All Forum Posts by: Thomas Franklin

Luke Aubut and Shara Surabi Transferring title can trigger the Due on Sale Clause. In the eyes of a Lender, a Title Transfer is the same as a sale. If you wish to close, in the name of a Corporate Entity, most lenders will offer Commercial Terms. Yes, a lender will require at least three months of all financial statements (Bank Accounts, IRAs, other Investment Accounts, etc.), from all people that are involved in the Joint Venture. Depending on the lender, you will need to have 6 to 12 months of Capital Reserves, to cover Mortgage Payments. Some states will also require your Capital Reserves to cover Property Insurance Premiums, for 12 months. You can seek a Recourse Loan where you are personally liable or a Non Recourse Loan where the Corporate Entity is only liable.

Howard Johnston If the information I have provided you, intrigues you; AND you feel there is a possibility for us to collaborate, I propose we schedule a date and time to discuss.

Howard Johnston Many Investors that flip homes use the 70% Rule that says 0.7 x ARV - Repairs = Your Maximum Allowable Offer (MAO). What hurts Investors that use this formula is it does not account for Holding Costs, Backend Selling Costs, etc. I use the following formula to determine my Maximum Allowable Offer (MAO). This formula is the Profit Margin Formula that accounts, for 99.99%, of everything. ARV - Desired Profit - Closing Costs to Buy - Repairs - 10% of Repairs - Holdings Costs - Concessions - Realtor Fees - Closing Costs to Sell = Your Offer (MAO or Maximum Allowable Offer). ARV: After repaired value or what you think it will sell for once repaired. Desired Profit: This should be taken off the top first. Most people run their numbers to determine what their profit should be. That is backwards, you should use your profit to determine what your offer should be. As a General Rule, my Desired Profit is $20,000 or 20% of ARV whichever is greater. To have an offer accepted, one may need to adjust their Desired Profit; however, it should not be below $20,000, or what one feels is acceptable. Closing Costs to Buy: What is it going to cost you to buy the property? If you are using hard money you need to budget for the points and fees as well as traditional third party closing fees. Repairs: The money it is going to take you to rehab the property plus an extra 10% of estimated repair costs to account for unexpected repairs. Holdings Costs: Here is where a lot of investors get tripped up. Start by determining an amount of time that you will hold the property, probably 4-6 months. Then add ALL costs related to holding the property (utility costs, property insurance premiums, property taxes, loan payments, HOA Fees, etc.). Concessions: Concessions are what you give back to the buyer at closing. It could be for closing costs, unfinished repairs or something else. I typically subtract 3%, of the ARV. Realtor Fees: What is the commission you are willing to pay your listing agent (unless you are the listing agent) and the buyer's agent. Utilize 6% of ARV. Closing Costs to Sell: Title fees and other closing costs. You can budget around 4% of the sale price to cover these. This is a conservative formula. If you come out ahead without Buyer Concessions, on budget, etc., this puts more money in your pocket, when you close at selling.

Howard Johnston Since you are interested in fix and flips, I propose the following action plan. The first step would find an Investor Friendly Realtor assuming you do not have access, to the MLS. I would suggest that you interview several Realtors and ask them the following questions, to ascertain if they are truly Investor Friendly, or if they are throwing you a sales pitch. 1. How many investors do you currently work with and how many investors have you worked with, in the past? 2. How many transactions have you closed, with investors? 3. Do you currently own any Investment Properties? If so, what type do you own? 4. Are you a member of any REIAs? The next step would be to work with the Realtor and determine the hot markets, in your County, with the greatest number of sales over the last 90 to 120 days. Personally, I would prefer 90 days because markets are always changing. This list would contain the zip code and corresponding name of the municipality. In addition, a breakdown of the number of SFRs, Townhouses, and Condos, with corresponding ADOM (Average Days On Market), and Median Sales Price, for each municipality. This will be your Farming Area. From this data, you can utilize a website bestplaces.net that will give you a breakdown of the percentage of homes that sold, in various price ranges, for a given zip code. You can identify the two highest retail price ranges, in greatest demand, per zip code where you can list the rehabbed property. You can use the Realtor to help you find deals and also use Wholesalers. If you acquire a property, from a Wholesaler, once the property is rehabbed and ready for the Retail Market, allow the Realtor that provided you the zip codes, to list the property for sale. This creates a WIN-WIN Situation and gives the Realtor incentive, to work harder on your behalf.

Matthew Hudson Many Investors that flip homes use the 70% Rule that says 0.7 x ARV - Repairs = Your Maximum Allowable Offer (MAO). What hurts Investors that use this formula is it does not account for Holding Costs, Backend Selling Costs, etc. I use the following formula to determine my Maximum Allowable Offer (MAO). This formula is the Profit Margin Formula that accounts, for 99.99%, of everything. ARV - Desired Profit - Closing Costs to Buy - Repairs - 10% of Repairs - Holdings Costs - Concessions - Realtor Fees - Closing Costs to Sell = Your Offer (MAO or Maximum Allowable Offer). ARV: After repaired value or what you think it will sell for once repaired. Desired Profit: This should be taken off the top first. Most people run their numbers to determine what their profit should be. That is backwards, you should use your profit to determine what your offer should be. As a General Rule, my Desired Profit is $20,000 or 20% of ARV whichever is greater. To have an offer accepted, one may need to adjust their Desired Profit; however, it should not be below $20,000, or what one feels is acceptable. Closing Costs to Buy: What is it going to cost you to buy the property? If you are using hard money you need to budget for the points and fees as well as traditional third party closing fees. Repairs: The money it is going to take you to rehab the property plus an extra 10% of estimated repair costs to account for unexpected repairs. Holdings Costs: Here is where a lot of investors get tripped up. Start by determining an amount of time that you will hold the property, probably 4-6 months. Then add ALL costs related to holding the property (utility costs, property insurance premiums, property taxes, loan payments, HOA Fees, etc.). Concessions: Concessions are what you give back to the buyer at closing. It could be for closing costs, unfinished repairs or something else. I typically subtract 3%, of the ARV. Realtor Fees: What is the commission you are willing to pay your listing agent (unless you are the listing agent) and the buyer's agent. Utilize 6% of ARV. Closing Costs to Sell: Title fees and other closing costs. You can budget around 4% of the sale price to cover these. This is a conservative formula. If you come out ahead without Buyer Concessions, on budget, etc., this puts more money in your pocket, when you close at selling.

Jason Brown How may we collaborate, to further both our REI Objectives and Goals?

Omar Gutierrez Yes, there are deals, to be found in Miami. If you feel there is a way we can collaborate and work together, please feel free to reach out and we can discuss.

William Salas What tangible Skill Sets do you bring to the table? Are you full time employed? If so how can this situation bring value, to an Experienced Investor? I am always seeking individuals, to add to my team, but such a scenario MUST be mutually beneficial.

Steven Fernandez What tangible Skill Sets do you bring to the table? Are you full time employed? If so how can this situation bring value, to an Experienced Investor? I am always seeking individuals, to add to my team, but such a scenario MUST be mutually beneficial.

@Corbin Wafford In my opinion, if you adhere my advice 20 years of REI Experience, you have three options. Seller Financing that I previously mentioned, having family members and/ or friends restructure their Retirement IRAs to Self Directed IRAs that will allow you to bring them aboard in a Joint Venture or as an Equity Partner. The third option is to find another individual that would be interested, in a Joint Venture or an Equity Partnership.

If you are soliciting funds, from friends or strangers, be certain that you are not violating SEC Rule 506 as well as your State's Securities Laws. Information which is designed or which can have the effect of arousing investor interest in a company, even if no actual mention of any securities being offered or sold is included, may in some instances be considered to be “general solicitation or advertising.” 

I hope the above information helps you, in making informed decisions regarding your REI Goals and Objectives.