All Forum Posts by: Andy Collins

What did the property appraise for? Normally hard money lenders will loan about 70% of ARV,,,if its a $150k deal, why did the first lender only lender $75k?

David,

I didn't question your numbers to make the deal sound bad, it sounds like you can make some money.  I always worry when someone starting out (and I'm assuming that), uses profit figures that don't fit the house.

I've seen too many people think they can make $x on a project, and end up making $1/2x and are disappointed, instead of being happy they made money on it.

I go into any deal looking at the worst case scenario, if it works out better, and I plan on it working better, I am more than happy.

Just remember to look at your numbers from reality, and always, always plan on unknown cost,,,10-20% is what I normally use, but it really depends on the rehab and what is involved.

Look at the numbers closely on any deal, I know you said you get 2.5% on the buy side, and pay 2.5% on the sell side,,,but hopefully your selling for a lot more than your buying, so you still have the 2.5% on that money.

andy

I got half of my EM returned on a HUD property because between the time I put in the offer, and the time of my inspection, the house was vandalized,,wiring cut, water pipes cut.

It was obvious the vandalism was done after I signed the agreement, since the damage was not present at that time, luckily I had taken some pictures when I first viewed the house 

It still took a couple of months to get it returned,,and again, I only got half back

since the total rent is $2500 month, I would dare to say this is a lower income area,,,in that type of area you should expect great cash flow,  at that price you don't even get close to good numbers

 In one city I have rentals they do an inspection between every tenant (and if you don't do it they won't ever get water),,,if they find a new hot water heater they will want to see the permit,,if no permit, you have a big issue.

Even if the hot water heater is a year or two old, if you have owned the property that long they want to see the permit was pulled.

andy

Most people don't remember where the 'reality' shows came from.  About a 12-15 years ago the tv show writers were going on strike, no writers, no new shows,,so the network realized if they had 'unscripted' shows (big brother, etc etc) they could bring some new shows out during the strike.

They realized that the shows were actually liked by audiences, and the cost of production (no mega stars) saved money,,,so it is grown to today's 'reality' shows on everything and all done with so much drama it makes me laugh.

I loved one show that would show 'new hot water heater $1k, added value $2k", when truthfully you couldn't have sold it without the new hot water heater,,,I figured if you spent enough on  a house you could retire after one flip according to that show

If you paid $365, rehab is, lets say $30 based on the last figures (with nothing built in for issues), you have $395.

If it sells for your high estimate of $465k, less 3.5% for the lower selling commission, you have $448,725 IF you have absolutely no issues with the rehab and you sell at the top of your possible sales price.

I just don't understand why you say "about $80-$90k pretax profit"?

I realized I could never flip after watching some of these shows (i am a buy and hold investor), I don't drive an exotic car, I don't scream at people and I'm not always pushing contractors to work overnight because I have a open house scheduled.

These shows are entertainment, just like all reality shows,,they have very little to do with reality,,I think most people not in REI realize they are scripted and made to increase the drama for an audience,,,ever notice how the husband/wives teams nearly get a divorce every week from the fighting,,,

To have $400k (or close) in a house that leases for $2,500 isn't something I have any interest in,, a high end house on a golf course isn't what my model calls for,,,,

have you driven by or parked nearby in the morning or afternoon just to see if he is running a daycare out of your house?  He might have a home office and put the license at that address,,,I wouldn't jump to conclusions until your sure he is running a daycare.

andy