All Forum Posts by: Tom Scott

J Scott It's interesting you chimed in. The reason I ask about the inspection and appraisal is because both are listed on your project estimation spreadsheet. I figured if you did both before a rehab that I'd better at least check if they were needed. I couldn't really think of a reason to do the appraisal since financing isn't involved. I guess I could see the point of the inspection just to make sure you caught everything on the walk through. Tom

@Dylan Long

The seller will be acting as the bank and I will own the property. They could foreclose only if I don't pay. I told them I could offer them more money if they would hold the paper and not charge me any payments or interest for 7 months.

Tom

@Emerson Miranda

As others have stated above, Zillow estimates are worthless. Zillow is useful for seeing what is currently listed, and seeing what has sold in the past and for how much. You can set the search features in Zillow to only show homes that have sold within the past 60 or 90 days. You can go back longer but they don't do much good that far out. Verify all data with the county website before moving too far forward. I use Zillow as my primary real estate search engine and comping tool and it works as long as you know its limitations. Someday I will get MLS access, but for now it is the best of what is out there.

Tom

I am working on a deal where the seller is going to hold the note while I flip the house. In cases where there is no bank involved, would you get an inspection or appraisal prior to closing?

Tom 

@Chris Vacek

The thought crossed my mind but I think that's a bit ambitious for my first rehab. I'd also think that getting that done with the county might be tough but I haven;t investigated it. I am considering adding onto the house to increase it's square footage but I need to get with my contractor to get an idea of cost. As it stands, if the seller will carry the note with no payments for 6 months I should be able to fund the whole rehab with my own cash. If I decide to add on to the house, I would need to take a loan which may or may not make sense depending on the ARV of a bigger house. The immediate focus is on getting it under contract. I am right at the bottom of what the seller will accept I think and I am trying everything I know to get it to work. The sellers daughter is a real estate agent so in addition to paying them more for the house if they carry the note, I am promising her the listing as well. That could be another $10k or $11k in their pocket if they can avoid splitting the commission.

Tom

Also, this will be a fix and flip deal.

Tom

Property: Brick / Block 1570 sqrft 3/2 with additional office built in 1956 on 1 acre lot (most lots in area .5 acre or less)

ARV : $185,000 (used $180000 for profit calculation to be safe)

*Same house 2 doors North sold 2 months ago for $193000*

Purchase Price: $90500 (seller will finance with no payments for 6 months)

Holding Costs: $2000 (No mortgage payments due to seller holding note)

Rehab Cost: $43000 (contractor will estimate before we sign)

Selling Costs: $21000 (if I have to pay buyers closing costs)

Profit: $22000

The house is a time capsule with a workable floor plan. I need to knock out 1 non load bearing wall to open the kitchen to the living room. This will allow a slightly larger kitchen and a much improved floor plan. Need to redo 2 bathrooms and put new floors in the whole place. Carpet in bedrooms and office, engineered hardwood in the living area and tile in the bathrooms, kitchen and laundry room area. House is also do for a new roof, but decking seems to be in good shape and should need minimal work and the attic is as dry as a bone. The only thing I don't like is that all the bedrooms share 1 bathroom. I'd like to find a way to give the master sole access to the, currently, common bathroom but I'm not sure how to do it and make it cost effective. House also has new AC and heat pump and new water heater. Main electrical panel has also been replaced along with the outside meter panel and disconnect. 

I'd be curious on what you all think? I'll get pictures when I head out with my contractor. 

Tom

I'm going to look at a house today that was farmed out of my direct mail campaign. The seller is the owners daughter and she mentioned she was a realtor. I don't think we are too far off on price but I was thinking that I could sweeten the deal for her by promising her the listing once the rehab is complete. What do you think? Is this a good idea? Are there any legal entanglements that she needs to worry about as a realtor selling a home she used to own? 

Tom

@Andrew Cordle

What a great tool that cheat sheet must be. I sent you a PM and would love to have a copy. I think the prices look pretty good based on what I am seeing here, which isn't surprising since you're only a few hundred miles away. I'll tweak the prices a bit but other than that, it looks like just the thing to get me in the ballpark. It also looks like it would translate over to an iPad spreadsheet rather easily which will make the process even more streamlined.

Thanks, 
Tom

So, I keep reading how it is such a great strategy to come to a showing with a contract in hand and I agree it probably is. My question though is how do you come up with an offer price right there on the spot? Obviously you have ARV ahead of time and you know the max you can pay based on the 70% rule but how do you figure repair costs on the fly? I have read J Scott book and have created a great spreadsheet based on the categories he uses. The spreadsheet works great, but it's a bit impractical to set up on the kitchen table (if there is one) with my laptop and spend 20 minutes punching in every little thing. I know some of you guys have streamlined this process a bit to get a good preliminary number so you can make an offer on site, I just am not sure how? Do you just give everything a flat number per square foot? Do you just figure a flat figure that covers a traditional renovation (i.e. new floors, paint, appliances, cabinets, counters, baths etc.)? Perhaps a cost per type of room (i.e. $15k for a kitchen or $8k per bathroom, etc.)?

The ultimate goal is to come up with a spreadsheet that I can load on an ipad and edit as I go but for now I am sticking with a pad and paper. Any advice is greatly appreciated. 

Tom