All Forum Posts by: Account Closed

Thanks guys!  We are pretty excited.  It already showed 3 times last night, and a couple so far today... #fingersCrossed, haha

So, we finally did it... 

We closed September 1, 2018 on our very first flip purchase; We underestimated the rehab; We overspent on the rehab; overall, we paid too much.  However, we finally finished the house, and have it listed as of today!!!  

We don't expect to make much on it, but we are just so happy with everything we learned, as well as how great the house looks.  I'll post some before:after photos, but here's the link to the redfin (if that's allowed).

@Kyle Schlosser - Great advice, and I did that before I contracted.  I can probably get close to break-even cash flow, but I'd have to keep most of my cash in the deal.  It's definitely a worthwhile "exit" to rent it and see if Fort Worth continues appreciating... 

The wholesalers estimated 35k for rehab, and a 250-275k ARV. I did what research I could ahead of time, and estimated 46k for rehab, and stayed conservative at 240k for ARV.

I think it's possible/likely that I under-estimated the rehab if I have contractors do it all, but I also know how to do pretty much everything I need to do myself (except foundation repair and HVAC).  I did get estimates for foundation repair ($4500) and replacing the parts of the the HVAC that need it (about $6k).  

I know my time is valuable, but until I know exactly what something should cost - I will do it myself.  I'm using this first deal more as a learning experience than as a gold mine.  I'd be thrilled to make $10k after all costs, and have had the experience of getting my first deal finished.  This deal will simply educate me more for the next many deals.  I know I won't make much on this deal, and I'm fine with that.  I just want to get that train rolling down the track...

@Joe Villeneuve, @Adam Wright Thank you both for the words of encouragement!  Still working hard...

I am closing on a wholesale deal (my first deal) in the next couple of days!  I hope I don't screw things up.

Closing is supposed to be Thursday!  I've got a roll-off dumpster arriving Friday to assist in cleaning things out.  I think Monday the foundation guys are coming.... 

I'm nervous as hell... I'm sinking 40k of my own money in, not to mention the hard money :( 

My wife and I just put our earnest money down, and contracted on our first deal.  It's a wholesale deal in our own neighborhood, and a hoarder house... it's on the outskirts of the neighborhood, but we're very excited about it!  We are financing with hard money, so we'll be trying to get it flipped ASAP.  It needs foundation, hvac, windows, floors and cosmetics (basically everything).  We are going to do as much as we can ourselves to learn what things actually cost and to save as much as possible during the rehab.

PP: 150k

Rehab Estimate: 46k

ARV: 240k+

We close on 8/30.  What should we do first?  I think I should probably go ahead and change the locks, get a roll-off dumpster delivered, and get the foundation guy out there on 8/31 to get that finished asap.  We will spend the weekend getting all the hoarder junk out, and getting rid of all the tile/flooring we're going to replace anyway.  Does that sound reasonable?

What should we do next?

Because I've been struggling to find a deal with which I can force equity, I thought I'd start looking at other places to find a reasonable deal and found a couple of newly built duplexes.  

They're trying to sell it for $328k for a 3/2.5/2.

Rents from rentometer are between 1300-1700 for a 3/2.

My Assumptions

• Maintenance/Repairs/CapEx budget wouldn't need to be all that necessary, since it's a new build
• Could likely get near the top of the estimated rents since it's brand new
• Unlikely to get much appreciation, if any, since it's a duplex

Does it make any sense to get into this type of a property?  I guess they'll not likely sell it for significantly less than they've listed it for, but if I plan on getting 1600/month/side, I feel like I could cash flow $100/door at a PP of around $305k

Any thoughts around this would be hugely helpful!

I've been analyzing 10+ deals (SFR and Duplex) a day for about a month - mostly MLS, but I've also hooked up with a few of the wholesale firms in the area. I've actually walked about 5 properties, but have only offered on 1... the offer was rejected.

I think I'm getting a pretty good idea of what it's going to take to get into a rental property, but like most of the BP community, I'm struggling to find a property that looks as though it will cash flow without putting more than 25% down (which isn't "true" cash flow). I'm looking mostly at properties I can try to build equity into through rehab (hopefully to BRRRR).

Here are the details on the one I made an offer for:

Source: MLS 100+ days. Property is vacant; Owner in a nursing home; kids trying to sell it

3 Beds, 2 baths, 1315 sqft

Original LP: 165k

Current LP: 155k

ARV: 170k+ 

Estimated Rehab: (moderate/high) $18/foot = 24k

It's in pretty rough shape.  It's very outdated; there's a garage conversion for half of a 2-car garage that was poorly executed; kitchen/bathrooms need new countertops, tubs, appliances; flooring basically throughout

Rents: 1300-1500 (trying to get to the higher end with my rehab==1450)

Monthly Expenses: 756

PM: 182

Taxes: 210

Vacancy: 112

Repairs/Maint: 70

CapEx: 70

Insurance: 112

Max Mortgage Payment: I used all these costs, with my hope to cash flow at least $100/month to back into what I should offer for the property (not considering CCR yet), with a 20% down payment. This would allow me to have a maximum of a 90.7k note (offering 113k), so the P/I payment would be $544.

NOI: 1400-544-756 = $100/month

I offered 110k (which is roughly 75% of ARV-Rehab), and what I thought was pretty fair considering the work that would need to go into the rehab. This would allow me to get into the property for a fair price, but also allow me to cash flow. The offer was simply rejected.

From this analysis, do you guys think I'm doing something wrong or missing something, or am I following the right steps and just haven't found a good deal yet?

Also new here - but you're close.  

If you refi for 360k, you pay off the note for 250k, you pay yourself back for the 100k down/rehab (50+50), and end up with 10k extra (obviously that will likely be soaked up with closing costs/etc).... BUT, you will have ZERO cash invested, and hopefully have a cash-flowing property, which provides "infinite" cash on cash return. (In addition to the 90k equity left in the deal)

Hope this helps!!