All Forum Posts by: Peter Mckernan

contractors should give exact quotes, come in give you a full detailed list of how much it will be to cost for labor and materials broken down. PPSF quoting will not give you the true info you need to make an educated decision.

If you send me a PM I can get you in touch with some companies and foundation people in that area. I used to work up there for years as a firefighter and still sell a lot in that area. 

The foundation is one issue, I agree with the other two comments.. I would get a slab/foundation company out there to take a look at the property and see what the quote is to repair it. This should be 3-5 quotes for you to get an idea of the true number for fixing it. 

The next part is to get a contractor(s) in the door to give you estimates on rehabbing the rest of the place to get it to rent out. You own it so that is a good thing, but if you bought it for 165K and it will take 75K to fix it up you are not in a great position to have a great ROI. I would also verify from a licensed realtor how much rent would be and how much selling it would be.. These will give you the out numbers, and then you can work backwards once you know the repair costs.

I would really get with someone in that market that can dig in see what is going on with the market (comps), and also maybe the rehab was not as good of a job of what the market is yielding at 300K property. Did you put in a kit shower and the market is better with tile shower walls.. Did you put in the carpet when all the properties in the comps you pulled are selling with luxury vinyl.. These are things I would go over with the agents, and get the in there to see what is going on. 

Then if you still 100K off, I would start dropping the price in a big way to get to an even playing field. 

The last tip, I would also see about the first option above I mentioned and add in staging if you do not have it. 

Couple listing options: range pricing, new photos, cancel and re-list, and stage the property. 

I would search out people in your market that are flipping, and try going to a couple meetups as well. That helps get you in the mix of people doing what you want to do in your market. A couple of ideas would be using this platform on the events page, and also use meetup.com to find a meetup too! 

I agree with Chris, get a loan for rehab.. Before doing that, get numbers from a few contractors first 

These are all goals that you will set, then you need to back into those goals by numbers (KPIs). For example, I want to make 100,000 this year in flipping homes. Okay, now you can back into that number.

1. What is the average spread in the market(s) you are in for flips? Let's say it is $20,000, so you will need to do 5 deals.

2. How will you get these deals? Door knocking, wholesalers, phone calls, yellow letters? 

3. Then once you know how you will get the deals, that is where the fun starts.. You need to know how many of those things/activities lead to a deal. So for example, you want to send out postcards/yellow letters. I need to send out 1,000 postcards to get 5 phone calls, and 1 phone call turns to a deal. 

4. Now you know, you need to send out 5,000 postcards to get those five deals..

You will know the cost of acquiring a customer/property after all this.. For the last example, you spend $3K to put all the mailers out, so you would spend $3,000 to get a return of $20,000.. This is a very simple way to look at the numbers for you. 

I would say two things:

1. Shadow/mentor a person doing it. Even work for them for years, yes years. You can learn so much and get paid while doing it by working with someone who is doing what you want to do. 
2. Second thing would be to work with a contractor, this is great stuff to do since you know building a house, building material costs, and knowledge of right and wrong what to do. 

I started and did it differently. If I could go back that is what I would do.. I worked as a firefighter so I got the building construction from that background and then the transaction and numbers I got with working within/alongside investors that were in the business doing the stuff I wanted to do. That got me to learn contractors, negotiation, and how to analysis deals too. 

First comment I would say is do not buy something because it feels good. Buy a property when it feels good is when you are buying your primary home where your kids will grow up and you'll live with your family. Buying an investment property on feeling is not the right strategy. I would fist run the numbers to see if it is a good deal at the price and everything else, and then I would drive down the streets to see if you see any licensed contractor signs/trucks. I would call those contractors and ask the same thing about this property as you did those other two guys. Once you do, then you can verify if it's hard or easy to flip there.

Couple questions I would be asking, how long does the permit process take. If you actually need to do permits on everything or just structural fixes and big items (I.e. roof, siding, windows, etc.). If you are doing a paint, flooring, countertop, and some hardware fixes is you will not need permits. Also ask, when you submit the plans does the city give a hard time on all the stuff or just a couple things. 

These two contractors may not like that area, or just had one bad experience, so it would be great if you could explore more of what other experiences people had/have in the city. 

Selling fees (estimate), $30,000, and holding costs? How quickly can you get the work done? I would project, 6 months, so if there are holding costs $2,270 a month (not including utilities), with utilities in about $2750.00. $2750x6 months= $16,500.. Points for the loan 1-2 points, so now you are in $3,413 roughly. 

Buy: $284,900

Rehab: $115,000

Holding: $16,500 

Points: $3,413 

Selling fee: $30,000

Insurance hold: $2,000-$2,500 (maybe get back $1,000-$1500 if you close quick)

Other title/escrow purchase: $2,500

ARV: $500,000

Profit: $46,587 (9.25% approx) 

I would do the deal, especially if you get that gap for rehab closed 3-4 months and tighten up the rehab costs too ($100,000)