All Forum Posts by: David Oldenburg

@Mario Mullen

It's hard to tell from the video what work this home needs?  What work is needed, at what cost, to arrive at $215,000?  Do you have 3 solid recent sales that are the same beds and baths and sq footage to arrive at that value?  

@Bryan Hancock I crowdfund some of my deals and have helped others crowdfund their deals.  I haven't had any real issues, have experienced fast fundings, the ability to structure more than 100% of the cost and very traditional rates.  I do know that some people have problems.  

There are 2 opportunities here. I am negotiating a bulk REO buy of homes in the Sacramento area. I need investors who want to buy these homes that are perfect for fix and flips. I also have an opportunity for someone who wants to be involved with the money.

I need someone who wants to put up $750,000. I am putting up $250,000. You will have a first mortgage at 75% of the price I pay, which is steeply discounted from actual value. Your actual LTV is closer to 50% or less. I am paying 10% in rate and 10% of net profit to you on each home. I usually use all of my own money, but I have a lot of money in other deals right now. I will be paid back on about $550,000 of my money within the next 45 days, and can pay you off most of the money if you are only seeking a short-term loan.

A little more info: This is a bulk buy of REO's in the Sacramento area. The way this works is that I commit to a purchase price. In this case $1 million. I am able to pick from a list the homes that I want and substitute homes that I do not want. I will estimate value on each home, and determine if it is a better fix and flip or wholesale. Please read my BIO here if you want to know my background. If you have questions, please ask them here or call me direct.

@Jay Hinrichs Yes, it is amazing how much money is available in CA, and how reasonable the rates are here. I can get 10% with no points with a few people who know me.  I am always shocked when I hear people in other areas are paying like 14% with 3 or 4 points...wow!  

The Granite Bay area is really nice. I have lived here for about 20 years, but in the Sacramento area for 30.  

@Raj Pat 

Are you looking to loan money at 70% ARV? Almost all of my deals are in the Sacramento area, but I often use my own money. When my money is tied up, I do borrow from others. Let me know the details. What is the rate, points, fees, time to close, do you do stated-income etc... Thanks! Most of my lenders loan me money at 10% with 1-2 points and all do stated-income. I borrow from some private money investors and some institutional hard money lenders. Thanks :-)

@QUINCY ROE 

 Hi, I answered this the other day in a slightly different way.  It's not what "you" want to make, it's what the property and investment yields to other investors. Some of your wholesale deals are very tight, and you will be lucky to make $5,000 to $10,000.  I know a wholesaler in my area who just made $52,000 on a $250,000 home!  

You have to know what the home will be worth after repairs, what the rehab will cost, and what ROI each of your investors is seeking. If the deal is a 15% ROI and I am looking for 20%, I am not going to be interested. However, if I am looking for 10% and you bring me a 15% deal, I am going to jump on it.

I suggest building a network of investors and know exactly what they want to get excited and quickly pull the trigger on a deal.  Once you know exactly what they will buy, it is very easy to enter into contracts confidently, because you know you can quickly sell the property.

@Account Closed 

I don't know about San Diego, but here in Sacramento it is hard to get a really good deal at an auction. There is lots of competition and there is also lots of risk with these properties. Some of the best deals that I see are deals right in MLS, where a property cannot qualify for any kind of financing, allowing an investor to offer cash and negotiate a price well below market.

One of my fellow wholesalers just bought a home right in MLS, negotiated a great price because it needed lots of work. He turned around and wholesaled it for $52,000 more, without doing a single thing to the home. The deals are there if you look and are patient. If

You can also network with Realtors and contractors and get lots of leads for "off-market" homes.  This allows you to get a great price, have time for inspections and have a guaranteed clear title.  I have a friend who has flipped 1,500 homes in California, and not a single one of them was purchased at an auction.  Whatever you do, I hope you do well and have lot's of success!

I am never to BP's, but have been an investor, lender etc... for a long time. I am very thankful because I am already meeting some great people, partnering with other investors and enjoying hearing what others are doing!  This is a great environment for growing your business :-)

@Arin Hanohano 

 Hey never feel ignorant when you don't understand something in the world of investing!  You asked, "How did I come up with the $280K max price in my example above?"  

I base my ROI (return on investment) from what I actually invest and have to lose. This is different from how others may do it, but my way works for me! In the example above, I know that the home needs $50K in rehab and I already know the ARV (after repaired value) is going to be $400K. I also know that my selling costs are going to be 6% of the $400,000, price or $24K. This means I net $376,000, and this needs to be enough to cover my purchase price, rehab costs and earn me at least 15% on my initial investment of purchase price + rehab costs.

Yes, there are other factors that could be put in, like cost to carry the money etc..., but I wrap all that into me wanting a 15% return. These numbers can change if you are borrowing the money from someone else to buy the home, and you are paying interest and points.  In that situation, you need to add the cost to carry the money into your total project cost and add it to your purchase price and rehab costs.

Ok, so I took out my trusty Texas Instruments BA II Plus calculator and did this the easy way! I had to pick a starting point and I guessed about $280,000. I took $280,000 + $50,000 + $49,500 ( my 15% profit of the amount spent with purchase and rehab) = $379,500. I know that if I sell for $400K and my costs are (6%) $24,000, I net $376,000, so those numbers are very close. I could use a spreadsheet or different calculation to get exact, but I am not trying to get this to the penny, as no flip will ever work out that way. I am just trying to do my best to get a 15% or higher return on my initial investment. If I had guessed say $260,000 as my purchase price, the ROI would have been higher, and I would have known I could pay more for the home. Likewise, if I had guessed $290,000 as my starting point, my ROI would have been too low and I would have to lower my offering price. The point here is that if you know your investors and what "yields" they want, you can quickly evaluate wholesale deals to see if they will be easy for you to sell quickly to investors you already know. I would never enter into a wholesale deal, unless I knew exactly what others might be willing to pay.

If i had borrowed the money to purchase and paid points and I needed the money for say 4 months, I would have to factor that in and my "buy" price would have to be less than $280,000.  I hope that helps :-)

@Mark Vejnar One strategy that can work, but it is not a guarantee, is to WRAP the home.  You buy the home from the seller with a 5% to 10% down and get them to finance the home for a rate as low as possible. You then sell the home on a WRAP / AITD (although I don't know rules for this in your state), with a larger down and a higher rate to someone else.

It is not a guarantee, because you could have a hard time selling, even if you are offering financing. You also need to know your original deal with the seller will allow for you to do this. 

I do know this strategy does work in some situations. I have never done it.  However, a few years ago a friend of mine purchased a home with 10% down 5% seller-financed NOTE.   He did very little work, new carpet and paint and sold it to someone else for $20,000 more than be bought it for, because he offered seller financing with a 20% down.  He also charged a higher rate and made a "spread" there as well.  I would say this is more of an advanced strategy, because you need to understand the rules and laws in your area and the contracts you are using.  I would also recommend having some cash that you can use to make payments on your original NOTE, if your buyer should ever stop making payments to you, and you have to foreclose and get them out.  It can be more complex foreclosing on someone when you have "wrapped" the home.  For this reason, I would recommend a good attorney if you do not have experience.

A better way is to buy the home yourself, have the seller finance the home, and then sell the home to another buyer with a lease-option.  This way they have an "interest" in the home, but not actual title.  You can also structure the lease-option in your favor. I hope that helps!