All Forum Posts by: Andy Sabisch

Auctions are deceiving . . . . rarely do they go for the opening bid and in fact there is likely a reserve which has not been disclosed.  We have bid on properties where the final bid was a good deal over the opening amount and did not get the property as it did not meet the reserve which does not have to disclosed.  Due to the need to have cash at most day-of-sale auctions, we have avoided them after attending a few to see how they play out. 

Not trying to talk you out of a deal but for your first flip, you are taking on one heck of a project.  The vehicles can net you a few dollars from a scrap yard but the rest will be an expensive clean out.  Remember paint and other items cant go into a dumpster and in many cases, they won't take tires and a few other things.  And as was stated earlier, you have the condition of the house that is hidden with the trash that may throw a monkey wrench in the works. You need to have at least a 15% reserve for unexpected surprises on this deal.

If this is a real sleeper in terms of value, you can count on other flippers eyeing it up.  That will drive the auction price up.  You need to know your number and never cross that number.  We have walked away from some great properties that got stupid with the bidding and when our number was reached we were out period - never say "A little more and I can make it up".  Remember, you make your money when you buy the property - not when you sell it".  If you want to go the auction route (and they do work - we just got one and close on 8/3), attend a few in person and then look at the online options like Auction.com or Hubzu.com or HUdson&Marshall among others.  Get a feel for how they work and what they require to bid and what happens when you win

As far as the estimated cost to rehab, $45 for what you show in the pictures seems on the low side especially if you are having a lot of it done and paying for it.  The kitchen is a replace, the fireplace needs attention, the roof looks good from what we can see and the windows boarded up raises questions . . . you do not know if there are any floor issues with the trash on it.  Can be a good deal of expense waiting for you.

You asked about Zillow estimates . . . . they are often wrong and not always in the good direction.  Touch base

with a local Realtor and see if they can get you a better ARV . . . i rarely use Zillow other than to see if the property is worth looking at . . . then I get a real number with a basis behind it. The house to the right of the one in the photo does not look all that good - what is the rest of the street looking like . . . can you share the address so we can see what it looks like?

Wish you the best but this might be a watch and learn so you are ready for the next one

Keep in mind that most in-person auctions require payment at the end of the auction so ensure you know the rules and come prepared with certified bank checks . . . which may make it difficult to have the funds in hand since a HML will want to have assurance that you have the property locked in before fronting you the money and you getting cashiers checks. Have you discussed this with your HML?

Could not get the link to the property to open to give you any feedback on that aspect of the deal.

Is there a reason you are looking at a 12-month flip?  That seems really worst case and if this is your first deal, that might be a large undertaking in terms of a renovation if you do in fact need that much time.  Are you doing the work yourself?  Remember a flip is different than working on your primary residence . . . you will need to pull permits for many activities and then get the inspections done before proceeding.  With a HML, the goal is to get it fixed and flipped as soon as possible based on the interest you are paying.  DO the math and see what a day of interest will run you and see how quickly days, weeks and months add up and detract from your bottom line.

Hate to sound like an advertisement but consider investing in yourself and joining BP as a Pro member . . . the calculators alone are worth the price of admission.  Our lenders love the reports.

Find the studs and get a ceiling fan box.  It fits into a hole and has arms that expand out to grip into the studs.

We have used these before where we can't get into the attic or on the first floor where access from above is not an option . . . easy to install and it will hold the weight you are looking at.

https://www.homedepot.com/p/Co... 

A real estate license is a plus when listing your flip as it saves you the commission. You can also find deals as soon as they come up and have access to the MLS to run comps. With that said, no all brokers / companies are the same so you should see what they charge you to get in the office and what they expect from you. If you are selling homes, remember most traffic is on weekends so that might make a difference in the decision. There are also certain things that you have to stay within being a realtor that an investor woudl not so another factor to consider. There are pluses but as you have already noted there are costs and you need to determine of they are worth the hassle.

We are looking at a REO SFR where the numbers look good for either a flip or hold investment. It is an auction property and the listing dis not say vacant or occupied. We drove by and looked at it from the outside and it looked positive . . . then we went by a day later and saw a car in the driveway and a garbage can at the curb. It looks like the owner that lost the house in late 2019 is still in the house. The lender is shown on the tax and land roll as the owner and they are the ones listing it as the auction property. A neighbor we talked to said that the owner had been in the hospital a few times followed by it looks like he bought a new car (the car in the driveway was a Cadillac).

So the question for the community is woudl you bid on the property as we had planned on and deal with eviction after the fact (the sample contract on the auction site is clear that do not state the house is vacant when you bid or when you close and you are responsible for any eviction) or simply walk away and not deal with the courts with the moratorium ending in about a month and the backlog of cases will be substantial. Any experience with buying a REO property and having to evict people that did not want to leave when they lost the property?

Thanks

We are looking at a MFR that has great numbers but the question we have deals with the name on the offer contract and then the financing.

We have an LLC in another state but it is a new LLC with no business credit at this point. If we want to put in an offer, woudl the contact be in our names or that of the LLC? The problem I see is the financing portion since it looks like we are not able to find financing for a new LLC but will need to personally guarantee the loan. This is not an issue as we have the credit and assets to quality for a 75% loan but the question we have is there another option to consider to write the offer and finance the property?

Thanks