conversation about the eviction and her story was not matching up to the Pensacola property manager’s. Tiffany brought up several maintenance items, that I was led to believe had been addressed – as in there were line items on my monthly maintenance statement from the property management company as being addressed. I figured the truth was somewhere in the middle but I needed to see for myself.

Sure enough, personally doing an inspection of the property, the maintenance items had not been addressed. The tenant even showed me the cancelled money order (date printed/receipt) where she attempted to pay rent through the property management company.

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Why this transpired and I’m out $400 court costs, I still don’t know, but I’ve now decided to manage this property myself. I was able to sign Tiffany to a new lease, one she is happy about and one that cash flows an extra $75/month for me. As for my Pensacola property management company, I see that relationship coming to an end soon, but for now I’ll let it roll.

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Selling Your Home. Can and Should You Owner Finance?

If you have a house in the Pensacola, FL or Cantonment, FL area you want to sell, there are plenty of things to consider. One of those is whether you want to owner finance. In some cases you simply won’t be allowed to do that, but there are circumstances where it may work for you.
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real estate investing pensacola fl

So let’s start with the Can You Owner Finance question. For people who have mortgages, owner financing is generally out. Even though you have the title to your house in your name, the bank still “owns” the house in the sense that they have a lien (the mortgage) on it. You can’t sell something with a lien on it without paying off that lien. This means you can’t transfer the house’s title to the new buyer without paying off your existing mortgage.

For most homeowners with mortgages, just paying off the mortgage in one lump sum isn’t practically feasible. But if you’ve lived in your home 15-30 yrs, never refinanced and don’t owe on your home then owner financing might be an option for you. If you need to get your house sold quickly, owner financing may be the way to go. When you owner finance, you’re basically the bank. You hold the mortgage on the home, and the new buyers pay you every month. There’s a written contract, just as there would be if they obtained a mortgage from a traditional lender, and you have the right to foreclose on the property if they don’t make their payments to you. While you won’t get a lump sum at the closing, you’ll get a down payment and the monthly mortgage payments. But is that really a good idea?

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Let’s know look at the Should You Owner Finance question. There are pros and cons to the owner financing option. It can certainly work for some people, and it will allow you to go ahead and get your house sold. That can be a big deal if you need to move quickly or there are other circumstances where a quick sale is very important to you. However, owner financing also has some big disadvantages that you’ll want to consider. First and probably the most important aspect for everyone, you’re not getting your money right away. Other than the down payment amount, you’ll have to wait for the rest of your cash 10, 15, 20, possibly 30 yrs – whatever the terms you and the buyer agreed upon. If you’re planning for the proceeds of your home selling to go toward another large purchase, such as buying another house somewhere else, you’ll basically be out of luck.

Another concern when you owner finance your home in Cantonment, FL or Pensacola FL areas is the chance that your buyer will stop paying at some point (non-payment actually happens everywhere, I thought this was a good spot to remind you we serve the Pensacola area). Banks have teams of people who can come in and foreclose on properties. They know what legal steps to take, and how to handle things. Unless you’re a seasoned real estate/finance veteran, chances are you don’t have the knowledge at your disposal, and foreclosing can be difficult if you’re unsure of the process. It’s even more frustrating if you’ve moved out of the area and now have to try to do everything long-distance or you must travel back and forth.

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A few other quick hits regarding owner financing…You’ll also need to make sure the property taxes get paid, and that there is proper insurance coverage on the property at all times, to protect your interests. Owner financing can be worth doing, but only if you’re knowledgeable about the process and prepared for any issues it may bring.

So, Can or Should you owner finance the sale of your home? Well my friend, that is totally up to you.
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How I Started Investing in Real Estate

I began my real estate investing career in 2006 with what I like to consider a false start. Flags on the field, back it up 15 yards…or realistically, 5 yrs :).  At what we now know was the height of the local market in Birmingham, AL, I purchased a 1950s ranch style SFR with the plan to live in and flip.
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real estate investing pensacola fl

Being my first attempt at a flip and working a a full-time job I knew it would not be the quick 30 day schedule that’s portrayed on TV. Single at the time, I knew I could live through the construction zone. Ironically and amazingly, the bulk of the construction happened after my girlfriend, now wife, moved in. I am VERY thankful as she became key in the design and helped with me with the manual labor on items we could do ourselves. Another blog idea…Know Your Limits. I may link back to this later, but knowing your limits in repair/maintenance is key to producing a good product and my limits would not be so low if I would have taken some of the best advice I ever received (from my dad).

Entering my sophomore year of high school, my father wanted me to spend each summer working with a different tradesman. He helped build houses on the side, so we had the connections of guys who could teach me right and make it fun. His plan was for me to spend one year with an electrician, next year with a plumber, 3rd year with a carpenter. The only thing is, I had a devastating fear of being electrocuted (still outsource most all electrical issues), cutting my fingers off and I didn’t want to deal with other people’s…poop (thank goodness for professional plumbers!). Needless to say I  regretfully didn’t take my father’s advice – I was a teenage kid, definitely thought I knew more.

REI Strategies. Lessons Learned. How-Tos. No Spam…Learn More.

Back to my false start…as we were paying more for labor we should have been able to perform on our own (thanks teenage me), the Birmingham market started tanking hard and in a couple of years we were like many people, upside down. We didn’t see much a choice but to bunker down and finish remodeling. By 2010, my day job provided an opportunity for us to move to Pensacola, FL, and always wanting to live on the coast, we took it.

Before moving to Pensacola, we had to make a choice (1) sell our house and take a major financial hit (2) turn our house into a rental and hope the market recovered sooner than later.  Not having the means nor wanting to take a major financial hit, we converted our Birmingham house to a rental and with it, I was re-introduced to the idea of passive income.  Unfortunately this time it was negative passive income. Following our move to Pensacola, each spring was the time I touch based with my realtor. “Not yet,” he would tell me. “If you can hold onto it for a few more years, you’ll be in a lot better position.”  And he was right. We held onto the rental property until 2014 when the market allowed us to exit nicely with equity to reinvest in Pensacola, FL.

real estate investing pensacola fl

It would be an understatement to say my real estate investing debut was a learning experience. However, my rookie season experience has pushed me to learn more, study harder, and really focus on the numbers – after all it is investing. At the time this post was written, we have made 15 offers in the last 3 months yielding no deals. I did receive an astounding “F&$% you and your calculator” response from a for sale by owner, so I know I’m doing something right. Believing in the process and highly relying on the numbers will help me not fall back to the way this all began and ultimately protect mine and my partners’ money.

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Oh and if you want to see photos from the original remodel, a few are located on our site: http://www.palmettosunproperties.com/remodels.html
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Advantages of Selling Your Home to a Real Estate Investor

Selling your home to an investor is a relatively straightforward process in most cases. There are basically four types of investors: (1) buy & hold investor, (2) wholesaler, (3) flipper, and (4) the buy/flip/hold investor. In the Pensacola, FL and Cantonment, FL markets we serve, we apply a strategy of buy & hold and buy/flip/hold.
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real estate investing pensacola fl

First things first…you are more than likely going to be offended by the initial offer you receive from an investor. Chances are they don’t know you, they don’t know the emotional memories you’ve made in that property and quite frankly, that’s not what the investor is buying. If they are a good investor, they have a specific investment strategy and mathematical formulas to support that investing strategy. The offer you receive on your property is just what comes out the other end of their formula. In most cases, as when we make offers, it is not meant to be an insult or devalue the memories you made in that home, it is simply the answer to an equation that makes that investment work for us (the investor). On your side of the deal, you more than likely have a property that is in disrepair and don’t want the hassle of making repairs that are traditionally required when using a Realtor. The investor is there to solve your problem: help you get rid of the house quickly.

Let me step back for a minute. There are basically 4 types of investors:

Buy & Hold Investors: simply put this type of an investor wants to purchase rental properties. They may manage their properties themselves (as we do currently) or outsource the management of these properties to a Property Management Company, but this type of investor wants to grow their real estate portfolio.

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Wholesaler: this type of investor has no desire to hold your property for long term, even short term really. Complicated concept to grasp, but this investor may only own your property for 10 minutes and then turn around and sale it to one of the other investor types discussed here. These guys obtain the best deals on properties and while we don’t wholesale, we will link sellers to other investors if the deal isn’t right for us.

Flippers: you’ve seen the reality shows on TV. These guys buy the worst house on the block for cheap, demo it down to the studs, move some walls, update everything they can and then hopefully sell a modernized home for profit.

Buy/Flip/Hold: this is a combo of Buy & Hold and Flipper Investors and where we tend to find our sweet spot. This is typically a distressed property that the owner has let go due to financial strain, divorce, foreclosure, job relocation, or inheritance. This type of investor buys distressed properties, flips them, but holds onto them and turns them into rentals.

Many investors do a combo of flips, rentals, or Buy/Flip/Hold, while some focus on just one area and others do all. How much the investor is willing to pay depends on a number of factors, including the specifics of your house and the market conditions of the area.If you list your house for sale, investors may come to you, especially if you use the words “fixer upper, handyman special, or needs TLC” in the listing description. Even if you don’t list your house for sale, there is a chance investors may come to you. If you have a home in Pensacola and surrounding areas, there is a possibility you’ve received one our cards or letters in the mail. Don’t worry, all the information obtained about your property is public record and savvy investors know how to obtain this info. You don’t have to wait for an investor to decide to contact you, though. You can reach out to investors in your area, like us in Pensacola – hint hint :). There are both companies and individuals who will come to inspect your home. They will look around, check out the comparable homes and their value, and potentially make you an offer if it fits within their buying criteria and investment strategy.

Again, don’t be surprised if the offer an investor makes to you is considerably lower than what you were hoping to get for your home. That’s one of the downsides to selling your home to an investor. You often have to take less. After all, an investor isn’t looking to find their dream home. They are looking to make money, and they can’t make a profit if they pay too much for the homes they buy. Sometimes offers are very low, at around 1/2 of the value of your home. Other investors will be more fair with the value. A lot of that depends on how the investor plans to use the home (flip or rental), and whether the value of other homes in the area is going up or down. Market conditions always play a factor, as does the work that is needed on your home.

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Two BIG advantages to selling your home to an investor: (1) quick sale for cash and (2) no repairs needed.

Quick Sale for Cash: Investors don’t typically need to go out and get a mortgage, and you won’t be anxiously waiting for the bank to decide whether your buyer can get a loan. They typically pay cash, and because they don’t need a mortgage they can close the transaction much faster than a more standard buyer. Generally, closing is less than 30 days for an investor, and it can be within just a couple of weeks in a lot of cases. By keeping that in mind, you can decide whether the fast sale is worth the lower price you may have to accept. Depending on your specific circumstances, selling your Pensacola, FL or Cantonment, FL area home to an investor may be just the right choice for you.

No Repairs Needed: Unlike a buyer finding their dream home and wanting it to be in perfect, move-in ready condition, investors won’t ask to have repairs performed on your property. In fact, the more work needed, the better. Just realize this is one of those factors that affects the offer you’ll receive from an investor.

I have unintentionally offended a lot of people, but now that you know it’s all about a math formula and helping you get rid of that unwanted property. If you have a Pensacola area property you want to sell to an investor, Contact us today!

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What Serving On My HOA Board is Teaching Me About REI

I have to hand it to my wife. She knows me better than I know myself…
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real estate investing pensacola fl

 

In September 2015 I was convinced to serve on the Board of Directors for my HOA in Pensacola, FL. Before throwing my hat in the ring, I inquired with people whose opinion I value and there are times where I wish I would have listened to everyone of them. They all told me “don’t do it!” I tried to convince my wife that this wouldn’t take much time, wouldn’t be a hassle, etc, but she knows better. “You’ll go at this full force like you do everything else.” She was right and what I’ve learned will help me when I run across that opportunity to Buy-Renovate-Hold a large multi-family that’s in need of deferred maintenance attention.

First, all of my interviewees had current or previous BOD experience not in our neighborhood (friends who live in Daphne, Navarre, and Pensacola). Second, their advice was solid and so far, on point: it is the most under appreciated role you’ll ever have – don’t do it.  A few things to note that makes this such a good opportunity for me to learn: (1) not a single member of the previous board that served for the 3 previous years lived full time in our neighborhood, not even in the southeast actually (2) we had 3 property management firms in the last 2 years (3) I’m currently the only serving BOD that lives full time in our Pensacola neighborhood (mostly rental properties).

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In the short 8 months of serving as Treasurer & Secretary, here’s what I’ve learned:

  • Not going to make everyone happy. This volunteer position doesn’t allow you to make every one happy. I can’t imagine taking over a large multi-family in need of deferred maintenance attention will provide much opportunity to make everyone happy either.  There are those that welcome improvement and there are those that are against anything that isn’t their idea and unwilling to serve. The later makes me smile.
  • How to resolve deferred maintenance items while working within a budget. With the previous, physically distant board attempting to take on large projects (i.e. grass replacement for entire neighborhood) while changing management companies each time the sun came up (not really), our neighborhood resulted in lots of deferred maintenance items. My wife and I joked a lot because each week before the HOA meeting it was like a scene from While You Were Out around here. Rush a years worth of work into one week. This part I’ve enjoyed the most and it has brought the most criticism (from none other than the previous board members).
  • Enhancing relationships with quality vendors. Once I came on board, it took some time to identify which vendors wanted our business with us and which ones didn’t. The quality ones are still around and we make sure to treat them like they deserve.
  • Expanding my knowledge/experience of replacing sub-par vendors.  Change always has a FUD (Fear Uncertainty Doubt) feeling, but we’ve made a few sub-par vendor changes that have led to easier management and less involvement from our board. We have a couple more to go but the deferred maintenance items are certainly dwindling down.
  • Resolving deferred maintenance items to improve overall property value. Just to name a few…dying to dead brand new sod, common area buildings that need painting, homes that need painting/cleaning, 10 year old irrigation system with little to no maintenance (ever), website with a 1980s look & feel, dying pool & spa equipment. More than a few, but we’re getting there.
  • It takes a team. Like managing any property, trying to take on HOA BOD duties solo is #1 illegal (due to our governing docs & FL statues) and #2 is just plain crazy. Having the proper team (board members, property management, maintenance, lawn care, pool service, HOA members that have previously been silent, etc) is the best way to accomplish improvement.
  • Increased my knowledge of FL Statues. While this won’t help me as much owning/managing a large multi-family, I’ve learned more than I really wanted to know about the legal processes an HOA BOD has to operate. Interesting process and glad the statues exist to provide the framework to operate. Thankful for our Pensacola legal team for all the guidance!
As we’re addressing many of the deferred maintenance items, I hope to continue to be able to serve for the education. I expect there to be endless tasks to be done or, as I like to look at it, endless opportunities to learn. If you’re looking to invest in Real Estate in Pensacola, or any area for that matter, I encourage you to serve on your HOA BOD. It will come with heartache, stress, and time away from other important items in your life, but it will be an education that you can translate into your investment properties.

 

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5 Reasons to Invest Your Hard Earned Money into Real Estate

There are many ways to invest your money and make a profit, and one of the most popular investments is real estate. While it’s not for everyone, getting involved in the real estate market in Pensacola and Cantonment has the potential to provide big profits regardless of the investment strategy you choose.
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real estate investing pensacola fl

Here are five good reasons why you should be investing your hard earned money into real estate.

1). Positive Cash Flow via Passive Income

When you invest in real estate and have some rental properties, as long as you purchased the property correctly, you have positive cash coming in from those properties consistently. Naturally, you want to get as much cash coming in as possible, but it’s very important to be realistic about the value of the properties and how much you can rent them for. You’ll also need to budget for expenses like taxes, insurance, vacancy, property management and repairs. Still, you can obtain a positive cash flow with little effort, and having that money coming in can provide some peace of mind.

2). Tax Advantages

The deductions for property ownership can really add up, and that can bring you some big tax advantages when you invest in real estate. Before you make those investments, though, it’s a good idea to work with your financial advisor, CPA, or tax attorney. That way you’ll know exactly how real estate investing could benefit you, allowing you to weigh the pros and cons and make an informed decision about whether the tax advantages are enough in your particular situation.

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3). Potential for Appreciation – extra icing on the cake!

Property, in general, is going to go up in value over time. If you take good care of the property and make upgrades to it, you can help increase that value faster. That appreciation will mean that the property is worth more than the money you have put into it, giving you an investment that has real value and that will continue to gain value the longer you own it. Investing in good areas and keeping the property updated can help you with appreciation.

4). Long-term Wealth

Many real estate investors are quite wealthy. They have some missteps along the way, just like anyone, but they have managed to accumulate long-term wealth that they can feel comfortable with. It takes time and effort to get to that point, but once they achieve it they have little to worry about. Their real estate investments will simply keep bringing them income, and they can invest that income to build wealth more easily over time.

5). Financial Security

Having real estate investments can help you be financially secure. Unlike a company that could close its doors tomorrow and leave you without a job, real estate investments will still be there. As long as you own the property, you can continue to collect rent. You can also buy, flip, and sell properties, and then invest the profits in ways that are best for you. There are so many options to consider when you invest in real estate that the financial security opportunities are significant.

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Overall, real estate is a strong investment strategy with multiple avenues to explore, and one that can help you build wealth and feel comfortable with your financial future. For us personally, we focus on positive cash flow and strive for a return of 15% or greater. This is far better than the stock market or any IRA can consistently provide – at least in my experience. Our IRA grew a WHOPPING 1.4% in 2015 while our RE Portfolio provided 25% ROI! And if appreciation happens, which it will, it’s just extra icing on the cake.

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Wahoo @ the Developments in Pensacola!

With all this excitement, building & revitalizing, the recent announcement of two larger developments in and near downtown Pensacola has me wondering. Is it too fast?
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real estate investing pensacola fl
About 2 years ago we started seeing new construction, but now it’s as if new construction is happening everywhere. From Perdido Key to Gulf Breeze and from Downtown Pensacola to Cantonment. And not just single family homes, but entire neighborhood developments. Just to name a couple, the expansion of Lost Key and with Navy Federal relocating their headquarters to Pensacola, Cantonment is booming. Lots of new construction is exciting, particularly exciting to see how downtown has and continues to revitalize (it was a dump when I visited for a fishing trip just a little over 10 years ago). Now it is awesome.
 
With all this excitement, building & revitalizing, the recent announcement of two larger developments in and near downtown Pensacola has me wondering. Is it too fast?
 

I wasn’t really in the real estate game when the bubble popped in 2006-2008. Ok, ok, I did get the bug on the tail end of the hype (which I’ll write about in an upcoming post), but now that we all know what happened then, are these truly signs of improving times or another economic bust?

It is hard to say and one that only elite experts can predict (recommend watching Adam McKay’s The Big Short), but I don’t think we’re facing another housing crash anytime soon. It is just too damn hard and complicated to get a loan these days. Credit Unions, Banks, mortgage brokers, they are all starting to become 4-letter words to me. Regardless of the lending institution, they are just to damn difficult to deal with. And this is coming from someone who is an ideal candidate for a home loan. Rant over, I’ll save it for another post 🙂

It is exciting to see what’s going on in Pensacola and many people are responsible. I’m glad we just get to experience it. Wahoo!!

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Article links to the aforementioned developments: 

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Title Search: Should I Pay a Professional?

From my experience, absolutely 100% yes, a Title Search should be performed by a paid professional, every time. Furthermore, at closing, always, alwaysalways purchase title insurance. Title Insurance can save you thousands. For now I want to talk about why I will always pay a professional (lawyer, title search company, etc) to perform a title search.
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real estate investing pensacola fl


As always, I’m not a legal attorney and if you have title / deed questions, a legal attorney should be sought after. Consider this post for entertainment purposes only 🙂

I recently started inquiring to buy a property near downtown Pensacola, FL.  The property appeared to have been abandoned for years & in absolute horrible condition (the way we like them). I had my realtor touch base with the listing agent and I expected it would be a lost effort as the deteriorating Realtor listing sign in the front yard conveyed this opportunity had been around for a while. After a couple of weeks my realtor finally returned with very little feedback. “Title issues”, she said. That was it. In an attempt to save $100, I went off to perform my own title search. Surprisingly it came up clean (hence the reason I now will always pay the professionals to perform title searches). My realtor abandoned pursuing the deal with me so I went on to speak with the owner listed on the Escambia County Appraiser’s site. For the sake of this post, let’s call him Pensacola Bill.

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Over the next several months Pensacola Bill and I had many discussions and I learned a lot about the property.  This property was an heirloom passed from his deceased mother. Bill has been paying the taxes on the heirloom property for a few years, even though the property is abandoned and in horrible condition. He thought by just paying the taxes gave him 100% of the title. He eventually will be correct if he exercises something called Adverse Possession, but he’ll have to wait it out for several, several years to exercise this right. Bill and I finally agreed there were some unknown title issues and worked out a sales price for the property that included me paying for some of the legal costs to finally probate title the property directly to Bill. I had a ceiling of what I would pay and those legal costs will be deducted from the agreed upon sales price. Anything over that, Bill was responsible. As we dove deeper into the discovery phase, more items started to unfold to the degree that I became very uncomfortable moving forward – at least not until I understood everything better. Remember, when I did a title search on my own, it came back clean, one owner, property was Pensacola Bill’s.  A quick call to my Real Estate Lawyer and $100 title search later here’s what was discovered:

The heirloom property was actually titled to Bill and his two brothers. Unfortunately, Bill was the only one still alive. Because his brothers and brothers’ wives were also deceased without a will, their ownership of the property passed onto their children. Furthermore, each of the brothers, including Bill, had been married a couple of times. Each marriage resulted in at least one to several kids with each wife and some wives had children from previous marriages. Under Florida law, the ex-wives  (living or deceased) still have ownership in the heirloom property as long as they were legally married at the time the heirloom passed title to Bill and his brothers. If the ex-wifes were deceased, their ownership passed onto their children (including those from any previous marriage). As Bill and I started to add up the potential # of known dependents, that quickly totaled 27. Twenty seven individuals who would join the probate process, all of who had to agree to not only sale the property, but at what price. I know this is part of the probate process and something that needs to take place, but at this time I decided to not pursue the deal any further.

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Helping Pensacola Bill discover all that he didn’t know and give him some direction was truly educational and quite frankly, rewarding for me. Sure it may have cost me $100 and several hours of my time, but the probate costs alone were expected to be more than $10,000.  Bill and I have agreed to keep in touch in hopes that we can strike a deal in the future.

Bottom line, always pay a professional to do your title searches and always purchase title insurance. As in this scenario, it not only helped me save thousands of dollars but also allowed me to not get wrapped up into a deal where it would take potentially years before I was able to see any ROI.
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History of Real Estate: Strolling Down a Trail

As I get older, history seems to provide me with a newfound spark of interest and thankfully Pensacola is full of it.
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real estate investing pensacola fl
Recently we took advantage of a warmer weekend and explored the Tarklin Bayou Preserve State Park. Curious about the name Tarkiln, I had to do some research. It is a compound word made up of tar & kiln.
  • tar – As in pine tar. The kind that made George Brett of the Kansas City Royals infamous? Maybe so.
  • kiln – As in the type of oven that can get hot enough to harden objects such as clay for pottery or…yep, you guessed it, tar.

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Straight from the pamphlet available at the main entrance kiosk:
During the 1800s, tar kilns were located on the adjacent peninsula to process the tar removed from the yellow pines. Visitors can still find an occasional “cat face” in some of the larger pine trees where ceramic pots were used to capture the seeping tar. While pine tar was an important resource for the maritime industry, it was also used in the production of soaps and animal medicines.
 
real estate investing pensacola fl
Thinking about life in the 1800s and how this now preserve was used differently then, I immediately wondered how real estate must have been in those days and wondering a step further, how did the act of buying and selling property, real estate, actually ever begin. Enter…Google Magic. Instead of boring you with words, the folks over at curbed.com put together the most meaningful graphic I could find. The history of real estate:

 

I get overly excited every time we start the process of evaluating single and multi-family homes to hopefully add to our portfolio. I imagine I would be like a kid in a candy store if I were anywhere near the size of a Louisiana Purchase or Alaska Purchase…wow. There we were as a nation, looking to add territories to our portfolio. I certainly didn’t have that thought going through my head when originally learned about those events in grade school history class.
More info on Tarkiln Bayou Preserve State Park: 
Located in southwest Pensacola off Bauer Road, the 4,200 acre park offers a few hiking trails, a picnic area and wildlife viewing. The short 1 mile loop is completely paved or raised platform – which makes for a nice walk with a curious, still stumbling toddler or stroller. The 6 mile loop on the other hand, be sure to wear boots. and get a little muddy. Either way I definitely recommend a visit, even if you have just a couple of hours. We will certainly be a repeat visitor.
real estate investing pensacola fl

 

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