All Forum Posts by: Matt J.

Hi @Leif Oldert. 

ARV is generally based on comps. Check out this thread for a good discussion.

If you're wondering about resale value, as always, it's only worth what someone will pay for it. :)

@Aaron Harren, consider private lending. Have you been to your local RE meetup? I've met several people at mine looking for good investments. You might consider borrowing from them, partnering or wholesaling (as @Anthony Dooley mentioned).

@Mario Mormile, a friend of mine bought a FL beach condo using some of his own funds and a loan from his parents. As part of the deal, he agreed to let them use it for several weeks each year while he paid it off. While there, they did some of the maintenance. 

Something creative like this might be an option. If you don't have relatives willing or able to help, there are lots of retired baby boomers with low yield financial investments. Some of them may like the idea of funding a vacation rental with higher yields, secured by the real estate itself. However, they lack an understanding of how to make it happen. 

It might be worth looking into partnerships. As they say, even if you end up with a 25% stake of a good deal, that's still better than 100% of no deal. Just have a qualified attorney draw up the agreement so there is absolutely no misunderstanding of each party's rights and responsibilities. 

Best of luck to you!

I agree, @Tenzin Gyaltsen. It is interesting to watch. However, I don't know if we'll see a big downturn, as we have before. We likely will see a general cooling and the prices will readjust.

Sure thing, @Michael Babin. Best of luck and please let us know how it works out for you!

@Michael Babin, I don't have much experience in rural areas. Have you looked at the population and employment trends? Consider how they compare to national averages. 

As for the cash flow, there are so many things to consider that have an impact on the bottom line. Have you run it through the calculators? If so, how conservative are your assumptions for things like vacancy rate and maintenance reserves? Are there any owner-paid utilities? Will you have to fund any deferred maintenance or rehab? Have you considered property management fees (both initial setup and as a portion of gross rents)? 

With conservative assumptions (10% vacancy, 10% PM, 20% down, 20 yr term, 5.75% rate) and the limited information, I show a total loss of about $202 the first year. If you plan to manage it yourself, you might save some of the fees, but you could have longer vacancies and you might not get top market rents. Plus, it adds a significant hassle factor - especially as you say you are new to REI and with seven units. Think about how much your time is worth and whether you truly plan to build a solid, sustainable portfolio. If so, seriously consider looking into a good PM. They can make or break your business.

Just my two cents.  

Glad to hear it, @Rachel Chavez! I hope she's able to give you some guidance. Keep us posted on your progress.

Best of luck to you!!

@Bruce Gibson, have you tried the calculators on BP? There's one specifically for that under Tools > Calculators > Wholesaling. It can give you some good insight and may help you learn which questions to ask. 

You might also consider connecting with other wholesalers in your area. Try a local meetup. That's how I've met some great folks that have been extremely helpful.

That's a pretty broad question, @Jesse Daconta. I suppose it depends on your end goal. You likely will choose different materials for flips than for buy-and-hold. For example, nice carpet or even hardwood may work well to match comps for resale, but durable vinyl plank is a good option for a rental. 

For paint, we always use neutral colors and we tend to choose higher quality options - especially for the exterior. Often, that extends the life and saves considerable money over time (may not be a concern for a fix-and-flip). If you have several units in one area, try using the same color(s) for all of them. It cuts down on the spare material you need to keep on hand and you can buy in larger quantities, which saves money. This also works for fixtures, trim, etc.

One final tip would be finding a local surplus shop. We like the Habitat for Humanity ReStores. It's hit and miss, but we've found some incredible deals on brand new fixtures, flooring, cabinets, counters, appliances, etc. Plus, it helps a good cause.

@Tenzin Gyaltsen, it is very hot up here - borderline ridiculous right now. For example, one recent news story claimed the median house price in Seattle dropped to $750k. They seem to be cooling a bit more now, but they're still many times the single-family median income of ~$100k in that area. 

We wish we still owned the condo in Westminster.