All Forum Posts by: Brett Tvenge

@Brett Tvenge yes he would be lending 100% of the deal and rehab.  

@Jeffrey Donis our normal model with our condos is to use the profit as added income, so that my wife will have income replacement when we retire (as she won't have worked as long and I'll have a fully funded pension at a younger age). However, if we did the flip the immediate cash profits would go likely go towards a STR in another city (near by) as that is another area we would like to expand to. If we had excess profits, we would also potentially buy ourselves a reward for our work (an in ground hot-tub at our house). I also think that a flip could be a good learning experience. However, I think we're both leaning towards a rental, because it's in our wheel house of current knowledge.

@Brett Tvenge we brought the investor in because we felt that for the added 5k in profits after paying for the HML it wasn't worth the stress of that process and potentially carrying the loan for longer. By using this loan we feel more comfortable in the flexibility of renting the house out instead of flipping if it did not sell for what we wanted. Also- is there a target number where it makes more sense if 16k is too low? The flip project brings in a higher profit but the other party gets about 10k.

Hi 

im looking to getting my second property to fix and flip. Based on the success I had with my first property I flipped , I now  have a close successful friend willing to invest and becoming a private lender on my deals.   My question to everyone is how do I set it up so its a good deal for both of us ? Do house flippers normally just split the profits ? and if so how much %.  any examples that I could reference so I can get an idea 

any help will be awesome thanks! 

Hi All, 

Below is a pic of the inside of a small condo located in Marathon Florida that I am looking to rehab and flip. The property was a hand me down from my parents after a long-term tenant had recently passed away. As you can see, the place needs a lot of work. I am planning to replace the carpets with luxury vinyl flooring in both the living space shown in the picture and the bedroom. My main concern is the wooden paneling being used for the walls. I have two options: 1) I can leave the paneling and apply a fresh coat of paint over it or 2) Remove all the wood paneling and replace it with sheetrock and paint. In my opinion the conventional sheetrock and paint is more aesthetically pleasing but would be the much more expensive option. Does anyone know if leaving the wood paneling would have any "negative" consequences on the property other than it giving the place somewhat of an outdated look? Same question would apply to the drop ceiling shown in the pic. Is the cost of demoing the place and replacing with conventional sheetrock typically worth it in cases like this?

Any feedback would be greatly appreciated. Thanks! 

My wife and I are entering into our fourth investment property, a single family home as opposed to our other properties which are condos.  We're under contract for 115K on a 2/1 800 sqft home built in the late 40s.  Doing 90% of the rehab work myself we're estimating a reno budget of 18k, this reno is mostly cosmetic (yard work, fence, paint, floors, countertops, adding dishwasher, and insulating/finishing out a utility room into a laundry).  Rentals in our area are moving very quickly but as this isn't our normal condo market, we're unsure what we'll be able to charge.  There is a house on the same street currently for rent at 1600/mo that is not as cosmetically nice as ours will be, but we think that it might be over priced (however we're keeping a close eye on the property).  We've brought an investor along in this deal under the following terms: We bring 25K the other party brings 90K cash to the deal. If flipped we split reno costs 50/50 and we walk with 60% of the profits after taxes.  If rented we charge 50/hr for our time during the reno and split reno costs (including our labor cost) 60/40 (40% is ours) however we owe a 0% loan on the remainder of the 50% property purchase cost (115K/2=57.5k-25k=32.5k) for a term of 15 years and are unable to charge our standard management fee to the other party which is 10% of their monthly income until the loan is paid (no penalty for early repayment).  We estimate that once subtracting out 60% our personal labor costs from the loan we'll owe 23K to the other party. Last bit of background info, the other party is a family member who can be/is a large pain during the purchase and reno phase, but once in rental mode is a nonfactor (we own another property 50/50 with them). 

Flip Numbers:

Total Investment: 133k

Target Sale: 175K

Closing (carrying, closing, and buyer's agent): 7k

Pretax Profit: 35k

Taxes: 7.7k

Post tax: 27.5k

Our 60%: 16.5k

estimated reno is 10 weeks (30 hours of work a week by us an unskilled helper (90 man hours))

So with our capital input we expect a 51.7% return on our cash invested (including our sweat)

Rental Numbers:

Monthly Rent: 1.5k

Monthly Expenses: 350

Net Income: 1.15K

50/50 split: 571

Loan repayment: 107

Our monthly cash flow: 514

Yearly: 6.15k

Cash on Cash return of 18.24%

Additionally, we can get another 0% loan from another family member so that we can begin charging a management fee however this loan is a shorter term (less than a year) and would have us having more cash in this deal. Our other properties have been cash deals so this would follow our normal process however we've been thinking we need to use longer term loans to increase our cash on cash return instead of our normal which is just the properties roi. If we changed to this loan upon rental it makes our yearly cash flow go up to 7.7k but brings our cash on cash return to 12.03%.

So after being very long winded, which should we do? Flip? Rent with option A or B for the loan? Thank you up front for replies and insight.