All Forum Posts by: Joe Villeneuve

OK.  You found houses on CraigsList...a fine site that we use to find deals on.  I have one really basic questions though for those who doubt my numbers.  How many of these houses that you are using to shoot down my numbers have you walked through and verified their value and condition?  I don't mean similar looking ones in your states.  I mean these actual houses? 

JV

We have a lot of foreclosures in the area. Just that simple. There are a lot of what you see as low comps, that are just the most recent foreclosures sold. Those properties need a lot of work. When done, those are the properties you see sold with the higher comps. You are correct in your overview of what the normal market presents. I don't live in a "normal" market. That 180 comp, is based on 135 cost...which includes the rehab we had to do on a house that we bought for 60. The numbers you see are all facts of life in this area. Like I mentioned in an earlier post. This area is what could be described as the perfect storm of foreclosures, new renters, property values that have dropped like a rock, but are climbing steadily (slowly though). We have the Banks, HUD, FM, etc... sitting on a number of foreclosures...just letting them out in small enough groups to not bounce the market up and down. The results are what I posted. Properties that can be bought low, and when rehabbed can justify the higher sales comps on them because they are basically a new house.

JV

Richard, How do they treat foreclosures as comps in Colorado.

Richard,  Didn't think you were doubting me, just wanted to clarify.  I used to be one of many that searched for this type of funding only to be frustrated in the attempt.  It's there, and I bet it's everywhere.  I figured I had to keep looking.  Funny thing is, I didn't find it, it found me.  LOL.

Joe Villeneuve
REcapSystem
A2REIC

Richard,

Some of the members of our REI group use this funding for their first deal.

Joe Villeneuve
REcapSystem
A2REIC

J Scott,

When I use Bank financing I use 1stMerit. They give me 75% LTV/ARV on a NOO Refi, 30 years at around 5% (only 4 loans though).

My 80% source is a Private Broker.

Joe Villeneuve
REcapSystem
A2REIC

Sorry Jon, but these numbers are not assumptions.  Everything stated in the post above happens on a regular basis every day here...which is probably why there are so many "out of state", and "out of country" investors investing here.

The 80% refi I spoke of, is what we use.

The Cash Flow I gave you, is the minimum we will move forward with...and I'm living in a target rich environment. I have another one where the cost was at $135k (ARV=$180). We are going to refi a little over the $135k, and the 4 bed house will CF about $1100/month. This is because it will be rented to med students by the room.

Joe Villeneuve
REcapsystem
A2REIC

Jeff,  Are these deals financed or cash deals?

Joe Villeneuve
REcapsystem
A2REIC

Cash flow is forever, flip profits have a shelf life.  If you just flip for profit, all you've done is exchange living from check to check, to living from flip to flip...and there's no guarantee there will be a check waiting for you every week on flips.

Joe Villeneuve
REcapsystem
A2REIC

Austin & James,

Cash is King...always has been.  It used to be, way back before the year 2000, that if you had a house CF over $50/month you would happy, and rationalized it to be a good investment because of depreciation and appreciation.  Sorry, I never thought that was a winning formula...and the crash preved that right.

Now, at least in my area, if you can't get a house to CF over $400/month with PM and financing, you're not doing it right.  I know there are other areas of the country where this is also true, but it seemed as if we experienced the "perfect storm" for investors over the past 5-10 years...and I don't see an end coming anytime soon.

Austin, you were asking for more specifics.  Here goes with a deal we are in the process of making (all numbers have already been confirmed & PA signed of by buyer/seller):

• $42,500 All cost (cash deal.  Didn't have to be...just the way we do it)
• $68,000 ARV/LTV
• $54,400 80%ARV/LTV (for refinancing purposes)
• $975/m  Rent
• $238      REFI loan pymt (4.875%/30yrs/$35,000)
• $210      T/I
• $120      PM/Maint/Misc
• $400+    CASH FLOW/month

If we take out cash at closing (there's room to do it here) the CF would go down, but we could access our equity (tax free) and use it on the next house...or just keep it.

This is a pretty typical deal too.

Joe Villeneuve
REcapsystem

A2REIC