All Forum Posts by: Crystal Smith

@Sean B. I'll send you a PM w/ a recommended attorney.  If you control the property w/ an assignable contract or inside of a trust then it's not illegal.  W/ some attorney's you have to use different language for them to understand the transaction.    

Cash offer means they want you to bring cash to the table w/ no finance contingencies.  

@Jay Helms We partnered w/ a GC on a flip. The challenge we ran in to is we had to fire the GC as they weren't performing. It was potentially going to be rather messy but we were fortunate in having a JV agreement where it was understood that just because the GC was a partner didn't mean that he could get away w/ not performing. So even as a partner he had to sign a GC contract w/ the same caveats that go in to a regular GC contract, penalties for being late, lien wavers...... We tied the JV agreement to the GC contract w language that reduced the GC split for failure to perform & the ability to fire the GC & get no split if the failure to perform significantly impacted the profitability of the job.

We're convinced that partnering works.  W/ the right GC it can reduce the cost of the job & increase the incentives for the GC.  

@Timothy Brubaker You should put together an investment package that lays out all the financials & potential financials for the deal.  Then start looking for a partner.  There are most likely some examples in the BP file folder.

@Mark Doyle Once a property gets out of the 1st look period, we've had offers accepted by Fannie Mae that were written as cash or Finance, even though the listing said cash only.  Bottom line as we've looked @ it is a buyer can offer what they want.  The seller can either reject it or counter.  Just because the listing says cash doesn't preclude you from making a different offe;  especially if is you provide evidence that you have the financing in place to close.   Here's the key:  When they say cash, we don't make the offers "contingent" on financing, but if we have a lender that will do the deal then we want the option to use the lender.  Sometimes it works, other times it doesn't.  

@Account Closed We've had some success w/ Christian Luckman- VP @ Guaranteed Rate

@Kelly Foydl Earlier this week we sat down w/ some investors we've been working w/ for a while. Their original question was how to turn an $350K inheritance, making less than 5%/year in to a portfolio that would throw off more cash than their income. They had also just been pre-approved for some HML loans & some conventional loans. Here's what we worked out on paper. You just have to triple the numbers if it was $1M. The newbies are in their late 40's. The numbers we used are typical for Single Family projects we've been involved w/ on Chicago's southside & we used them to illustrate the art of the possible.

Step 1: A renovated brick bungalow on Chicago's south side on the right block, in the right condition, will retail between $150K to $200K. These bungalows can usually be purchased between $25 to $40K w/ gut renovations between $60 & $80K. So you're all in number is around $100K. Some will be more, some will be less. The gross margins is $50K. With their lender providing 65% of the ARV as a loan the cash reserves they need per project will be ~ $20K to $30K. Mathematically they could do 10+ projects but we settled on 8. Using a 6 month time line per project would mean 16 projects per year; with a gross before taxes of $432K.

Step 2:  Take 1/2 of the earning & use it for down payments on cash flowing properties.   

Step 3:  Repeat Step 1 & Step 2

Step 4:  At the appropriate point move in to lending.

Step 5:  Every time you finish a project reward yourself

This is naturally a perfect world plan & stuff will happen the 1st time the plan has contact w/ the real world.  But it's a plan that's relatively safe because of the amount of the cash reserves available for stuff that's bound to happen.  

@Brent Cullipher We're not in the San Antonio market but we'll comment. 1st off - It's an asking price. What you offer versus what they want are 2 different things. 2nd: You're responsibility to do the due diligence on a deal, which it seems like your doing. There's nothing pre-determined about spreads. Regarding ARV- If the wholesaler has provided sold comparables to support the ARV or if you have the ability to determine your own ARV then you have the data to make a decision. If all the deals w/ only $10-$15K spread are selling fast then you're in market where you'll have to make some decisions on your strategy, or find a way to significantly reduce the cost of the renovations without reducing the quality of the work.

@Moshe Eisenberg I would ask your broker to provide a sales comparable report for everything that's sold within the last 6 months up to one mile from your property.  Have him run the report on all 3+ bedrooms w/ 1 bath.  Then run the report with 3+ bedrooms w/ 2 baths.  All the properties should be about the same size as yours & within no more than one mile away.  Look for a significant difference in the sale prices and Days on Market.  If the difference in price is much larger than the cost to install a new bathroom & they are selling faster then put in the bathroom.  

Welcome to BP.