All Forum Posts by: Michael Hicks

Marcus, I live in North Georgia and work in the Chattanooga area.  I would be glad to meet with you one day next week and take a look at your project and give you some ideas.  Let me know.  Mike

@Saul L., I never looked...

@Eric Hrlbock, I purchased a foreclosure about 10 years ago.  Everything had been cleaned out except for a 6' long chest freezer.  Of course the power had been off for over a year.  When I tried to lift it I could tell it was full.  I knew better than to open it so we tied a strap around it and used piano dollies and 4 people to lift it.  We could feel whatever was inside sloshing as we carried it.  We got to the truck and began to lift.  The contents inside shifted and someone dropped their corner.  The strap popped off and it went everywhere.  I won't describe what happened next but we all got sick and left.  I called some scrap metal guys and they picked it up a week later...they got sick too.  Good times

I've been contacted by an individual who is wanting to sell his home for pay-off.  

The basics: 

Assessed at $89,900

Retail value $99,000-$105,000

4 bedroom, 3 bath ranch

Can purchase for $52,000 by assuming payments of $752 a month including PITI

The house will lease from $800-$850

2014 Taxes were $841

Estimated annual insurance $750

Waiting to hear from owner how many years are left on the note

If I am figuring correctly, there would be $204 a month positive cash flow along with a $5000 non-refundable option fee?  Is that a fair option?

I have never done this type of deal and am wanting to make sure I have it right.  If I understand correctly, I will make the payments under the subject to agreement.  I do a lease with option to buy with a lessee with a non-refundable lease option fee.  The lessee is responsible for the lease payment plus taxes and insurance.  I think this is the general idea behind it.  

What am I missing?

How is the deed conveyed if the property is paid off?  

Is this a good deal in your opinion?

I've purchased many properties but am trying to broaden the range of my deals.  I've never purchased in this manner.  Any ideas or suggestions are appreciated.  

Thanks, Mike

I borrow from private investors to fund some of my flips.  On my end I like to pay anywhere from 7-15%.  15% may seem high but I want to make sure it is worth it for the investor too.  I don't pay any up front points or loan fees.  I simply pay interest only until the home is sold.  Usually on a one year note.  If it is a small amount like $25,000 I don't mind paying 15%.  If it is a larger amount, I like my interest rate to go down.  If i flip and sell within a month or two, I give the investor a "bonus" of $1000-$1500.  This may not be the ideal set up but it works for me and the few investors I work with.  I always have a security deed written up and filed as well as a note with the investor.  

Since you are wanting to learn to flip, you may suggest a deal where you front the money, he does the flip, and the two of you split.  There are several ways to work it.  I would look at it more as private money rather than hard money.  

Good luck, Mike

I am with @Allen Maris.  I provide the stove, dishwasher, and otr microwave.  If there happens to be a refrigerator, I leave it and let them know if it goes out, they will have to replace it.  I was buying new appliances and getting 1-2 years out of fridges.  I started buying appliances off of craigslist.  I look for whole kitchen packages where people are replacing with stainless or newer.  I can usually pick them up for $500 with range, dishwasher, otr microwave, and fridge.

I believe I would sell, avoid the capital gain, and move on to bigger and better profits.

Not sure how to keep you motivated but I'll try.  I have been in this business for 15 years and still get discouraged.  I had a deal fall through last week and it still gets to me.  When you do get that first deal it'll all be worth it and you'll never look back.  Just keep it up.  Like @Mary B. said, surround yourself by like minded people.  At this point, I get as much satisfaction helping others as I do making deals.  

@Roy N., squatters is something I've never had to deal with and from what you've found...I'm glad.   Not very common in my area thank goodness. 

I would leave it the way it is.  It's tasteful and nothing bad to look at.  If you are truly concerned then go ahead and paint it.  It'll be easier to knock it out now rather than after furniture is already in place.  Also, you could just ask the tenant if they would like it changed before they move in.