All Forum Posts by: Kurt Smith

@Britt Bass Welcome! Always excited to see another new BP member from the Central Arkansas area. I'm planning to take the advice of @Eric Metz and go to the next CARREIA meeting. Hope to meet some of you there.

@Kev Top The only REI club I know of in the area is https://www.carreia.com/ I haven't personally been to a meeting yet, but I intend to soon. I think the next meeting is a week from today (4/10).

My REI experience is limited to two books, three BP podcasts, a couple BP forums posts, and many articles that I've been reading. I'm planning to buy my first property before summer arrives.

@Kev Top From another new guy in Little Rock, welcome to BP. What kind of real estate investing are you interested in doing?

As far as "learning real estate," I'd definitely recommend the Ultimate Beginners Guide. It has a ton of good info for new guys like us: http://www.biggerpockets.com/real-estate-investing

@Sam Craven - House 1 definitely needs some work in order to bring the $135k sale price or $1100 rent. Apparently a bathroom sprung a leak upstairs and caused some rotting on an exterior wall. This hasn't been repaired yet, thus the low rent. Good idea to ask the current owner for a little more history on the current tenant. If the house remained rented at $775, it would maybe break even as far as cash flow goes, which obviously wouldn't be much fun.

As for the question about the lots around House 2, that is something I haven't considered yet. Thanks for bringing that up...I'll see what I can find out.

Regarding the market, I could probably get a higher cash flow or return by looking at some lower priced housing, but my primary goal is to build wealth through equity. So, I'm trying to stay away from the $30k houses that rent for $600/mo and will have questionable value in the future.

I created a separate thread earlier today regarding buying from wholesalers and mentioned that a local wholesaler had a couple properties that seemed to meet my criteria. I'd like to post some numbers and get feedback from those with experience. Is my thinking sound, and do these sound like "deals" to you?

Background: My plan for now is to buy & hold single family homes. I would be buying these with a conventional loan and 20% down payment.

House 1: Seller's price is $75k. Estimated rehab (for full retail sale) is $30k, ARV is around $135k. This house is occupied with a tenant that has a purchase option for $100k that expires this summer. Current rent is $775. Estimated rent after repairs is $1100. Tenant has already made some repairs to the house, so it would seem they are interested in exercising the purchase option, which would allow me to pocket around $15k after some minor repairs and closing costs. If they don't purchase, I would make repairs to the house (~$20k) to bring rent up to the $1100 level. House is built in 1970's and in a established stable neighborhood.

House 2: Seller's price is $85k. Estimated rehab is cosmetic only, around $5k. ARV is $130k. House is empty and would just require some cleanup, carpet, etc. Estimated rent is $1000. House is built in 2005 and is in a developing neighborhood (mostly wooded lots for sale).

House 2 looks like an easier start for a beginner due to lower rehab cost and newer build, but House 1 looks like it could be more profitable in the long run. Both would bring approximately the same cashflow (rent minus mortgage, taxes, insurance, and management), which I estimate at $450 for House 1 and $350 for House 2. I show House 2 to have a higher Cash-on-Cash return ($4.2k/$22k = 19%) than House 1 ($5.4k/$35k = 15%).

I may be too late to the table to acquire House 2, but I wanted to at least run through the comparison process and get some feedback. Thanks!

Thanks @Account Closed - I will try to speak with the title company and continue to look for local investors to learn from/with.

@Robert Leonard I definitely can't say that I'm comfortable with the process yet, but I think that is because this is my first time. The wholesaler has a good reputation locally from what I can tell (I know of at least one BP member he is mentoring), so I don't feel there is any reason to not trust the seller. Having a local investor (other than the seller) work with me during the deal would be great, but I'm still working on making those contacts. Great advice though, and thanks for asking the question.

4 great responses in less than 5 minutes...BP is amazing. Thanks everyone.

I'm on the hunt for my first rental property, and I've connected with a local wholesaler who has a couple properties that fit my initial criteria. What does/should the process look like for buying a property from a wholesaler?

Should I use a Realtor or agent to assist me in the process and paperwork, or are wholesale purchases too simple and quick to warrant getting one?

Hello Mona-Marie,

I am new to the REI and BP scenes, but I'm located in Little Rock and happy to see another Little Rock user on BP!

What sort of investing are you looking to do?

-Kurt