All Forum Posts by: Christopher Brainard

@Dustin Fisher

Step 1 is always determining if the deal is a deal. What is the ARV? How much does it need in repairs? How much does he owe in back taxes? How close is the county to taking possession of the property? How much does he owe on the property? Is it rented? If so, how much? What are market rents? Does he even want to sell? What is he expecting from the sale?

Step 2 is crunching the numbers. Is it really a deal? If not, don't bother spending time on it. If everything checks out, I would get the property under contract to either buy yourself or assign to someone else. I heard that wholesaling in Ohio has been raising red flags lately, so I would speak to someone local to ensure you don't get into any trouble.

Step 3 is finding a buyer, which if Step 1 and 2 are done properly and it is a deal, won't be an issue. The biggest mistake most wholesalers make is trying to sell a deal that isn't favorable to the investor.

-Christopher

@Daniele Reeder

Hi Daniele and welcome to the forums. This is really a trick question - the best type of property to invest in varies greatly with your situation, financial status and the area you live in. With that said, the common denominator is return on investment.

If you're just starting out and have very little cash, buying a fourplex with FHA and living in one of the units is a great way to get started. If you have capital, the type of property you're looking at shouldn't be nearly as important as the ROI. I would try to put as little money down as possible, unless you're cash rich and risk averse.

-Christopher

Here are the numbers from the CA Home. This was a REO and the bank required that I pay lender's and owner's title policy and would not negotiate that. They would also not pay the past HOA Dues (almost $8000), so I'll exclude that from this calculation. In this deal, I negotiated a 3% contribution to closing costs as well to offset some of the purchase costs.

Purchase Price: $394,000

Lenders Title Policy: $1294

Owner's Title Policy: $2618

Prepay Insurance: $776

Prorate Taxes: $3390

Government Recording: $160

Transfer Tax: $490

HOA Prepay: $275

Inspection: $330

Flood Cert: $9

Credit Check: $37

Loan Fee: $995

Interest Charge: $837

Home Warranty: $530

So my total closing costs were $11,741 or 2.98% of the purchase price. 

-Christopher

Here is the information from the last condo I purchased. This is pretty much the bare minimum you can pay and was a cash purchase. It is important to know that I get a good discount from the title company due to my investor status, they usually charge $300. Everything else is in line and depends on the property you are purchasing.

Price: $71,733.48

County Taxes (4/24 to 7/1): $80.58

County Sewer (4/24 to 7/1) $35.93

HOA Dues (4/24 to 7/1) $425.60

Recording Fee: $60

Title Company Fee: $136

So my total closing costs were $738.11 or 1.03% of the purchase price.

I'll try to dig up my last flip that I did in California to give you an idea of what I paid there.

-Christopher

Hi @Ricardo Camacho

Closing cost distribution should be included in your purchase contract. Typically, when I'm buying, I do not pay for any of the closing costs, except for items which are pro-rated (I pay my share and the seller pays his) and I pay half of the title company's closing fee (which in Nevada, is about $300 per purchase I make). Additionally, if you're purchasing where there is a HOA, you may have to prepay a few months of HOA fees.

-Christopher

@Jacob Edmond

I think double vanities are a good selling feature, standard for most updated homes, but not necessarily a 'must have' in low price points.  With that said, I don't know the market you are in, the specifics of what you paid for the house, and if the comps will support an updated bathroom, but I will tell you, I think the bathroom is pretty darn ugly and dated. 

-Christopher

@Mimi Booker

I agree with@P. Martin but let me explain why. 

National Banks have procedures that they follow when selling foreclosed homes - It isn't the same as dealing with an owner who can review you proposal and instantly make a decision. They are also not a motivated seller. It is true that banks don't like holding property, however, Its very likely that before this property is sold, they are going to have it appraised (or a BPO at a minimum) and put it on the market with a realtor to obtain as many bids as possible in order to recover as much money as possible. Over the last 2 or 3 years, it seems that most REO deals are 'meh' at best.

Additionally, The banks will sell the property when they are ready to, which isn't necessarily at the first chance they get. The last flip I purchased was a REO and our closing was delayed two months because the bank wouldn't signed the papers. When I asked why, they said they needed to push it to the next quarter for financial reasons.

If you're driving for dollars, your prime target should be homes with absentee owners that are vacant. Dealing directly with an owner that can make a decision is critical, especially if you are wholesaling deals. Since they are absentee and the property is vacant, they are likely motivated as well, which helps you secure a good price. 

-Christopher

@Cheri Schaffer

While pets are inherently bad for your property, I'm an animal lover and have 3 cats of my own, so I felt it would be hypocritical to not allow my tenants to have pets. I allow up to two pets with a weight up to 25 lbs. Pet deposit is $300 and I don't charge pet rent. 

-Christopher

@Melissa Searing

If you are a new investor and not a contractor yourself, you should get the home inspected. Once you buy and sell a bunch of properties, you will no longer need the inspection to determine what needs to be addressed on a property and how much it will cost. For me, that was about our 5th renovation. Keep in mind, neither you nor the inspector is likely to discover any latent defects, so I always budget a bit extra to cover those.

-Christopher

@Andrew Bondarchuk

That HOA fee is a deal killer. Unless I read your post incorrectly, 62% of your total possible gross income is going to the HOA. What about Vacancy? CapEx? Repairs? PM Fees? Forget about it. This property is almost at negative cash flow before you even account for debt service.

Unless the rents for this unit are significantly below market which would allow you to raise rents significantly (double them?), this wouldn't be a deal if you were getting the property for free.

-Christopher