All Forum Posts by: Brandon Purdeu

@Richard Redding I agree its a pretty good ROI, better than my current project.

@Dell Schlabach I use $20/SQ FT just as a very general number. I know a lot more goes into it especially on a project this size but just for deal analysis to see if I want to see the property or not. I imagine this home will cost more than $20/SQ FT as I will be ripping it down to the studs adding a new roof, possibly updating windows, mold issues and of course a roof. I'm going to the property today and will get some real numbers put together and quotes. I think I will submit an offer if the floor plan looks good and hope the financing catches up during due diligence. The home you did is beautiful! Thanks for sharing. 

I believe I found an amazing deal. There is a property in the neighboring county to where I invest that is a foreclosure with extensive damage that is foreclosed and asking $12,000. Over the last 12 months properties have sold for $125,000-$140,000 within a quarter mile all slightly smaller. The home has had parts of the roof open up causing significant mold damage to the property. The house is a gut job all around to include new roof. The home is a 1700 SQ Ft 3/2 brick SFH. I estimate repairs at $20/SQ FT totaling $34,000 plus $15,000 mold remediation, $7,000 for a new roof and a little buffer of $10,000 for overages and unknowns. This puts total rehab at $66,000. I'd be into the house for $78,000 with a potential to resale for $130,000-$145,000.

Can anyone provide some insight if I am crazy or not? I am closing on a deal next week and would have to use a private lender for this house as I've committed my free cash to pay for the rehab of the other property but I don't mind paying extra interest on a deal this sweet. 

I am in contract on my first flip and wrote about the process in an earlier post. As part of my investing strategy I wanted to have a GC do all the work to free me to continue to scan the market. Another deal popped up on the MLS (well it's been on the market for 90 days but dropped the price into my range) that I will be looking at tomorrow with my GC & realtor.

First off I want to evaluate the numbers and get some input then some advice on if I should try to move forward right away or get the first flip under my belt and pass on this one. 

The numbers: The home is on a golf course little 2 bedroom 2 bath 1050 SQ FT. It is built to be a vacation home or a summer home. Asking price is $68,000 and a tax assessment of $110,000. It needs  a basic reno of approximately  $18,000. So based on that I want to get the house for around $60,000 (70% of 110,000=77,000 and 18k in reno keeps me in tolerance). Profit looks to be around $16,000 initially which I'm happy with. 

Next question: I am under contract for a home and am using almost all of my free cash for the reno of that property. Thus this deal would have to be done without me putting any skin in the game because I simply don't have it. I like to have my own money in the game because it lowers my interest expenses and I think makes the investor feel more comfortable. At the same time if I want to grow I need to learn how to leverage. I have started my LLC but have not cash flow statements to show so a business line of credit is out of the picture for the next year, looking for any recommendations on what to do. The risk adverse Brandon is telling me to just stick to one property but the investor in me says go for it...

I know if I find the right deal the money will fall into place but this time I don't have $18k laying around for reno costs... 

@Andrew Bourgeois I went into the google machine and typed in general contractor. Of course the top hits were "luxury contractors" that build horse farm mansions in the area but I explained what I was looking for and asked if they recommended anyone. I got four names and started making calls. I one name was also recommended by my relator so I had him come out and look at 2 properties with me. He's a licensed home inspector so he was pointing out things that most contractors weren't on other walkthroughs. His numbers were in line with about $20/sq ft and he was on time, clean cut and eager to work. We fit personality wise so I choose him. Talk to local contractors, real estate agents, property managers and conduct interviews and be up front. Your not looking for a custom builder your looking for a quality contractor at an affordable price.

I unfortunately will not be doing anything myself. I simply do not have the time with my full time job and I feel taking on work myself will extend the flip time which equates to about $1,200/month in expenses. I told my contractor that if he comes close to busting budget to let me know and I'll pitch in to keep costs down but that is my last resort. Anyways I feel I need to be focused on searching for the next property, managing the books and inspecting the work of the contractors. I do not want to get tunnel vision, also I know the quality of work I can do will not match a contractor.  

@Jake Thomas I did a private lender for 5% origination and 2% monthly interest which should make my financing costs somewhere around $2,000-$2,500 depending on holding time. I knew going in I was going to have to offer slightly above market terms for financing seeing as I am new so I was happy offering 2% instead of 1%. I am having an attorney draw up a promissory note for me between me and the lender, just to cover all interested parties and also putting him as a lien holder on the deed to cover his investment.

@Bryan Wilhelm I will be paying for the rehab out of my pocket. So the grand total for my contractor is $14,000 for drywall patching, interior/exterior paint, laminate floors, updating fixtures, cleaning up the lot, repairing some exterior siding and installing the kitchen. I wanted to purchase the kitchen cabinets, countertops and appliances myself seeing as I will hunt a little harder than a GC on a good deal. I know he will go to lowes and pay retail since it's not his money, so I held that buying responsibility. I also didn't want to pay for brand new appliances in a $90,000 house so I will shop craigslist for some appliances that are in good condition. So total reno costs I'm planning on $20,000 but that will increase if little issues come up such as a bad AC, termite damage ect...

@Cody Barrett Contractor's are the subject matter experts and I love their input. I bring one into the house before I make an offer, they point out things I don't see. I look at floorplans and think about finishes; they look at construction quality, and spot water damage, bowed walls and a lot more.

In business I like mutually beneficial relationships, I want my contractor to make money, I want my real estate agent to make money, I want to make money and I want to provide a nice SFH to a family. If everyone makes money and the consumer has a great product then I feel I will be successful. With that in mind I let my agent and contractor know that there is much more work to come if they do right by me.

@Joseph Druther its off Pee Dee, once I close I'll be more than happy to let you come out and get your input! I'll be out that way this weekend probably lets try to link up and chat!

I've done a remodel on a primary residence before and I have a very close friend that is a contractor. So I ran the number past him and through homewyse and weighed out how much it would take to get me to do it... I think the key is that I made sure the contractor understood that this was his job interview and if he did well he's have more work to follow.

Travis Beal it's in Aberdeen

Well I'm officially under the gun. I am in contract on my first flip property and pretty excited to get going. I am in contract with a 1100 SQ FT SFH in North Carolina which I purchased for $31,000. Looking at an ARV between $80,000-$90,000 and repairs in the 20k range.

Just thought I'd share a little about the journey so far. When these pro's say find the right deal and financing will happen they mean it. I posted about this deal on the deal analysis page and had multiple investors contact me about helping make it happen! If your numbers are right the money will fall into place (of course a little work is required on your end).

Don't be afraid to offer a lowball price on a house that has been sitting not the market for a long time. This house was listed at $60,000, I offered $24,000 initially, and after some negotiation got it at $31,000. Motivated seller indeed and right off the MLS.

Work with your contractor. My contractor had and initial quote way to high, he wanted $7200 to repair drywall and paint the interior. I simply told him what I thought fair value was and asked him to come down to it and he did. I used the numbers off homewyse.com and just explained what I was looking for. 

I'm still pretty new in the process but thought I'd share. My inspection was held up today due to a water leak that the seller has to fix but hopefully I'll be back on track next week to get this flip rolling by the end of the money. 

Thanks for all the great help!!!