All Forum Posts by: Jonathan Chan

Hi all,
returning to the game this year and would like to pick your brain a bit, we started working with a wholesaler that will send us properties here and there with the "wholesale" price, but every time we check the properties and add the numbers, the margins are, well, I am not sure, too low perhaps, maybe we are getting to picky, but this is my dilemma for example...

Today we got a property, wholesale price 300K, rehab about 50-60K, ARV is about 440k, but with the cost of hard money, we have about 100k cash, hard money interest at 11%, keeping the property for 90 days while we finish the rehab, closing costs, commissions, we ended with 30k profit before taxes, while it sounds appealing, adding up all expenses and cost we ended up expending 50K on rehab(labor/materials) and about 50-60K with cost of the loan, interest, commissions, etc, everyone makes money, happy with that, but it seems that we are working to produce a 100k for everyone else, while we make 20-30k if everything goes well...

In my opinion, we are not really getting "wholesale" price, it seems that we either buying to expensive, rehabs are much more than we would like to spend and the cost of borrowing that money is too high...

We came up with thoughts as: lets fund it ourselves with money from a close friend/partner that we will bring in, and that would save us 10-15k here and there, but still, is that the norm now?, not so much for the profit we are making, for all of the expenses involve that surpass our profit.
I just add the spreadsheet we use as a sample to see if this makes sense....

Would love to hear your opinions on how much money are we making for everyone else, before we make 20k

I've looked at most wholesaler's numbers. They're a waste of time. You'll have to run your own.

0 Votes

Atlanta, Georgia

Quote from @Cynthia Leite:

Quote from @Jonathan Chan:

Are you trying to put together a borrower's package for potential lenders?

Yes, that's what I am trying to do!

Typically what we look for in a borrower is someone who has a good track record, (at least 5 in the past year) along with purchase HUDS, statement of work as well as sale HUDS. We want to make sure you're profiting off these projects. Then we'll look at credit and background checks to make sure you don't have a history of fraud. Once we've gone through that, we'll start looking at live deals and borrower packages. A complete pitch deck will include:

We'll evaluate some live deals to make sure that your assumptions and ARVs are in line with what our underwriter says. If that all checks out, we'll start working with you as a borrower. During our first deal we'll look at communication and regular updates. If communication is poor and/or we're not receiving regular updates with pictures and/or videos, we won't fund anymore projects. Hope that helps!

0 Votes

Quote from @Vikash Nand:

Just wondering if there are good internet guides out there to help new investors understand steps in renovations and lay out scopes of work and materials needed so we don't miss anything?

for example when changing cabinets, addressing trim, door pulls.

hot water tank replacement: place a pan under it.

thanks

Your best bet is to partner with a GC or find a GC that a friend of yours trusts. What market are you looking at, what type of housing are you interested in getting into and what's your preferred exit?

1 Vote

Quote from @Ximei Yue:

I am a Newbie.

Here is a summary of what I want to ask some advice. Any suggestions are appreciated.

I have about $50K in saving and could potentially get to $100K in cash for my very first real estate investment.

Current consideration:

1. Start with BRRR in some areas that have lower barrier for entry
Pros: Could potentially get to the second investment sooner
Cons: No existing contractor connections. Could run into issues. Good deals are not easy to find.
2. Start with a single family home at areas where I could afford and have a stable cashflow
Pros: Easier to manage
Cons: Would have no equity to invest in my second property

Some background about myself:

Have a full-time job ($190K a year income). Financially my full-time job is our main income as a family.
Job is demanding. Long hours.
With 3 young kids. One of them is just one year old. And, another one requires more support (special needs).
Husband working on starting his own business (starting phase, no income)
On the side, there are some income ($50K a year)

Goal:

1. Get to a point of having enough cash flow for me to spend less time on my job and more time with young kids in 5 years
2. Have a bit more control of my time.

Welcome!

I was in a similar spot with a high paying W2 when I first started investing in real estate.
I took the principles from BRRRR and Long Distance Real Estate Investing from David Greene's books and went at it. It was a great experience and learned a ton, but my goal was to get out of my day job. While I've been able to get out of my W2 after acquiring 30 properties, I've learned that you still need to generate some sort of active income unless most of your doors are completely debt free. I'm happy to share my experience with you if you're interested.

2 Votes

Quote from @Mic Salvador:

Hi BiggerPockets Community!

My name is Michael, and I’m excited to join BiggerPockets and dive deeper into real estate investing! I’ve been studying real estate for the past few months, reading books and absorbing as much as I can. I feel so fortunate to have found BiggerPockets, as it’s been a goldmine of information and resources.

Currently, I'm leaning towards the BRRRR strategy as my primary niche. Living in Southern California, I realize the market here is quite expensive, and I'm not sure if it's the best place to get started. I'd love to hear from experienced investors: do you think it's possible to do BRRRR in a high-cost area, or would you recommend looking out of state?

Additionally, what’s a realistic amount of capital needed to get started? I know this can vary, but any ballpark figures or advice on funding options would be helpful. I just finished Brandon Turner’s Investing in Real Estate With No Money Down and learned a ton, so I’m open to creative financing ideas too!

Thanks so much for any insights you can share. I’m eager to learn and grow in this community.

Welcome! I was in a very similar spot when I first got started 4 years ago. I lived in Northern Virginia, which was a very expensive market. I ended up going with a market I had already been to, Huntsville, and learned to do long distance real estate investing as well as the BRRRR method. The capital needed depends on the market and type of home you're targeting. I used to hear it all the time, but never really understood that you need to get clear on what it is you're looking to do. If you want to do LTRs near military bases, then just focus on that. If you want to do MTRs near large hospitals, then just do that....figure out exactly what you want to do and the rest becomes easier. All strategies work, it just comes down to figuring out what you like and what you're good at. Good luck.

0 Votes

Quote from @Zachary Engen:

Ive read a few things about onlying being able to cash out refinance 75% or the purchase +closing costs, whichever is lower. I plan to purchase a distressed property amd do the renovations with my heloc. Once I'm finished I would just want my purchase price amd the money I spent on renovations back back...

for example, i buy a house for 100k put 50k of renovations into, house would now be valued at 250k. I would just want to be sure I can get that 150k back to pay off my heloc..is this possible? The 75% thing I've read is confusing me.

thank for any info.

Unfortunately, ther'es no guarantee, because there are a lot of variables at play here. However, if you're running your numbers then you'll want to make sure that you're including all the interested paid for the money borrowed from your HELOC as well as the carrying costs including utilities, insurance and property taxes. With an ARV of 250K, you'll be able to pull out 187,500 less additional closing costs for the cash out refi. When I was doing the BRRRR method and leveraged a HELOC for these purchases, I was using my W2 income to put as much back into my HELOC as possible. Hope that helps.

0 Votes

Quote from @Brett Sheeran:

Hello, I’m a new investor looking to purchase my first property in the next month or two. I’m wondering if anyone is aware of good real estate meetups in the DMV area? Looking to bounce ideas, make connections, and learn some new knowledge from others. Thanks!

Hi Brett, sending you a DM. I used to live in Fairfax, right by GMU before moving to FL last year. I've been investing in real estate for 4 years, have some buy and holds, did some land flipping as well as wholesaling. I landed on lending now. I'm happy to share my experiences with you.

1 Vote

Fairfax, Virginia

Quote from @Brian Quo:

So I live in the SF East Bay and have been looking to invest in a rental. I am too afraid to do out of state rentals. I have been looking at some homes for investment and it's expensive here.

I have been looking at Tracy, Manteca, Lathrop area to get an investment. I do like some new construction homes in the Manteca area and can put about 20% down. However doing the calculations after rent, property tax, Mello roos, property mgmt I would be at a loss of about $900 to $1000 per month after rent.

I know in the Bay area and California it's hard to cash flow. What I am hoping for is appreciation and also being able to refinance at a lower rate in the future where I would be able to be cash flow positive. The new construction keeps coming out with new price sheets every week and the properties seem to keep going up but some of the properties do have special rates (APR or incentives). I kind of feel I need to get in before I can't afford it because the price is going higher.

How bad is it to start out not cash flowing?

It puts unnecessary financial strain. You can invest long distance as long as you build the team. I used to live in Northern Virginia, which is a very expensive market. Nothing cash flowed unless you put a crazy amount down. I ended up building a team in Huntsville. Shoot me a DM...happy to walk you through how I did it.

0 Votes

Modesto/Merced, California

Quote from @Bryan Hartlen:

We use private investors and offer them 20% APR, with 10% return guaranteed, paid as a balloon.

any points up front?

0 Votes

Fort Lauderdale, Florida

Hi All,

I first joined biggerpockets back in 2020 when I decided to get into real estate. I started off doing long distance BRRRRs until the rates went up. I then did some wholesaling, land flipping, did some more buying and am now just doing lending to build up active income. I'm looking forward to meeting new people and am happy to share my experiences through my first 4 years in real estate with anybody who's looking to get started. Thanks for reading!

3 Votes

Orlando, Florida

All Forum Posts by: Jonathan Chan

Jonathan Chan has started 27 posts and replied 123 times.

Post: Real wholesalers - or hype pricing - my numbers are not adding up - dilemma

Post: Hard money and or private money loans

Post: scope of work

Post: Suggestions for my 1st Investment: Should I start with a BRRRR or focus on cash flow?

Post: New Here :)

Post: Using heloc for brrr and renovations

Post: Real Estate meetups in the DMV area?

Post: How bad is it to start off not cash flowing on 1st rental that is new construction?

Post: Fix n Flip 70% rule

Post: Coming back to BP