All Forum Posts by: Nathan Emmert

Depends on volume.

Money is valuable... you can finance it 100% yourself and save a lot of fees on Hard Money... but then you're limited to that 1 deal.  If you could find HM to fund 75% of the deal, you could be doing 4 simultaneously.  You'd pay for that money obviously but you'd get 4x the sales which may (or may not) result in more profit. 

What you're likely going to have to consider is how quickly you can fix and flip the property. If you can churn them quick, you can control the fees of HM... if you are new and it's going to take a while to fix it and you might misprice it leaving it languishing on the MLS, those fees will quickly eat through profit.

It also depends on your market and skills.  Are there 4 properties available to flip now or are you having a hard time finding deals?  Could you really control 4 crews to do 4 flips simultaneously or are you hands full just managing 1?

Buying with cash gives you some comfort and time.  There are still holding costs (utilities, taxes, etc) but they are far lower giving you more buffer to learn.  We all need to get an education in Real Estate and no matter how much reading you do, much of that comes hands on... a HUGE key is to minimize the cost of that education to make sure you can afford to stay in the game after receiving it.

A little, yes... your sale still gets reported to the state regardless of if it flows through the MLS. I think your logic on why sellers sell to investors is flawed... it has little to do with "discretion" as you implied and honestly I have never even heard that suggested.

That said, posting checks is just plain tacky... do I post my W2 salary on FB?  Why on earth would I?  I mean, I'll talk about it with anyone as I think discussing money helps everyone... but to push it on people who may not be comfortable is just silly.

To your point on profit... I agree... as long as everyone is happy it doesn't really matter if they made 10% profit margin or 80%... it's a commercial transaction.  When I buy something at Walmart I don't really worry about what the cost basis for the product is, I simply ask if the price they are requesting is worth it to me... if it is, I buy it and everyone wins (presumably).

A credit union would give you better terms than that and if you have excellent credit would likely close in 30 days or less.  If they were willing to take a lower down payment it might make things interesting but at 20% down and that rate, I'd go Credit Union.

If it's worth less than he owes you can work it as a short sale but that doesn't generally leave enough money in it for you (you might be able to negotiate the discount for someone to rehab... but that discount, plus enough for you to wholesale... nah).

 What contingency budget do you establish on top of your expected budget or do you hold risk entirely in your profit markup?  If you are anticipating $40k in repairs (for example), do you budget $44k and then expect to make 20% profit... or do you budget $40k and understand any growth will lower the profit margin?

Not enough info to evaluate if it's a good deal... but based on the math, $5,500 + coins a month at $330,000 it is definitely worth exploring further.

A $10,000 rehab doesn't do much.  The appliances are all in great shape so they won't have to spend money there?  How big is the house... it's about $1/square foot just to repaint the house... another $1 if you want to paint the exterior as well.  No flooring problems?  Carpet, Hardware... even vinyls will burn through $10,000 pretty quickly.

Flippers generally look at 70% of ARV - repairs. If it's $120k that would be an $84,000 purchase price minus repairs would leave them at $74,000.

Being $100k (purchase price + repairs) into a $120k house is pretty deep for a flipper... They're going to pay 6% to sell the house (commissions) plus concessions (figure 3% seller assist)... when  you factor in holding costs and cost of money they are well under $10,000 profit on the property which is very VERY lean.

Hi Liz, welcome!

For your CoC you should also figure in Property Management and CAPEX... granted, with a condo the CAPEX may be a bit lower but you still have appliances and things in the unit that will need replacement. Do you have your own hot water heater and furnace or are those central?

With regards to Property Management, doing it yourself is like a 2nd job and shouldn't be figured into your CoC... think of it as a time value issue that you'll need to decide on your own (I save $130 a month in fees... but spend X hours each month or year dealing with stuff a PM would do). For some it's worth it... for others they can make more money doing other things (why make $30 an hour in property management when I can make $50 an hour flipping for example)... and still others don't want the hassles (*raises his hand to that one!!*).

With CAPEX and PM, your cash flow is going to be pretty poor. You bought at just under 1% rent (rent as a percentage of purchase price). That's pretty close to the break even point at today's interest rates. What's hurting you is the HOA fees and the high tax rate... you're over 30% expenses after just those 2 items (I try to buy properties with property taxes under 1 months rent).

How are you buying with less than 5% down and 4% interest? NOO generally requires 20% down on SF and 25% on MF (2 - 4 units) and you'll likely pay a minimum of 4.25 - 4.75% interest.

Your formatting looks bad up top... seems like the enters got messed up in a copy and paste.  $1,100 rent against $45,000 purchase price is pretty good... that said, we can't analyze your expenses as you don't have them outlined.  They appear to be inline with 50% before P&I which is a solid sign... as long as you didn't leave anything out!

Also, your ARV looks terrible... why would you buy at the ARV when it needs $10,000 of repairs?