All Forum Posts by: Chris Vail

@Nathan Buss 

Not breaking down the monthly expenses makes it very hard for us to try and analyse this deal for you and see if you are missing anything.  You are also not breaking out how the units rent breaks down (500 each unit?).  Where did the monthly expense number come from (you or the seller)?  Is there back up for this number that is verified over an extended period of time?

@Neda Navidnia 

 Also just from looking at the area around Katy and what is available on the site from the map view (I have no understanding of the area as I live in California) there are numerous rentals that are with in 25-50 dollars a month +/- of your price that from the pictures on line look way nicer and more appealing.  Which means that all of those would need to be rented before I would even consider going and looking at this rental.  I am assuming that the link I have above is your listing as it is the only 4 bed 2 bath rental for 1300 that came up on my search of the area.  Have you gone and looked at what the other rentals in the area are offering?  How do they look when you walk them? 

@Neda Navidnia 

 is this the listing ? http://www.homes.com/property/6371-scothwood-dr-ka...

if so I don't see any pictures of bathrooms on the listing and your description of the property is not very enticing.  

Welcome to the site @Kate Fayn 

@Anne James Welcome to the site.

@Kyle J. Thanks for the article post.

I should be in, just need to make sure the little one will let me go ;).  Thanks @al 

@Al Williamson for keeping the meetups going.

Yeah I would say with the added twist of the property being occupied it is a for sure pass.  Depending on how set the current holder of the property is on price you can always tell them to call you when they really want to sell the property and you will consider it at the 129,000 price un-occupied and if they want to not have to deal with removing the tenants that you might be interested in it at 110,000 or some much lower number than the 129k price.  Maybe they call you in six months maybe they don't but at least they will know where you stand on the property.

@Leyla Simsek 

So one thing you can do to help screen properties is reverse engineer everything.

If you know what comps are for the area and you can get close to an accurate ARV for a home you should be able to back into an initial price an investor will be willing to pay for a home, if you know what the investors criteria is for a profit margin.

Lets take your ARV of 180,000

Remove closing costs from this : 2,500 (your estimate, is this an accurate estimate? maybe but I think this might be low)

Remove holding costs: ?????  this will be dependent on how long the flip took or should take, think utilities, Hard Money costs, taxes, all the costs associated with holding the property for the flip time.

Remove Repair costs: 5,000 is a nice small budget and would be amazing if it turns out to be this.  If this is accurate then there must be very little that is getting done to the property. Unless this is just a material quote and again 5,000 does not go a long way depending on what is getting done.

Remove closing costs on the Initial purchase: ????? it is going to cost something to close on the initial acquisition. 

Remove your Assignment fee: 2,500

Remove Initial Purchase price: Variable

Left over is profit:  xx,xxx  how ever you haven't accounted for the opportunity cost of that capital or bench marked it against what a "safe" investment would be.  If you can find out what your investor community or buyer pool is willing to accept then you don't need to bench mark it against other investments as your buyers have already told you what they will accept.

Lets say they are willing to accept 20% profit

ARV 180,000

-profit 36,000 (20% on the final sales price)

-Assignment fee: 2,500

-Closing cost 1: 2,500

-Repair cost : 5,000

-Holding costs : Conservative 2,000

-Closing cost 2: 2,500 

= purchase price 129,500  

I believe most flippers look for more wiggle room than 20% profit (I am not a flipper) just due to the nature of risk that comes about from flipping.  

@Leyla Simsek 

 is your 12k projected profit after everything is said and done on the flip?

Meaning:

final sales price - closing costs - rehab -holiding costs - purchase price - initial closing costs = 12k

And what is the 171,000 in investment dollars going towards?

Just trying to analyze the deal.