All Forum Posts by: Dave Savage

@Joe Smith I would always try to negotiate even with the investors I know or are recommended. You are both in the business to make money. If the deal is fair I wouldn't try to really low ball someone, but I would try to shave a few percent off at a minimum.

You don't know how low they have the property and there might be a lot of margin for them to share with you. If they push back too hard and the numbers still work, make the deal.

Quick answer: Run away.

You don't want to get into something like this unless you are fairly confident in significant appreciation. You haven't factored in management, normal repairs, and a capital expenditure fund. You will be negative for a long time on this property even with rent appreciation over time.

Remember with AirBNB you will most likely have higher vacancy causing your actual income to be lower.

It is good to invest in an area you are familiar with if you are long distance, but it may not make sense if the prices are this high.

FYI Just as one example I just looked at a 120k quad in Rochester, NY that has a monthly rental income of $2400/mo as one example. It should cash flow ~$600-800/mo. Lots of deals like that throughout markets in the US with good property managers in place.

This doesn't sound like a deal to me. Run the numbers:

70k Selling Price

4200 Realtor Fees to Sell

1500 to Close on Sale

1500 to Close on Purchase

500 Utilities while holding

800 Taxes while holding

200 Insurance while holding

Flooring throughout ~$3k

Paint throughout ~$1500

Misc Repairs and landscaping while holding ~$4000

You can adjust closing costs/utilities/taxes, etc based on the property and also your material and labor rates for your state but this ends up being ~$52k leaving no room for profit even if you allow him to break even at closing or do a Sub-2 Deal. I would offer him $40k and see if he is willing to bring money to the table to get out of it.

Otherwise on to the next real deal...Remember 25 calls to get 1 deal

@Arturo Martinez I would find your local REIA and start attending for a few months to get a handle on investing in your local market before you pursue getting a license or taking any guru classes.

Read all you can for free here on BP as well to get a handle on the different types of investing that you could pursue.

@Anthony Barbato I would start networking with other investors (FFREIA is a great place to get started) and over time you will get connected with the HMLs in the area as they become comfortable referring you.

Remember real estate is a lot about connections and you have to put a little time in to grow those connections.

@David Stott as you will be carrying a mortgage on an owner occupied loan you need to follow the new Dodd-Frank rules for mortgages. There are many threads to find info on these new rules with especially Bill Gulley doing a lot of research on the topic a few months ago.

I will PM you a contact in Rochester to help you sort through the new details as it is being practiced in NY.

Look for listings with "as-is" "fixer upper" "handyman special" and then look for listings >120days that are sitting on the market and appear to be reasonably priced - probably need work that is scaring off buyers and you might be able to negotiate down to a price that would allow the rehab to be done with profit left for yourself.

Also look for houses that are vacant in the pictures with long listing times as those buyers have moved and may be looking to get out at all costs after a few months of no bids on their property

@Joseph Heath I won't review your numbers right now, but just talking about your points 1-3.

#1 This I am sure will vary from city to city but there should be a Certificate of Occupancy(or similar for your city) in place that may transfer upon ownership transfer. If there isn't a CofO (in NY at least) you can choose to make it a contingency of the purchase.

#2 After the first inspection you will be given a short time period to remedy the issues that are found - ~30days - again will depend on your area.

#3 Those repairs sound like only a few thousand dollars, and if you are getting a good enough deal I would just work that into my numbers. Pretty much any multi that you buy at a discount is going to need that level of work or more. The only concerning thing I heard was the sagging floors - tough to know what that is going to take to get fixed. You may want to bring a contractor/inspector through to look to see if there are serious issues with the foundation/joists. It would be worth the $300-400 you pay them to understand if there is a serious issue.

Remember project houses typically can be bought at a discount greater than the cost of repairs, if you are willing to put in the time and money to make them right. If that isn't of interest look for something more turnkey and take the slightly lower returns that come with a turnkey priced property.

@Robert Rippey it is definitely not too late to get started in wholesaling. There are always opportunities out there. I think in a small town you are always going to struggle especially as a wholesaler. There may be more opportunities as a rehabber in the country but the market isn't big enough to sustain a wholesaler.

I would consider making the drive to Columbus 2-3 times a week, attend the REIA meetings there, and connect with other wholesalers who are active in that market and offer to birddog for them to come up to speed. Over a few months you can learn the business from them and then get your own deals. This isn't going to be fast or easy but the systems do work over time.

Sean Terry has a lot of great content on his podcasts for free on how to be a wholesaler, listen and re-listen to them and don't pay anyone for your education. This combined with meeting other wholesalers in Columbus will jump start your effort.

@Petru Popovici if you don't get any bites from this posting, try and find the closest REIA and start networking there, you will find a number of investors I am sure willing to help mentor for 50% of your first few deals. Good Luck!