A Newbie from Cedar Rapids, IA who needs BP help!!

12 Replies

Hello BP, 

I am a new investor from Cedar Rapids, IA looking for some BP help/advice on a deal that I am interested in. When I say newbie I mean I have done tons of reading/research and am ready to pull the trigger. That said there is the issue of funds, I am at the moment unable to show my commission from my full time job as income (until taxes for 2015 are complete), and between a new baby, the purchase of my own home, upcoming wedding and 3 moves in the last 3 years my savings is to say the least taken a hit, which is why I am coming to BP for help, this is after all the home for "Buying with no or low money down"! 

Well now that everyone knows the why, here is the what. I am looking at a house in my neighborhood that is currently owned by an out of state wholesale company that buys bulk REO properties and re-sells them. This property is currently not listed on the MLS but the asking price is $69,900 (per the owners site and signs in the yard). I will list the info I know below and would appreciate any feedback on whether or not I am on the right track.

Asking price: $69,900

Owner purchase price: $49,900 (they closed in the middle of December on the property) 

Estimated Rehab: $10-15,000- total rehab of small bathroom, new roof, new interior doors, carpet in 3 BR's, new windows and new siding. 

ARV: Low end $110,000, high end $125,000

I believe this could be easily picked up for $60,000 and if I was all in for $80,000 with rehab and holding I would stand to make a minimum of 30K. 

If anyone has any suggestions or if I am not on the right track, I would appreciate any feedback I can get. Also, as previously mentioned I currently cannot get nor do I really want traditional lending at the moment so if anyone has any ideas/suggestions on how to acquire this property I am all ears. 

Thanks in advance to everyone on BP for their time!! 

Hey @Tristan Neumann !  Welcome to BP!

I would see if this bulk wholesaler could carry the contract for 9 months or so?

Also- careful with your profit numbers.  Generally takes 10% in selling costs, and your silent partner, the IRS, will take theirs at your new ordinary income marginal tax rate.  The realtors usually make about what the rehabber does.

I'd still ask about seller-financing.  No Land Contract or Contract for Deed, though.  You need title, especially when rehabbing.  Good luck!

Hello Tristan, I'm over in Des Moines. Some of those wholesalers will be willing to do contract terms, but you do pay a premium for that. I'd just give them a ring and ask if they'd be willing to do contract terms and see what they say. 

@Chase Gochnauer Thanks for the response! I will definitely give them a call and see if that is an option, however this is where my newbieness (yeah I just made it up) comes into play as I am not sure how the seller financing process goes (I understand the concept but not the step by step process) so I will have to do more research.  

@Jerry Houk Thanks for the response! As for rehab costs I agree they probably look a little thin however this particular house has the same exact layout as the house I currently live in and I have priced up almost all of the same rehab costs on my house and I am able to do all the work myself which helps keep costs down. That said I realize I am just trading time for money but at the current moment I have more time than I do money so its a sacrifice I am willing to make.  

Yes I didn't read through the numbers, but I agree with Jerry, $10-15k for all that is a bit low. $10-15k is maybe materials. I think you'd be lucky to get away with $10-15k for just the siding and roof, assuming you're hiring professionals.

@Chase Gochnauer I agree if I were hiring all of this work done it would be cutting it close with those estimates. However like I said to Jerry, I will be doing the work and I have a good idea of the costs of materials going in as it is the exact same layout as my house. Also this is a relatively small single story ranch house which makes it a little easier to work on. 

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