Video Closed Captioning:
one
what’s going on everybody it’s matt aka
the lumberjack landlord here with mike
silver from one rest of the time michael
we are here for segment three and this
is one’s going to be action-packed
because
i’ve got an itch we got a scratch
oh no we got a events coming we got
event coming it’s coming i’m putting
everybody on notice
um talk to me about your last experience
with an appraiser
on one of your properties refi
preferably
um so yeah i’ve done some refinances
here recently i did a cash out refi on a
property i’ll do my office building so i
have an office building it’s called the
hub in fresno it’s got all these awesome
real estate folks there i i did own it
free and clear on purpose
i decided that i wanted to race in
capital
uh let’s just use some round numbers i
think this particular building heart of
fresno cute area tower district uh i
think it’s worth 350 all day long
if i had to sell it
uh i bought it for
significantly less than that and spent
some money fixing it up
so i had appraiser go in
uh and um
let’s just say he thought it was worth a
lot less
i mean a lot less yeah
again i think i could sell it for 350.
he came back i think it was 200 or 210.
oh we’re not we’re talking like 40
points yeah yeah lower
yeah and um
yeah that that’s that was my last
you know that was the result of that so
i’ll see what you have to ask so yeah so
how did you so what was your next step
after you got the appraisal from your
bank
yeah
so i call i i called up the appraisal
appraiser
uh and had a discussion because i’m like
do you do you not understand that you
know i bought the building let’s say 150
spent over 100 grand repairing it making
it nice
and it’s all leased right it’s it’s not
like it’s an empty office it’s actually
an office building that’s producing
income
and um
his his answer back is it’s an odd
building there’s nothing else like it
i’m like no there’s nothing else
like it
it’s why it makes it special not why it
makes it worth nothing you
i mean it’s got deep parking in the back
it’s got frontage on the main street i
mean
yeah
he basically penalized it for being
unique and completely remodeled yeah i
hate things that are one of a kind yeah
i hate one-of-a-kind unique fully leased
properties yeah
faberge eggs with return on capital are
horrible and it’s an office building so
this isn’t no four hundred dollar
drive-by appraisal this is a 25 or
twenty nine hundred dollars
yes yes right so again so i get this the
bank’s like
michael we agree with you it’s wrong but
do you want to pay for another one you
know it’s like
not really
so you know the good news is i happen to
be in a situation where the money wasn’t
important
uh i do feel slighted i um
so i moved forward i just i did the deal
it didn’t feel good if i was doing like
if i was doing a bur project right i’d
have been i’d have been
crushed sorry i owe a dollar but yeah i
would have i would have at that at those
numbers i probably wouldn’t have got my
purchase price back i mean he was so far
under right this is why burr projects
are terrible because you’re relying on
an appraiser who could have a bad day
who could say one-of-a-kind unique
properties fully leased or worth half
what they’re worth
i mean i could sell the property today
in this market for 350.
yeah it’s a refi cash out so there are
going to be more conservative all the
time sure but
40 points more conservative really
that hurt
that hurt
yeah i can imagine so real quickly
couple points that i want to make sure
that we cover because a lot of people
aren’t familiar with commercial
appraisals commercial appraisals are
usually not 30 or 40 page documents or
50 page documents they’re usually 180
page documents
because they’re so much bigger there’s
allegedly allegedly so much more work
that goes into creating the appropriate
comps
clearly that didn’t happen in michael’s
case yeah
clearly it’s a one-of-a-kind property
that there’s nothing else like it and
thus it’s bad so when we have an
appraisal go sideways it’s not six or
seven hundred bucks
in his case it was twenty five hundred
in my quake in my case it was forty
three hundred dollars
so the bank will give you two choices
one move forward
two
get it redone again and not at the
bank’s expense but at your expense again
so you can roll the dice and this isn’t
just
well yeah we’ll put it in q and we’ll
get one back out to you in two weeks it
starts the process all over again it’s
probably six weeks what is your rate
lock do you have a rate lock it probably
expires
in that climb and you’re paying points
so when the when the move is as great as
it is in the market as it has been the
last six weeks
kind of your option is to take it that’s
exactly what i did if i would have got
another appraisal i would have lost my
sub 4 percent rate
and again i’m lucky enough to be in a
position where the extra 50 grand is not
gonna
make a difference but i was i was way
pissed off yeah
so the story that i have the the itch
that we have to scratch is
uh six unit
off market
i see the number i’m like holy cow that
number is ridiculous it was only six
hundred thousand bucks for a six unit in
a very desirable uh town
with a water view
oh wow water view not you can’t touch
the water from there but you’ve got a
beautiful view of a beautiful landscape
and river and lily pads i mean it’s
beautiful
and so and it’s very this part of this
town is very exclusive there are less
than 100
buildings in this part of the town very
very tough to get to walking distance to
a big huge river that splits the state
all sorts of cool artists stuff like
it’s a kayaking fishing you name it it’s
awesome
so 600 000 is an absolute steal for this
property
so i’m super excited i’m like
you know when you’ve got one of those
deals where it’s just like it’s almost
too good to be true and so
that’s kind of like the deal that turns
us back into rookies
you have it yet do you have it yet do
you have it yet hey do you have it yet
hey do you have it yet do you have it
yet oh do you have it yet like you’re ty
you’re texting you’re calling you’re
emailing trying to get a hold of your
broker do we have it yet it turns into a
rookie turns you into a first time groom
again you know just everything is
sunshine and roses and you’re just like
i just gotta win this deal
so we do we get it under contract except
this seller is a real pain in my
you-know-what because every single time
we send them anything they take five
days to respond to us i don’t know why
i don’t i don’t know what they’re doing
that for but they i know i promise
whoever you are and i’ll expose who you
are after this after this video like
after we’ve closed you’re not that busy
there’s no way there’s no way you’re
that busy where it takes five days to
get a response on a property you’re
trying to sell for six hundred thousand
dollars
so we go through the process we get the
appraisal we go through the whole nine
yards
the appraisal company says
we don’t want to go inside the units we
want to do a drive by
for a
4500 appraisal wow
yep yep
okay
worse
my bank says
okay
oh
oh no
this is not going to be good
all right sounds good and so
my broker gets the call from the
appraiser saying hey uh so we’re just
gonna do a drive by probably tomorrow
just letting you know and um and we’ll
be asking you
to go get all of our pictures and then
just send us the pictures
for forty three hundred dollars
[Music]
wow that’s good business i guess yeah
sign me up
i’d be more than happy to drive by some
properties and have somebody else go
take all the pictures
i’d be more than happy to so
this happens they do the drive-by then
they actually the appraiser has a couple
questions for me i hear his name and i
know it’s familiar
and i’m like that name sounds familiar
so
um so i check i’m checking while i’m on
the phone with him he almost torpedo
another one of my deals six months ago
and i’m like here we go so he asks me
and he goes yeah he goes it’s gonna be
pretty tough to get to 600.
i was like
i’d pay eight
yeah what are you talking about six yeah
and he goes
you’d pay eight for that i go
yeah i would
i said
what do you see so
i’m being as gentle as a lumberjack can
be
i can’t get any more gentle than this
yeah
what do you see as the three main
drivers
to that region and to that area that
where that house is located what do you
see as the three drivers for that area
and his answer was
i mean i don’t really know that there
are any
oh
interesting that’s interesting
apparently this appraiser knows nothing
about the town that he’s actually
appraising i said i said i forget i said
where where are you out of
boston
boston
boston is
might as well be china
it’s an it’s a little over an hour away
but our markets could not be more
different
in this town there are
zero single-family or zero condos
over a million dollars over five hundred
thousand dollars wow in boston there’s
building after building after building
after building album and commercial
stuff up the ying yang so
i say all that to say this i wasn’t
trying to put them on the spot i did
have to ask them the question he
couldn’t answer the question and so
i am now waiting for this appraisal to
come in he might hit six he might not
i’ve already lodged a complaint with the
bank saying we cannot be charging me 43
or 4 500 for an appraisal
and then sending somebody that isn’t
from the area doesn’t know the three
drivers for the area because michael
here’s the area that he doesn’t know
anything about
we are
this town actually has rights to send
their kids
to
the best regional high school in the
entire tri-state area
wow that’s one driver yeah i’d say so
right second driver is it puts them
10 minutes away
from
the naval shipyard that works on nuclear
subs
where the average income
is extremely
extremely good
number two
number three
it puts you in new hampshire which has
no income tax
but you’re 10 minutes away
from being able to go to maine new
hampshire
or massachusetts all via the state the
interstate turnpike wow
so those are my three drivers why for
why i buy in this town yeah
but
maybe i just don’t know what i’m doing
and the appraiser knows far better well
it’s not boston right
that’s that’s all we know this is not
boston exactly and so when i had that
conversation with me said
yeah you know i just i
i just don’t i just don’t think that i i
just don’t think that’s going to make
that much of a difference and i said so
when people are buying a home
if they have kids and these are larger
units they are looking for a great
school system check
if they work
and it’s not at the local walmart
they have any sort of a commuting job
they want to be close to a highway this
is five minutes from a highway and ten
minutes from the interstate
two
and then three
people that don’t pay income tax
legally state income tax people that
don’t pay state income tax have five to
seven thousand dollars per hundred
thousand dollars more money than if they
don’t exactly
so
we will see how this all turns out i
wasn’t meaning to do a cliffhanger for
anybody but we will see how this turns
out because allegedly i will be getting
that
report next week
and so well it’s actually interesting
because
i know where you’re coming from
but it actually might help you and again
i don’t know the situation at all but
let’s say it came in at 570. i know what
i would do first besides
i’d be going back to the seller go dude
you got me yeah you got to do 570
the bank won’t i mean that’s how i play
that but yes don’t disagree but i think
that the everyone here at the table
knows they took my deal because i was
clean i was fast
and because the number was
they were like listen we’re not talking
below 600. you know it’s like sounds
good then we have the right price 600.
yeah we’ll see because i wasn’t going to
beat him i wasn’t going to beat him that
the number is that good and i then
justified to him i said
he said well but what are you basing
your rent numbers on i said
i own a building five houses away i own
another one seven houses away the other
way
exactly and these are my rents real
numbers yeah real numbers not graphs not
feelings not i looked it up and i think
that the number should be yeah written
yeah no should bees
here are numbers that are rents and so i
have seven units
within a total of seven houses away from
this one building yeah yeah
but why would we want to use those
numbers michael no of course it’s too
close
it’s far too close to make an accurate
representation of what you’ll get for
rents there yeah unbelievable so
i implore you if you are looking to do a
burr
please
please please
make sure please don’t have it be your
maiden voyage please
it
michael and i are sophisticated
investors elite investors he has almost
200 units i’ve got just over 100 we’ve
been doing this for 20 years
even for people that know the market as
well as we know it you never know who
your appraiser is going to be what
biases they have and how far away they
came from
and for you it didn’t really hurt
overall but you still have 50 grand on
the table i did and you’re never gonna
get a four percent rate again so that’s
lost money forever forever
forever so anytime you’re doing that
refi you’re looking to get everything
you possibly can because your hope is
i’m not going to refi this ever again
the likelihood is if you’re in the
threes which you were
you’re not going to refi that again as
an investor oh not at all it’ll be paid
off before it’s refund absolutely 100 so
i implore people if you’re looking at
burrs if you think that burr is the way
to go just because there’s a lot of
videos out there i am telling you please
be safe please don’t do a burr as your
first investment it is likely going to
get you in trouble because there is zero
predictability when it comes to the
appraiser and that appraiser is going to
make the decision of how much your house
is worth not what the market says
it’s not what other comps actually are
it’s what that appraiser takes from that
data that then represents that as being
most applicable towards your asset your
house well said
awesome michael tell everybody where
they can find you my friend one rental
at a time go to google search bar and
type it in should see all kinds of stuff
8 a.m pst tomorrow 11 a.m est tomorrow
michael will be there and doing his
amazingness on
the wonderful youtube live stream and
then if you’re lucky enough to be part
of his group he also has a noon which is
also very good frankly he can be more
candid there because people are paying
for his content yeah so
far more and i don’t have to guess where
people are coming from exactly well they
better have been paying attention to the
question for it yeah exactly
why’d you ask that question you’re my
course you shouldn’t have asked that
question yeah go watch this video again
exactly need to watch that one more time
case review so as i always say we create
we spend a ton of time creating great
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like button super excited to have you
guys here mike have a great weekend my
friend we’ll talk about early next week
and uh at lumberjack landlord and at one
rental at a time on instagram you’ll see
us post things relevant every single day
to your successful real estate
investment journey and
being a landlord so mike thanks so much
for the time have a great weekend and we
will see everybody next week take care
everybody