All Forum Posts by: Mike B.

Yuriy Skripnichenko I cant enlarge the photo can you PM it to me (philly). Thanks

I order all new windows if they’re replacing existing openings. Have the windows on site and ready to go. Then your installer or contractor or whomever can remove the old windows so the new windows can go right into replace the removed one. That’s the safest way I’ve found to do it or keeping the home secure.

As long as the bulge isn’t too bad (or worsening with the stars/bolts). Lots of homes have them due to being 100 or more years old. More common then you think

Nghi Le Total purchase was $138K. Rehab costs were approx $90K for everything (materials and labor) Loans: —private lenders (family) was a flat 10%, no points, no interest or payments due monthly... only balloon payment due within 12 months of total lent plus interest —commercial home lender: $3K flat fee for paperwork etc, 25% down payment on purchase (138K) + construction loan (50K). had to sell within 12 months. Interest was 9.5% on total lent, had to pay interest reserve up front and I was refunded the difference the quicker I sold the property. So in the end, there was a few thousand in interest I got back at the table since I sold quickly. Hope this helps explain things better

Tim Butters thanks. Interest total was about $13K total for everything borrowed. Overall not bad vs HML. I know my profit margin was lowered because I was using a framer at the time who was pricey and didnt want to wait an additional 2-3 weeks for my regular guy to be freed up. It would have been cheaper to wait for my regular guy but who knows if home would have sold as quick. It’s a toss up. Doing more work myself definitely would save more but my goal was this was to not do any work

UPDATE: Alright everyone, closing was today and all went well. @Account Closed I know you were specifically interested in final numbers so tagging you.

Here's the final numbers (rounded/rough..I'm not doing to the penny :-)

Loan for home purchase + construction w/interest=$152K (interest was about 9.5%; I put down 25% to purchase)..used a local lender for the flip.. NOT hard money loan terms.

Personal funds (me) used to cover construction: $40K (I did this out of pocket as no interest to me.. cash & credit cards)

Private (family) lending money used to cover construction costs: $55K (includes interest payback)

Net sales price=$255K   ($277K sale price - closing costs, transfer taxes, etc)

Leaves me with $8K profit (net.. in my pocket).

Overall I'm happy to walk away from the table with some money, but would consider this project a FLOP.  Do you agree? Flippers - What are your thoughts ?  Good flip?  Flop?  I have some buddies who consider it a good flip since there was a profit and they point out if I did 4 of these at the same time every few months, it would make a nice annual salary.

Anyway, another way I think of this.. is that I only invested my own physical cash to the tune of ~$25K (the other 15K was purchasing construction materials on a 0% interest CC which I'll pay back before the 12 month intro period). So my "COC return" per say is 32% ($8K profit / 25K cash used for deal). The rest of the money to purchase, construction, etc was all OPM (other people's money) where interest rates didn't exceed 10%. My total time allocated to the project was just over 100 hours (phone, emails, physical visits to the site, working a few days at the house doing misc things). So let's say I worked "100 hours" on the home.. then I made $80/hour. Of course now I'm TAXED on the profits, and since this sold in 2018 under my corporation, with new Trump Tax law, I believe I'll only be taxed 25% (vs. higher personal tax).

That's why I consider it a flop (and I'll be returning to doing the BRRRR method for flip-to-rent properties in Philly).

Again, I'm curious how others analyze this, so please chime in.

@Dan Red --> @Yuriy Skripnichenko hit the nail right on the head (codes/fees wise).  Also as @Joseph Scorese mentioned.. inventory for MFHs are super tight now, especially in Philly.  I've been looking for the last 2 years and have yet to find a great deal that can be snatched up (most are off market or bidding wars drive up the price ridiculously).  You may want to search outside of Philly for deals (and those still go quick sometimes). 

Speaking from experience, I used to own a duplex (I BRRRR'd out of it, sold it last year). Easier having a duplex in terms of permits needed for construction/alteration, fire codes, etc. For me at the time, the 1 bedroom unit paid 2/3 of my PITI payment and I was happy with that. I was also in Passyunk Square area, so it was the 'place to be' and rentals were hot in recent years there. Now, however it can be hard to find a good cash flowing duplex as you're limited to 2 units and if 1 is vacant.. can put you in the red. Location, condition, etc.. it all adds up as you know.

If you're at 10 SFHs currently (and kudos on that!), my suggestion would be to even broaden your horizon, looking at commercial places.. 5 units+, or perhaps buildings with commercial on 1st floor and 2 units (or more) above.  If you sold some SFHs, you could do a 1031 exchange, to get a larger commercial property.  Then renovate, raise rents, manage appropriately to force appreciation on the commercial property. 

Finally, on a personal note.. I originally wanted larger, multi units, but having not found any, I decided to focus on niche areas of Philly, acquiring SFHs to flip-to-rent (BRRRR) in appreciating (or potential anyways) areas.

Paint stripper to remove the paint?  leave the sill if possible.  They do sell replacements but you might have to try and cutout the old one?  Pix didn't come through so I cant see it 

Bryan Cork what LTV did they lend to you? 75/25 standard terms or?? I have a SFH rental I’m thinking of doing heloc on as well. Thanks

@Troy Sheets quite the story and hard work does pay off.  Glad to see your success right here in Philly!  All the best!