All Forum Posts by: Crystal Smith

@John D. Can you provide more specifics on the issue?  If it's a code violation that requires building a new porch then you'll need an architect, preferably an architect recognized by the city as self certified.  

@Dena Zeid Throw out the 70% rule. If you're really going to invest $280K then the answer to your question depends on the target Return on Investment (ROI) you've established. If you're target is 10% then your return will be $28K; if your target is 20% then your return is $56K. W/ your target profit number you then work your way back to a max offer. (ARV-profit-rehab-holding cost-marketing/realtor costs= Max offer)

@Stephan Haas Do a search on Peer to Peer Lending & you'll find some companies that facilitate sub $50K loans.

@Dooreuhn Cee Before going in to a flip project we look @ multiple exit strategies & timelines for executing the strategies.  We won't purchase a flip w/o having the alternative exit strategies mapped out.  We put alternative exist strategy triggers in our project schedules :  The triggers:

• Short term balloon note date- If we've borrowed $ then 6 weeks before a balloon note is due we'll start the process of paying off the balloon & move the project from a flip to a hold.
• Sales comparable average Days On Market (DOM) - We'll qualify a project for a flip if the sales comparable average DOM is < than 90 days.  Once a project starts we'll monitor the market DOM.  If the average DOM changes to > 90 days it triggers a discussion on executing one of the alternative hold strategies.  

We have 2 hold strategies for projects that we're originally intended as flips:

• Short term- On the high end project in "A/B" locations we contract w/ corporate/executive housing companies.  These companies are looking for properties w/ short term month to month leases for moving executives.  The companies pay a premium for the lease & we can still market the property while occupied.  
• Long term- In the in the C/D locations we'll hold the property as a rental; rent w/ option to own or owner finance.  For the straight rental the rent to value is between 1 and 2%.

@Jon Adams you're getting great feedback from BP.  My input will most likely echo input you've already received.

• Maximize the exposure to your property.  Craig's list isn't enough.  Post the ad everywhere, backpage, craigslist, zillow....  You can use POSTLETS to syndicate the add & have it posted in multiple locations.  You should also consider hiring an agent to market the property.
• Improve the quality of the pictures you've posted.  
• Remove language from you ad that appears to be discriminatory.  You can remain tough but you may be eliminating qualified candidates who are reading too much in to your ad.

@Sylvia Pomazak I see you're a PRO member.  If you want to know whether this deal would be a good fix or a possible wholesale deal then take advantage of the BP Real Estate Investment Calculators to analyze the deal.  So what will you need for the calculator:

1. Sold comparables for the last 6 months within one mile of the property. If you have a realtor ask them to calculate the ARV. If you don't have a realtor use redfin

2. You'll need a renovation number for the calculators. You may want to try:  Homewyse.  I will tell you this.  Whatever number you come up w/ will be wrong so put in a fudge factor.  We have our own in house methods.

3. You'll need to know how you'll close the deal, Cash, Finance, What are the rates, terms.

4. You can estimate closing costs using  1st American Closing Cost Calculator.  It will get you in the ball park.

5.  There's other stuff that's required.

The numbers will set you free & provide you w/ the answer to the question of what you should offer  or if you should make an offer to support either a wholesale or keep it for a flip strategy.  Save the stamp, don't send the owner a letter.  He's already listed it.  Submit your offer thru your realtor.   If the listing expires then send the owner a letter.  

@Davon Lowery We're available in Chicago.  Also licensed in Georgia.

@Tony Santos I'd do some more due diligence on this.  If he owes $27K in back taxes chances are there may be other liens on the property.  

If he owns the property free & clear w/ the exception of the back taxes then an "out of the box" approach (Using your words- It's really not out of the box) is to make the property owner a partner.  Reach an agreement to pay off his taxes.  In exchange for paying off his taxes you agree to renovate the property & share some of the proceeds from the sale w/ him.  If he agrees you could potentially reduce the amount of cash you need to execute the project.  The incentive for the owner- He could potentially walk away w/ more profit than your current offer.  For this to work you'll have to get security in the property with the owner; a solid joint venture agreement & the owner may have to move.    We've done this a couple of times over the years.  All they can do is say no.

@Nic Bernier Our "momentum" is driven by financial numbers directly tied to Cash flow, cash in the bank, ROI,.... These type of metrics drive our momentum & strategies.

@Damiano Malfeo You don't need software to create an LLC. You can create your LLC directly on line w/ the Illinois Secretary of State office. or use an agency such as Corp Net to create the LLC, provide you w/ your operating documents and act as your registered agent.  You could also use a lawyer.  We've used Corp Net.