All Forum Posts by: Peter Mckernan

I would reach out to lenders too, just build relationships like you did with the HD employee that got you that deal. The best two deals that I got were from lenders that had people/clients come in and start talking about having issues with their home and needing to sell. Those were the biggest spreads and best numbers. Some other options, people that are in the space where you want to get deals from (attorneys, appraisers, handymen, contractors). 

That is always great that you can close quickly and make that happen with those lenders, I would really shop around. Points of 2-3 and rates of 12% is extremely high even with the experience you seem to have with this post. 

The two things that will eat you alive, holding costs and change order/increased material/labor costs. Get these two down solid and you should have a great advantage over the competition.

This is so hard just in the market you are in alone, let alone across the nation. I would get a property get 3-4 quotes from contracts and then narrow down to the good one you want to use.. Keep doing that many times till you know yourself how much it will be before calling the GC.

 This is pretty typical.. A lot of owners will let things go, not tighten up the ship on rents, keep things loss. These usually are the best deals cause you can negotiate all this stuff from these owners, the true professionals will have this tighten up (leases, expenses, and all) and they'll be selling for a lot more. I had one like this a year ago, we were able to send the estoppel certs and kick one tenant out by the seller being light on income for that units rent. They kicked the tenant out with doing cash for keys prior to us closing on the property. 

I am currently doing flips, it is one of my active portions of the business. There are a lot of people that are doing flips but you need to be dropping that price down to if you want to use a rule of thumb, 60% of ARV when buying and really know the right ARV with comps.... This is where some people are really getting hit right now buying it wrong and not putting a larger gap between buying and selling price.

I would of course check with your CPA and attorney, but you would be missing out on the homeownership write offs and the tax savings if you decide to sell that if you live in it and call it a primary within two of the last five years. I would put it back into your name or trust and use it as a primary. 

A deal is a deal, if you buy something for a flip you need to know the out price within the next 3-6 months, when you buy a lot to build you need to know what the out price is for 2-3 years, and when you buy and live in you need to know the out price in 5-10 years (average homeowner holds for 7.95 years per ATTOM, and some longer (12 years plus) for other data sources. 

So you are figuring the market could impact pricing but if you are going to live in the current market is really not that impactful if you are buying to live in. The strategy is completely different right now if you are looking to flip verse buy for yourself. Either way buy for a deal, but know living in it you want the best deal.. but you don't need a 60% of ARV or more as you would a flip.

With current market conditions I would pad an extra 10% in there for gap between buying and ARV. For you that means $21,000. Can you do that? I would try because these days not only holding costs are high for longer time on the market, but inventory is high..

In my market, you need to buy something $500,000 one year ago with an ARV at least 650K or more. Now it is buy that for $450,000 with an ARV at least 650K.

 I use buildium, it is on the cheaper side of the online platforms that help you coordinate all stuff within one place from request for maintenance and other stuff like emails to tenants.  You can capture money in and send money out to owners and all.  

I would be careful in this current market on adding too much value, or pushing the money too much on a rehab because the market has more inventory so that added value might not be added value in the buyers eyes. Just be super strict on your numbers and also make sure that you are expecting to be on the market longer than planed. This is for anyone in a slower market, some markets are still selling quickly, but over the course of the last three weeks I have heard a lot of other agents around the nation and it sounds about the same for most everyone else (slow). 

Some people already hit the nail on the head..

The price is too high for the market, and you need to reduce to meet the market. That is what a lot of people are struggling with these days. The pricing needs to be there for the buyer's looking in the area.. This is a 2017-2019 market now, more inventory and more choices. 

You can list for sale and for lease same time, and capture the best (may the best option win). That is what I would do and I do for my clients too!