All Forum Posts by: Andrew Taylor

You need to double-check all of your numbers. Using the 70% rule, your purchase price should be {225k * .7} - 25k = 132.5k. So right off the bat you're overpaying by 37.5k. And that's if your comps and rehab estimate are accurate {not likely, as you yourself said you have zero experience}.

Your credit is not an issue; hard money lenders only care about the deal, not the borrower. But no lender will give you money based on the numbers you're showing. I know that's frustrating, but you just need to keep looking.

@Michelle Rukny I'd like to know your wholesale contact as well. I'm in the magnolia area.

I didn't sleep at a Holiday Inn last night, but I am a contractor in Houston...:)

I can tell you the window quote is not out of line. You can figure the materials are a couple of hundred dollars per window, plus the labor to install them.

As far as the roof, 400 square feet is about the size of a small garage. $8,000 seems high to me, but A) I don't know the entire scope, B) I don't know what was agreed to before hand, and C) as a former boss of mine used to say, you can't put the s*** back in the horse. In other words, if you already hired the guy, and he already did the work, you're more or less stuck paying the bill unless you want a mechanic's lien on your property.

You've probably already learned this lesson, but in the future, at the very minimum have a detailed conversation with the contractor about what will be included for what price. Even better, get it in writing.

Extra points to @Michael Le right out of the gate. Thanks for the info.

Post title pretty much sums it up. Looking for recommendations for an investor-friendly (or at least investor-wise) CPA in the Houston area. Extra points if they're on the north side of town.

Thanks for the input @Jeff Filali.

I'm with you on wholesalers pricing themselves out of deals. I see ridiculous rehab estimates (my favorite is the $10k rehab that only needs foundation, roof, cabinets, and interior+exterior paint) and ARVs that can charitably be described as hogwash.

I have a vague understanding of the concept of wholesaling properties - i.e. the wholesaler finds a distressed property and/or motivated seller, puts it under contract with the right to assign, and then finds a buyer willing to pay more than the contracted price, thereby collecting the difference. So far, so good.

I have some questions about the nitty gritty, though. Had someone tell me yesterday that buying a deal from a wholesaler means paying twice the closing costs - one for the wholesaler's closing, and one for your own. That makes no sense to me, as I don't believe the wholesaler actually ever closes on anything. Correct?

Have also heard from multiple sources not to put a non-refundable deposit down on a wholesale property. But I don't think I've ever seen a wholesale lead that didn't say, "$X,000 non-refundable deposit secures this deal." So which is it? I don't think I'm willing to give anybody $X,000 of money I can't get back if I can't inspect the property.

And what are the mechanics of the transaction? Where does that deposit go? To the wholesaler? To a lender? Escrow/title company? If I was able to go by and look at a property, decided I liked the deal, and wanted to pull the trigger...how would I actually do it? (Assume I have cash and/or hard money already lined up.)

Finally, knowing that the general rule of thumb for BRRRR is (70% of ARV) - (Rehab cost) = MAX OFFER, why do none of the leads I see meet that criteria? Is that purely a function of what the market (I'm in the Houston area) will bear? Do wholesalers know that formula and not care? Do they not know it? Is 70% the minimum acceptable target, or is it the ideal, pie-in-the-sky target?

Thanks in advance for your input.

I'm not an attorney, but I did stay at a Holiday Inn last night...

I think the quitclaim deed may be problematic. You might contact your preferred title company and ask them about it. My understanding is that most title companies won't issue a policy until the quitclaim deed is remedied. ("Quitclaim" is another way of saying "If I actually own any interest in the property, then I deed it to you. If it turns out later that I don't have an interest in the property, well, then, neither do you." Hence the title company issue.)

Best of luck.

After speaking with @Nikolas Ferreira and a few others, it sounds like the typical arrangement for this scenario is for one party to purchase the property, and a second party (me, in this case) does the rehab work. At disposition, both parties receive their investments back, and whatever is left is split proportionately (i.e. if the property cost was $60k and the rehab was $20k then the profits are split 75/25 after recovery of initial investment).

This seems reasonable to me; any dissenting opinions? Anyone out there interested in an arrangement like this?