All Forum Posts by: Jaden Ghylin

Thanks for the real-time response Ted! I'll check out your blog.

-Jaden

Thanks Ted. Any idea where I can look for a professional short sale negotiator? Would this likely be a realtor? Have you been offering on multiple short sales simultaneously? I've talked to a realtor about offering on short sales and he seems to think that if you've offered on one, you better not offer on anything else in case that one comes through.

-Jaden

Hey all,

I could use a second opinion on my numbers here. I'm pretty new to using ARV and looking at properties from a flip standpoint.

I'm looking at buying a property for my wife and myself in the Minneapolis suburbs (Burnsville, MN) on an FHA 203K rehab loan. Obviously, we intend to live in the place at least for a year or two (possibly more) so it needs to meet our personal buying criteria (large wooded lot, large house, etc.), which I'm assuming will probably reduce our profit/equity a bit.

We found an MLS REO that came on this weekend at $149k for a 3,300 sq ft. 6 bed, 3 bath house on 0.6 acres wooded that needs new carpet, paint, and some repairs. Not sure about the roof at this point, so I'm assuming it needs replacing. It appears that $35k would get the place into very nice condition to retail above $200k. However, the comps get tough above $200k as houses in that price range just haven't been moving in this suburb. A handful have sold in the last 6 months and they range from $200-$275k, but they are smaller than this house and on smaller lots. I can safely say the property would sell for $220k-$230k in nice condition, but may bring as much as $250k-$275k.

Here's my analysis:
Sell price: $230000
Rehab: $35000
Realtor fee sell: $13800
Closing costs buy: $5000
Closing costs sell: $4600
Carrying Costs: $5750
Vacant house ins.: $800
Profit/Equity: $29900
Offer Price: $135,150

This is using 10% profit, which seems reaonable. I've seen others use 13-15%, but since this is our personal property and I can use FHA 203k financing with 3.5% down it seems like a 10% profit would be acceptable. Even doing this, I don't think the offer is going to be competitive. My realtor is saying that the place will sell this weekend at over list price. I am comfortable submitting a $135k offer though. Now, 70% ARV would tell me to offer $119k, which I think is mostly due to the higher profit margin of 15%.

Any thoughts? Does it make sense for me to offer $135k on this? Could I offer more to increase the strength of my offer? I don't think I'd want to go ove $139k.

Thanks,
-Jaden

I've been hearing a lot about short sales and the trend towards more of them to avoide foreclosing. I also hear that they are a lot of work and the banks frequently don't approve the offer price after working on them for months.

So, my questions are: Are you finding short sales as a viable way to purchase a property and meet the 70% ARV formula? Are you writing on multiple short sales in parallel? How many short sales do you write on to pick one up and how much time do you spend to write on one? Are you picking up short sales from homeowners calling bandit signs or are you marketing direct to them through mail or phone campaigns? Have you had trouble getting the BPO to come in at your price? Have you done anything to influence the BPO in your favor?

Any input would be appreciated. Just trying to get a feel for how well short sales are working as they seem to be trending higher and it seems like banks are going to start being more flexible with them.

-Jaden

Thanks for the input. I haven't really considered doing short sales as I've heard they can be a pain and frequently don't go through with the banks after working on them for 6 months. Any thoughts?

There are some REO deals on MLS, but it is tough to meet the 70% ARV on higher priced properites. 75% seems more doable when they're over $200k ARV. I'm seeing probably 1 property per week that is in the range of 75% ARV - repairs. Also, right now, I'm looking at doing FHA 203k financing and moving into the property, so my financing costs are much lower than using hard money.

-Jaden

I think it's time I introduce myself. I've been soaking up knowledge for the last two weeks trying to get up to speed here. There is certainly a lot to learn.

I'm Jaden Ghylin, my background is in Electrical Engineering and I am currently living in Cedar Rapids, IA, but will be investing in the Minneapolis area in the next few months.

I am a relatively new investor, I bought a rental property in 2005 here in Cedar Rapids and just sold it last year into the tax credit frenzy, which netted me a good gain that I otherwise would not have gotten. My first property was a good learning experience, but definitely was not a cash cow or huge equity earner. I cash flowed $200/mo, but managed it myself.

I am really starting to see deals in Minneapolis now that just didn't exist in 2005 and am trying to educate myself as much as possible so I don't miss this window of opportunity. My current strategy is to flip a couple of properties in the southern suburbs of Minneapolis and use the profits to begin building a rental portfolio. My short-term goal is to generate enough cash flow so that I can work part-time instead of full-time, I think this will take about $1500/mo (while using professional property management), which I'd like to get to within 2 years. I have no intention of being a property manager again.

I met with an investment realtor a week ago in Minneapolis and it sounds like most of the investment activity is going on in North Minneapolis on ~$30-40k homes. I find myself wondering if I should be focused on that instead of the suburbs. It is certainly more difficult finding distressed property in the burbs, but it seems like the resale will be easier given the higher demand and lower inventory. Prices are also much higher. I'm really looking for a $300k property that I can pick up for $160-170k with $40k of rehab or so. I've seen a couple on MLS that fit the bill, but they move fast. I've seen a lot of posts on here not to buy from MLS, but I am still stumped as to how else to buy properties while managing a full-time day job. I'd be more than happy to pay a wholesaler $5k to find a great deal on a property because I just don't have that kind of time. Finding wholesalers seems to be a challenge too. Any ideas are welcome!

Right now, I am searching high and low for great deals, but again most of my searching is on MLS.

Any input on strategy, investment location, or finding great non-MLS deals is welcome. Also, if you're in Minneapolis drop me a line, I'd love to grab a coffee and chat some time.

-Jaden :D

I'm in the same boat as Mack. I bought a rental about 5 years ago just trying to get in the game and learn. I did ok on it and just sold for a profit. I'm young and I think the biggest thing it taught me is that rentals are slow money, I need to build up some capital first to create a rental portfolio. So, now I am looking at getting into the flip/rehab business, but having a very tough time figuring out how to find properties at below market value or finding properties that aren't on MLS. I've called dozens of banks and agents and I keep getting the same answer "we list all properties on MLS" Once they are on MLS, it seems impossible to get much of a deal on them, since there is so much competition. I am looking in the Minneapolis area and could use a few pointers on how to locate good deals or wholesalers that have good deals to offer.

Thanks,
-Jaden

Thanks for the great advice all. I just recently discovered BP and this is a great community. I hope that I can contribute in some capacity.

I am in a very similar situation as Jennifer, I'm looking at a condo in the Minneapolis, MN area for $50k. It normally would rent for $1100-1200, but with the current oversupply of rentals, may go for as low as $900/mo. Assn dues are $125/mo.

I have previously owned a rental property, from that experience, this looks like a good cash flower. The main problem I have is financing. Cash is an option, but I cannot justify tying up that kind of cash for the return. There is apparently a new rule that the secondary mortgage market will not purchase mortgages on condos if the association is over 50% rentals (this one is 90%). I have called 20 local banks trying to get a portfolio loan, but they have all been burned badly on the local condo market and will not carry it. Any ideas? or do I just walk away? Thanks in advance for your insights.

-Jaden