All Forum Posts by: Britt Abbey

BTW... I enjoy your blog and see many similarities in our current positions, plans and goals.

You lost me in year 2.

According to your article the monthly mortgage payment on the first property (FHA mortgage) was $550 including taxes and insurance.

Assuming that mortgage was $96,500 (3.5% down on a $100,000 mortgage), my calculations for a 30 year mortgage would be: $475 at 4.25% APR. Now add on the PMI that will be required at 1.35% (approx. $108/month) and you're up to $583. Tack on taxes (3% estimate) and insurance (0.5% estimate) and you're up to $875. These are our fixed costs.

If we're renting it out at $1,200 /month and have a 5% vacancy rate, we're down to $1,140 month in income.

So now we're down to $265/month in cash flow before maintenance, reserves, advertising, property management (if any) and any miscellaneous expenses which WILL come up. With one major repair, we could easily be upside down in this scenario.

Perhaps I missed something, I and welcome someone to double check my math. The logic is great, but I think the numbers aren't realistic for the end goal.

I think it's reasonable to ask for the Schedule E related to the specific property. Very few sellers will overstate their income or understate their expenses to the IRS, however almost universally the listing will not take into account vacancy rates, insurance expenses, upkeep, etc. In addition you get some insight into how much they've put into their units in the last 24-36 months (which is often a lot less then what they've told their broker).

In addition, I ask for copies of the current leases the most recent months rents received (looking to see when payments were received).

I'll review the deed and any liens at the Clerk's Office.

I'll verify taxes, water/sewer with the municipality.

I'll preface this by saying that I'm not a routine flipper or wholesaler. That said, what are the costs to repair? Closing Costs? Holding Costs?

At $20k ARV how much profit is left for the flipper after you assign the contract and they pay all of the above?

On the surface, it seems like the margins would really slim to entice someone to pay a middleman.

1) I would only consider it at a last resort and if I had a good working relationship with him/her already
2) $6,000 isn't much skin in the game, especially considering that he's probably asking to be paid for his work too. Would he consider supplying labor and $6k and splitting the proceeds of the sale? (assuming you and he agree that $30k is the cost of the repairs and $15k of that is labor costs, you could agree to come up with $35k for purchase+ $9k materials, he supplies $15k of labor and $6k of materials. In the end he has $21k worth of goods and services in the deal. You have $44k). You get a 2/3 of the sale, he gets 1/3.

There are certainly instances when a Listing Agent could help persuade their client to accept an offer. The most logical situation to me is when there are competing offers:

Buyer 1: Listing Agent brings an offer for $100k to seller
Buyer 2: Buyers Agent brings and offer for 100k to seller

Both buyers have indicated that this is their highest and best offer.

Listing agents says to seller, if you accept Buyer 1's offer, I'll reduce my commission to 5%.

Seller accepts Buyer 1's offer and nets $95k
Seller turns down Buyer 2's offer that would net $94k

In my area, there is a distinction between "modular" and "manufactured doublewide or singlewide" Traditionally modular would mean wood frame, typically built to stick-built standards. Banks in our area treat modular the same as stick-built.

Doublewides or singlewides are more difficult to finance.

Proving could be difficult short of having the seller's agent provide CMA data that specifically excluded comparable sales that showed the property commanded higher market value.

@Lori Hunter

Naive or not, if an agent is intentionally misleading their client to believe that it is in the client's best interest to accept an offer that is 60% of market value so that the agent can earn both sides of the commission, they most certainly can end up in court, lose their license, etc.

Add a trailing zero to your numbers so that we're looking at $370,000 and $250,000. Do you still not see an issue with what you're insinuating an agent should/could/would do?

...not to mention that the agent has a fiduciary responsibility to the seller. Why risk a potential lawsuit, reputation, future business, etc?