Caleb Yamanaka's Discussions

sorry about the last post.  In regards to the initial article that Michael posted. For every person that is a success story selling and buying on their own.  I have personally met an equal amount of those whose research and "knowledge" or buying and selling homes has only gotten them further into trouble.  Every Real Estate market has its complexities and a Good Agent can provide the experience of dealing with the buying and selling of land on a daily basis.  I agree with the statement that 5% of the agents in any given market are doing 95% of the transactions.  There is a reason for that, it is because of all the things that Jack and Michael have previously mentioned.  The intangibles of doing this job on a daily basis, but if at the end of the day the cost is more then it is worth, then as a Seller you have the right to decide on going it alone. 

Staresce, "I think very honestly the commission you receive for the job you do is highly inflated when it involves high end houses." What should we get paid?  I don't understand the argument that Realtors get paid too much for what they do, because of the facts as mentioned earlier, pay structures are negotiable, you have the option to FSBO, no body is making you hire a Realtor.  Also on the Realtor's side on average a Realtor has to pay roughly 50% of their commission to their Brokerage, as well as (in most states) half of the overall commission with Agent on buyers/sellers side.  If you take a standard (in Hawaii) residential commission of 6% of the sale price the listing agent will pay 3% to Buyer's brokerage.  Then pay 1.5% commission to their Brokerage, leaving Agent with 1.5% of the sale price not including taxes.   At the end of the day as a Seller it is your choice on how you want to dispose of your property.   

I don't understand why "dispose" would have a negative connotation.  That is most Seller's goal.

I guess the question really is... In your opinion... what would be an appropriate commission for a Realtor's services?  I guess even further from that what is the expectation of that service?  I think that is as fair and transparent as I can make it.

Silver, I think what you haven't mentioned is that you need to know what sort of yield you are looking for on your investment.  If you know your acceptable yield then you can plug in the assumptions you have on rent, cost to operate, etc. on a property to figure out what sort of purchase price you will need to meet your yield requirement.  To fully understand your yield you will need to have a realistic (conservative) disposition price on said property to realize the full extent of that properties yield.  You will have to make many assumptions to figure out the Yield on each individual property and I would suggest running a best, worst and most likely case scenario for each opportunity.  This will give you an idea of what you could be getting into.  

There is no getting rich quick in real estate.  High leverage equals high risk. 

Small note.  While Kiyosaki's basic tenants are sensible... From what I understand, he didn't make his money in Real Estate, he made it selling the idea of how to make money in Real Estate. 

If you are to get into this market I would suggest starting small.  If you intend to leverage yourself do not borrow near your capacity.  If the investment that you make is a success do another investment just like that which is in the same niche.  Master one area of real estate investment at a price that, if you have a catastrophic failure, will not put you in a hole.   For every high risk (high yield) investment that you do, hedge that investment with a low risk investment. I do not subscibe to the thought of building equity in your first purchase, but it is a safe way to go. 

"I do not subscibe to the thought of building equity in your first purchase, but it is a safe way to go" Sorry what I meant is that "I do not subscribe to the thought of your first purchase having to be your home and building equity in that home, but it is a safe way to go."  If rent is less then cost to own home, then maybe there might be other investment properties out there that make more sense, rather then buying a home.  Depends on your market.

I agree with space_acer, while you may not need a degree to become successful a solid foundation of market principles can only help.   Also a good choice as an investor is to take a CCIM course, either the intro course or 101.