All Forum Posts by: Richard Warren

Hey James,

I’m glad that you took the time to look at my site.

First off: The $80k figure was a test to see if anyone was paying attention, congrats, you were the first to check my math! Seriously though, it was a math error. It occurred because I lowered my ARV assumption but didn't change the end result. BPOs put the ARV at $165k but I decided to assume a lower figure, if it turns out to be more, then that's great.

As far as the rehab, the pictures do make it look worse than it really is. But it is fairly extensive.

As for your labor estimate, if I were hiring guys at that rate you would be correct. I will be doing the bulk of the work myself. When I need the extra pair of hands I have a handyman that I use at $10 per hour. This is rural Nevada and it is possible to get decent help at that rate.

You point about the value of my time is correct if that was my concern. However, I enjoy doing the work and at this point in my life I’m not chasing deals. If I never wanted to work again I wouldn’t have to. I am very fortunate in that regard and I do things because I want to, not because I have to. Right now I am content to do one or two deals a year. In the past I’ve had five jobs going at once. I’ve been doing this for 15 years and I know exactly what is involved. If I were hiring the job out and acting as the project manager like I would normally do, I would figure the renovation cost at about $60k but may have altered the scope of work a little.

That would still put it well within the formula for a profitable deal.

($150,000 * 70%) - $60,000 = $45,000 max purchase

I paid $48k, but used cash so that there is no financing cost involved, that allows you to pay a little more. The ARV is most likely higher than $150k, but I prefer to use a lower figure in this market.

My 35k estimate is based primarily on the cost of material and incidental labor. I will have the new electrical panel installed by a pro and I will have the drywall professional taped because it would take me a year and a day to do. My estimate will probably prove to be higher than the actual cost.

We all look at deals form our own point of view because we have different goals. You naturally take a contractor’s perspective. I take one of someone who is looking for a fun project that will make a few dollars. If for some reason I am unable, or don’t want to, continue I can hire it out and still have a profit.

The Website itself was put together simply to market my new book. I don’t use it to sell projects or look for new ones. If you want to look at a time vs. money formula, writing a book is a sure-fire loser. I spent almost a year writing it and getting it published yet will make very little from it. I would have to sell about 25,000 copies to make as much as I could on one RE deal. Money was not a motivating factor for sure, it was just something that I’ve always wanted to do.

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Tim,

What an outstanding analogy.

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There is no way around this. this is a program designed for owner occupants.

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You can check it out here:

http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm

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Here is an interesting article on college town real estate:

http://promo.realestate.yahoo.com/college-towns:-still-a-smart-investment.html

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You might find this interesting about American Home Mortgage:

http://www.bloggingstocks.com/2008/02/11/american-home-mortgage-cant-figure-out-who-owns-the-mortgages/

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Interesting how different markets are behaving. Here in Las Vegas the big expensive homes are moving pretty well. The real low end is also picking up. It’s the 95% in the middle that is slow.

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How would he be breaking the chain of title?

Title insurance is optional. It is certainly one of the least expensive forms of insurance because the risk to the insurer is extremely low. I still wouldn’t want to be without it to save a few dollars.

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That is similar to my business model. I pay cash and do the rehab. I will then refi the property to do it again. However, I never leverage beyond the cash flow and in most cases my LTV is 50% or less.

It is possible to get a HELOC on an investment property. Washington Mutual, Wells Fargo and a few other banks have had programs for that in the past. I don't know the status of those programs with the current credit crunch. The rules are different from a HELOC on a personal residence so you need to do a little homework here.

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In Josh’s defense, there are rules about what can be posted. If you read the rules you will see that it is clearly stated that you cannot post any solicitations or promote any product until you have 10 posts. That is done to protect the site from spammers by only allowing people who have made a real contribution to the site to post here. You haven't been singled out, the rules apply to everyone. Make a real contribution and you will be allowed to post. The only contribution that you have made to date is to promote something that you sell. That system works very well and the site is pretty much spam free.

In regards to the Money Merge Account, the only people who heartily endorse or defend the program also happen to be selling it. That’s not exactly objective.

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