All Forum Posts by: Thomas Magill

Correct, Purchase price - 150K, rehab cost 33K = total cash investment is 183K. 

Investment Info:

Single-family residence fix & flip investment in Belmont.

Purchase price: $150,000

Cash invested: $183,300

Sale price: $249,900

This property is in one of the best cities just outside of Charlotte, NC. It is a small quaint city with a lot of character.

What made you interested in investing in this type of deal?

I really enjoy flipping houses because of the instant gratification. I love seeing the fruits of your labor within months as opposed to years. I come from a commercial real estate development/construction back ground and we wouldn't see a finished project for 2-4 years after inception. I love being able to design/build/and provide a home in just a couple months. It is extremely gratifying.

How did you find this deal and how did you negotiate it?

I found this deal through direct mail. It took about 6-8 months from first contact to close. The home was owned by a lovely couple. The wife's mother was the original owner and had passed away, so there was a lot of memories in the home that needed to be dispersed to family members. I could see it was difficult for the woman, so I remained patient. The husband and I went back and forth over the course of a couple months and finally agreed to a price we could both live with.

How did you finance this deal?

I self funded 50% of the deal and received the rest from a private money lender (through a friend).

How did you add value to the deal?

The house's infrastructure or bones were in good shape, and just needed some updating. We demo'd the kitchen and baths, tore up the carpet and removed some wood paneling. Under the carpet was original wood (gold mine), so we refinished it and it looks amazing. We installed a new kitchen (fixtures, appliances, some plumbing upgrades), new baths (wall/floor tile, vanity, fixtures) and paint/minor carpentry.

What was the outcome?

We created a beautiful home for hopefully a beautiful family. The property will go on the market today.

Lessons learned? Challenges?

We went over budget on a couple items that we didn't initially include (some exterior painting, landscaping) these were calculated decisions that added value to the entry sequence of the property. The biggest hit was the well pump was not functioning to the standard we would like so it had to be replaced. This item should have been included in the initial budget due to its age, but we felt it was functioning well (no pun intended) so it wasn't included.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I got my license about a year ago so I will be listing it, but I'm sure I will interact with some good people.

I quit my job about a year ago and started my own real estate flipping business.  I worked for one of the largest international developers, Hines, in their asset management division.  And, one thing I learned was larger real estate investment firms put a lot of value in the schools you attend.  My point is, regardless of your experience they want smart individuals working for them.  

I would agree with most of the people here to just put your head down and grind it out.  But, if you absolutely can't stomach the idea of going to work anymore, I would get a job as an analyst in asset management or development.  You will be exposed to all of the important parts to real estate investments. (underwriting, construction cost, soft cost, etc) This will help you understand the economics behind the deals.  

@Michael Quarles

I appreciate the response and this is exactly what I was looking for as far as innovative goes... Thank you!

I started a direct mail marketing campaign about 5 months ago and I'm receiving a good amount of feed back from property owners. The issue I'm having is the majority of people who respond, do not fit into my investment strategy of flipping. I'm looking to capitalize on more of the leads that come in and would like to know if there are some innovative investment strategies out there. My current strategy is the standard flip strategy of a conservative purchase of 70% of the ARV. I usually use cash up to 75K for purchase only, and 20-65K in construction costs.

A lot of the responses I'm receiving are people who want to sell there home and the value is out of my price range.  Or, the property is not worth what the buyer is asking but I feel there is another way to capitalize on this... 

Please send any good ideas.

Thanks!

Thank you @Brandon Reed, I appreciate your feedback.  I do not have access to private money currently, but I will certainly be on the hunt.  This really works out to be a timing issue that I am a little constrained by but in the bigger picture I'll need access to more capital to grow.

@David Seroy Thank you for the detailed response. I agree, the timing just isn't there to go the HELOC route. I'll be able to meet the two (2) types of criteria you mentioned for the hard/private money, and will probably pursue that route. During my initial analysis of the deal I factored in the cost to do hard money as a back up and the deal financials still worked. I feel that I will be purchasing at a 'crazy good price' so the hard money will probably be the direction I go.

I've never used a lending vehicle other than self funding, so I really just needed to talk it out. 

Thank you both again for taking the time. 

I am looking for advice on lending on a home flip that I am about to purchase. I will be closing on the property in the next two weeks, but want to pull my money out and be able to purchase other properties. I'm looking for advice on who or what avenue to pursue. Hard money, crowd funding, credit union lending.  I am NOT looking for a specific lender.  I am ONLY looking for advice.  I've done about 5 investment deals up to this point and have self funded each one, but in an effort to scale up I will need to look for other capital resources. If anyone has any specific knowledge of lending for the Charlotte, NC market, all advice is welcomed. Thank you 

Thanks Jason, I will definitely do that today! 

I just pasted my North Carolina real estate exams and have received my license. I want to hang my license with an investor friendly real estate company that I can optimize my properties exposure through the MLS, as well as have the ability to have access to the MLS for research. I want to save as much as possible on each of my properties sales, but will pay all of the required fees, ie E&O, MLS dues, etc.

If anyone has any suggestions or opinions, please share.  Thank you!

I have received some inquiries about lending cash.  I have the liquidity to invest in Gastonia I just need the properties.  Please send any properties my way.