All Forum Posts by: Mark Shaffar

Hi fellow BPers,

I've been investing in turnkey rentals for 6 years now and last week I took a job in investor relations. My question is what are BP members looking for in an ad on Bigger Pockets Marketplace? I think the strength of BP is the interaction and clarification possibilities offered here, but we're also talking high dollar ads for deals on the internet- risky.

Mark

We have partner banks that we recommend to our clients. We are also looking for private lenders. 

Thanks friends. I'm loving the interaction on BP. I'm learning a lot.

Mark

@Jamarcus, Thanks for the feedback and challenge to work harder.

I couldn't agree more with you fellas. The major strength of Bigger Pockets is that people can discuss and interact with the posted deals, not just a one way ad in a magazine. We can hold each other accountable and scrutinize the details together.  I would be scared to death to see an ad and then hand over a check for $116,000. I remember the first time I met Nate Armstrong (owner of Calhoun Ventures) 5 years ago, I liked him and I liked his numbers but I was extremely nervous signing that first check. For me, what helped was first touring their projects in Minneapolis and then knowing my name would be on the deed for the property. 

The purpose of these ads is to draw interest to our company and the kinds of projects we are doing. Most of our investors will go on a tour and talk to other investors of ours before handing over a check. Nate Armstrong recently partnered with Blake McCreight and Matt Larson to form Midwest Equity Partner. These guys have 3,300 plus real estate deals under their belt. Please check out our website to learn more about us: www.midwestequitypartner.com

As far as breakdown of the numbers regarding the original purchase price, our fees, and rehab costs please give me a few days.

@ Jason "So, you're basically offering a turn-key fix-and-flip -- you buy it with the investor's money, rehab it with the investor's money and then let the investor keep the profit...and you get a fixed fee for that?"

Yes exactly, an investor buys the property and pays us a fixed amount to rehab it and manage the process (fix and flip). 

@ Jason "The $15K profit potential is based on a full-price offer -- perhaps this is typical in your market, but it's generally far from guaranteed. So, $15K is likely the top end of the profit range, with some downside potential;"

Yes there is risk. In fact, I personally (as an investor myself) did one of these fix and flips in 2010 (1711 Orange Ave St Paul, MN) and the market was crashing quickly to the point where Nate couldn't meet his projected numbers. He told me he could sell at a loss and take the loss himself or I could just hold onto it and rent it out. I chose the latter and now that the market has recovered I am planning on selling. In 2012, I bought a turnkey (772 Jackson St. St. Paul, MN) from him for 65k and it rents for $1590/mo. So some deals work out very well and some are just so-so. 

Thanks Mike, He's a great guy!

Mark

I guess this is what happens when I try to work from home because the kids are on spring break. It was a little hairy in our household when I posted this. :) 

To answer your question, we have an agreement on the property and before we close we look for an investor to fund the deal (buy the property, rehab, and we take our fee). That investor puts up the money, we rehab it and resell it retail (fix and flip). In this particular property we felt that the best option was to flip it to another retail buyer after we rehab it. Others we feel make better rentals and we place a tenant and the investor collects rent. 

We would like an investor to put up $116k and then the investor keeps the net after it is resold on the open market after we rehab it.

Clear as mud?

Thanks folks for your interest. I am very sorry about the confusion. I'm kind of new to listing here.

This is a single family home deal that we are looking for investors to fund. Our all-in price to our investor is $116k for our purchase, renovation, and our fee for putting it together

As far as details on rehab costs I'll need to look that up, but it is included in the $116k.

Our estimate as to what we think it will sell at (retail) is $149,900.   

Our estimates for reselling costs after renovation are 

$14900 + $1800 +$2000=$18,700 These are conservative numbers and do not go to us  

Our estimate as to what our investor will make on this deal is $15,200

Again sorry for the confusing post.

2907 S 93rd Milwaukee WI

http://www.trulia.com/homes/Wisconsin/West_Allis/sold/757196-2907-S-93rd-St-West-Allis-WI-53227#photo-10 Price: $116,000 (Includes Renovation, Purchase, and our Management/Sourcing Fee) This number is fixed

After Repair Value: $149,900 (this is our estimate based on comps)

$149,900 Sales Price

-$14,900 Selling Costs (Realtors/Buyer's Closing Costs)

-$1,800 Purchase Closing Costs

-$2,000 Utilities / Lawn Care

-$116,000 All In

$15,200 Net

Comps:

Click to view listing(s)

We have a Davenport Deal open below:

http://www.zillow.com/homedetails/423-S-Lincoln-Ave-Davenport-IA-52802/94742537_zpid/

Price: $68,000 (This is fixed-it will not go up. Includes Purchase, Renovation, and our Management Fee) 

After Repair Value: $85,000 (what we estimate it will appraise at)

Comps:

Click Here to View Listings

Rent: $950 ---- to $1000

Management Fee: $76 ---- $80 (8% if you would like us to manage it for you)

Taxes: $117

Insurance: $65 (estimate)

Vacancy: $50 (5%)

Reserve: $50 (5% we warranty the work so this should be $0 the first year)

Net: $592 --- $638

10.2% --- 11% Pure Cash on Cash Return Projected

20% Equity / 80% Financed, Loan Payment = $350

Net Net After Mortgage Payment = $242

ROI with 20% Equity = 21% --- 25% Projected

More Pics:

423slincolnavemorepics.zip

Renovation includes:

All the cosmetics

Carpet, Patin, lights, outlets

, new flooring in kitchen & bath

Bath renovation (vanity, toilet, epoxy

tub

)

Appliances

Adding Cabinets & Countertop

New Furnace

New Hot Water Heater

Paint Basement

Garage needs paint

Not Needed:

Windows (newer casement windows already installed)

Exterior siding in good shape

Roof is good

Soffits, Fascia are all wrapped already

The renovation will be under 60 days. Leasing will be under 30 days. 90 Days or less total from the date of purchase = tenant signed lease.