All Forum Posts by: Steve Wilcox

It depends what the cause of the uneven floors are. Uneven floors are an effect of something else being out of whack.

as @James Hamling mentioned you need to have this vetted out by a qualified professional, and make sure to pick their brain when they are on site. As you do more and more you should develop an eye for tell tale signs of foundation issues yourself and eliminte problem properties before needing to go through the inspection and attorney review period.

I try to stay around 70% of ARV, or 30% ROI on paper. OUr typical rehab project is about a 6 month from purchase to sale.

I dont like light rehabs as they can be hard to justify increase in value to appraisers. My ROI might be higher then someone who does 'carpet and paint' renovations because it takes us more time, costs more money, and is much more complicated then cosmetic remodels.

My biggest suggestion from reading your post is DO NOT WORRY ABOUT WHAT WILL GET YOUR OFFER ACCEPTED

All you can do is offer what works for you. Worrying about what a seller will accept is a very slippery slope. Offer a workable number for you, if it does not work out, if you get outbid, so be it.

The margins on the deal you are bringing up are way to small to be worth doing the deal. If it is a rental there is no way based on a conservative ARV you can refi enough of your cash out after rehab to roll over. If you flip the property by the time you pay all your closing costs, carrying costs, ect there is nothing left for you at the end.

I am a huge believer in the 70% rule for flips and for rentals, and this deal is not even close.

Be patient. Do not overpay for deals. Do not underestimate rehab costs, because there are always unknowns, and it always costs more then you think (especially when starting out).

Most of the time to be in a nice area you will have to sacrifice some cash flow, but some investors do not mind as they feel their properties will appreciate and value will go up.

Good deals are not easy to find, and are not all over the place. If they were everyone would be rich.

In terms of unit mix, the more units in a building the greater protection against vacancy loss, however the more units the higher the price

If you do not have 20% to put down odds are that you will have to use FHA financing which is only available for owner occupants.

Where I live I could not get a good cashflowing property in an area I would like to live, so I buy in more urban areas. You should talk to realtors who work in your area are realistic, if not you may have to adjust your aquisition criterea. You may need to look in other areas.

Full disclosure I dont know abput usda loans as they are not available in my area. That said option #1 is not a good option for real estate iinvestment unless the mortgage is less then your current apartment rent and busoness rents combined because it will not give you any cashflow or pandlord experience. Also you are basically speculating that the area will appreciate- this is never certain in our changing market especiallyif interest rates jump.

Option 2 depends on the ratio of your mortgage vs projected rent roll of the non owner units. You might be able to live for free or less than you pay now and you eill get experience as a landlord. after 2 years of land Lord exPerience convmtional lendwrs will count the rents yu make as your own income for debt to income purposes.

Option 3 is solid as well. Not sure what a loan above means. Make sure when you calculate cash floe you really know all your expenses and you account for some level of vacancy.

Ps. Your primary residence is not an investment its a liability.

Finally- what is yout other business and how much do you expect to net from it? If its alot focus there and use the profits to invest in re

Kudos to you for going for it with your first deal.

Make sure you actually know where your $212k is going and that that is a true accounting for all the costs. You want to make sure you have enough $ to complete the project.

Often friends or more experienced investors might consider costs of doing business and not account for per project that could be a disaster for someone not anticipating the costs, especially if you dont have a ton of cash.

Spec builds are complicated and expensive.

Also your deal is difficult to analyze- In your first post you said 225k in materials and your gc was another 35k, and your purchase price for the land including demo of the existing house was 72.

Do you know if you have to do lead or asbestos issues that could elevate costs?

Does 225k include hook up to city water, sewer, gas, electric? Does that include the cost of building a street for the other 2 houses?

I dont see a cost of money anywhere to estimate what borrowing would do to the equation. If it takes longer then expected (say 12 months instead of 6) at 15% for 250k thats 37.5k which is the majority of your profits, however you would then own 2 other build able lots.

@Karen Margrave is 100% right that you need to call the city and find out about those lots even if they are already subdivided.

I looked at a legally subdivided lot from a wholesaler recently that was 50x100 which is build able in many towns I work in but in this town the new requirements were for 100x100 and there is no gaurentee we would be granted a variance.

Presumably you will be working with an agent when you go to resell the property, this person should have a good idea of the arv and no problem pulling some comps.

If not you should start to interview a few in your area. Ask other investors for recomendations at reia's and there should be plenty of agents. Just try to get a Production Record from the last year or two if someone tells you they are a top performer

After doing this a few times you should have a good idea of values in the market you are investing in.

rehab cost have nothing to do with properties potential as a remtal. I prefer to rehab rentqls especially the major systems as it usually saves on maintenance cost down the road.

You do need long term financing in place to rent it or cash to pay off your hard money loan.

I use affinity group managment

Call them and see what they quote, they do all our flips as well as our rentals

Jack Canfield succes principals

ABC's of real estate investing