All Forum Posts by: Tony G

What advantages are there to a handyman or contractor, who is also my partner, if I were to put some of the materials on my home depot card. We are splitting everything 50/50 cost and profits, but he has been pushing the subject alot in the last few days. Are there disadvantages/advantages for me in doing this?

@ Will

In your opinion, what would be a bad, average, and great COC return % for investments <= 100K? What about 100-200k? At what price range would COC returns need to be higher, and how much higher, for the investment to make sense? I know you had advised me to never do deals under 15% and should aim for 20%, but I was wondering if you had a certain % range for different price ranges?

As far as doing any deal unless it has at least 25k profit, that would mean that my exit value for this property would have to be at approx. 74k. This would be at the mid-range of our ARV. I always will take the lower exit price along w/ higher rehab cost, so if I get a higher ARV price when project is done, it's that much more in my pocket.

My partner who is a handyman and has done a few flips already projects w/ 20k budget, the upgrades will be pretty nice and we might not even use the whole budget.

With all that said, when all is said and done, I don't think it will be hard to have an exit value of 74k. My all in cost of 31k w/ hard closing cost, and 20k rehab, which will leave me at 69% of ARV. My COC will then be at 42%. My profit will be 21k after 4.5k commission and carrying cost of 2k. Even if I end up using 15% extra for construction w/ 3% seller closing, i'll still end up w/ 16k for estimated 4 month turnaround.

Will thanks for all the info, I'm trying to soak everything in and getting out there to network, connect, and build relationships.

Regarding no contingency on deals, wouldn't that be a big risk if it was winterized and the water not turned on? I could face the risk of a broken sewer line, major freeze damage, etc. I understand the mold and radon testing can be done, air tests as well, before EM is sent to the listing agent. Only some banks will give you the 3 day inspection period, however not all.

Are there other ways to take care of the major issues during the mold and radon testing if not given the 3 day inspection period by the bank? What do you personally do when you get in multiple offer situations or any deal situations pertaining to inspection contingencies? Do you not include an inspection period and take that risk? How do I attain the confidence you have in buying properties with minimal risk and yet have my offers on top of the pile?

If that is what you mean, what would be a good percentage if I were using my own cash? The reason I ask is because I don't think I can find a whole lot of deals at 70% exit value. I would say more realistically they would be at 75%+ and i like to be conservative with my numbers.

My agent's ARV has about a 20k spread. Is that too broad or does that need to be narrowed down? She hasn't worked with us before so she doesn't know the finish products so I could see that being a cause for the spread. However, she does know the cost of the rehab from my handyman/partner.

Example1: I put in a bid at 84.5k which was asking price and total rehab cost 18k. all-in cost 102.5k and ARV 135k-155k.

Example 2: I put a bid on a twin home for 45k, total rehab cost 15k. all-in cost 60k and ARV 80-95k.

With deals over 100k, would the exiting value change using my own cash?

Hi Will, Thank You for your insights on how to approach REO listing agents as a newbie, they will be very helpful for me in the near future. Will definitely keep working on my communication skills.

With all your clarifications regarding agents, I was just a little confused on one of your comments and had to take a step back to understand what you were trying to point out. All is good :)

Does 70% exit value mean the same thing as ARV? Example: ARV is 100k so all-in cost should be 70k for acquisition + rehab?

From a previous thread i stated my plan and goal was to make minimum 20k on a property. Mostly everyone had advised me to tough it out and wait. However, upon doing more research and talking with other investors as well as my agent, they say 10-15k would be the norm at this point and time, due to the high buyer demand for foreclosures. Foreign investors and career flippers who sell 5-10 a month take just 5-10k profit making it harder for new investors to compete, as well as other investors putting in high bids.

With that being said, do I get a project going and take the 10-15k due to market conditions right now since there are more potentials in that range, or do I wait a little longer in hopes of more foreclosures to hit the market for a higher return? Is it better to get the experience as a trade-off for higher returns?

My partner is a handyman and can do about anything except knowing if the property is structurally sound, mold present, no major plumbing issues, etc. So what's the best way for us to have peace of mind WITHOUT having a upon inspection contingency?

Thank You everyone for your inputs. I learned a great deal from everyone and will continue to learn as time goes on. You guys answered a lot of questions and doubts I had, as well as putting things in perspective for me. In the meantime, i'll keep plugging away and sticking with my guns and hopefully things will work out for the best. Again, I appreciate all the responses.

@ Bryan

"how doyou pick these neighborhoods?? it sounds like common sense, but i found where people want to live..which neighborhoods have the highest retail sales?? ( not investor sales, foreclosures, etc.)....which neighborhoods have the lowest days on market??"

How and where do you find out information on where people want to live? Looking at where employment is high/job growth, high average salaries in the city, and things like that? Everything else you mentioned like looking at highest retail sales and lowest days on market I most definitely look at.

@ JScott
"All that said, it's tough for me to find more than about 15 deals/year in my specific market (I have a small farm area) and that's why we're expanding our area a bit these days. It will mean driving more than 10 minutes for my project manager and myself when visiting properties, but it gets us more deals. The size of your market will dictate how tough it is to find the number of deals you want."

Right now for me I would say with my market research in my area, I would say that I'm not able to find a whole lot of deals that are short drives, 15 minutes or less from where I live, because those cities don't have REOs' that are under 90k. I have found only one that's been really close to me, otherwise the price range I can afford to buy and rehab, which is about 100k total, are probably at least a half hour from where I live. Realistically my market, as well as where I live, don't have REOs that I can afford.

To clear up all the assumptions of my partner and I putting lowball offers or not having funds to close quickly, this is not true. My partner and I have funds that are readily available to close quickly on a property. On the last 3 offers we had put in, we put it in at asking price since we understand there is low inventory and a lot of competition out there right now. Our profit range is from 20-25k that we are looking for and now i understand that's a good range for my market.

@J Scott
Thank You for breaking it down for me. A lot of things make more sense to me now.

As far as getting my license I will definitely try, but I have a full time job right now and I've looked at the class schedules and they don't really work out for me at this point.

Having a particular neighborhood "farming" i don't have or do that at this point and time. My partner and I are looking for properties which are about 30 minute drive from where we both live (same city) and where the numbers make sense. How did you come to have a particular neighborhood you want to work in and why? Wouldn't that be really hard to find properties to work on if the search is that specific?

My next step is to network with some REO listing agents. What's the best way to meet these people? REI clubs?