All Forum Posts by: Jason Krick

Hey @Andrew Sweat .  Welcome.  I remember your story.  Kudos for making a tough choice out of school and thinking long-term.

Hey everyone.  I inquired about some numbers on a property I was looking at in my last post.  Today, I saw the house in person,  it's not as bad as I thought it would be.  Here's the rundown:

It is a two story twin 2/1 and 936 sq ft.  It will need a completely new kitchen and bathroom. There is old linoleum on a subfloor throughout the house.  My plan was to put laminate down, but when looking up from underneath, it appears there's hardwood there that I am hoping I can refinish.  The walls have wood paneling on top of plaster and lathe.  I am guessing I would need that ripped out and drywall installed.  The gas water heater is new (2013), and the electric panel is newer, though I don't know the age.   

The minuses/issues:  All 10 windows need to be removed, reframed and installed.  The supports in the basement appear to be rotted in one place and the floor above sinks in that area.  The current owner has 5 floor jacks holding it up for now.  I'm not sure if it's a water issue or not.  That would need to be looked at and shored up.  Also, the heating is oil with radiators.  One radiator had a giant hole, the rest are intact, but not tested.  With the gas line already run into the house, the question would then be whether or not to keep the oil, get a gas boiler, or bring in a gas furnace and run ductwork for forced air.  Price and desirability would determine this.  Also, there is no A/C, but in this size house in this neighborhood, that's not uncommon, although the forced air route on the furnace would make it easier to install, if it allows.  All plumbing is present, altgough not turned on.

The owner is asking $34,900 for this, but I made it clear that I would need to start at the $20,000 range and work backward from there, based on estimates. He seemed to understand. I was hoping ARV would be $90-95,000, but I am going with $80,000 to be safe. The owner thinks $20,000 will do it. I'm thinking $12,000ish for the kitchen and bathroom. $8,000 for the rest may be doable, but we'll see. For what it's worth, I know the owner is only in for $7500, so I can negotiate him down while still leaving meat on the bone for him.

So, to make a long story longer, if anyone had recommendations on a reliable GC that can help with inspecting a few things and give me estimates on these types of items, it would be appreciated.

@Phillip Tillotson 

So, @Bill Gulley offered to help you with your education.  That's awesome!  I'm glad you accepted.  Had you declined, my response would have been along the lines of:

http://www.youtube.com/watch?v=usfZSsSeSKo

@Jon Holdman 

Thanks.  I was hoping you would respond as I always appreciate your concise and direct responses.  The numbers I put out were based on pictures only.  I realize if it gets too expensive, I walk.  Mostly, I am hoping that someone would say "With those numbers, funding would not be an issue."  

I can run numbers all day, and I think there is a deal here once I dial in on them.  But, my major concern was will I find hurdles with it being my first deal, and with any out of pocket money coming from a 401(k) loan?

Am I allowed to post links from Zillow to show some comps I used?  Granted they're not ideal, but it at least gives some guidelines.

Allight then everybody. I have a lead on a deal for a rehab and sell project. I could also rent it out as a second exit strategy. Some of this is hypothetical, and some is based on a property I am researching. I would like to know what I can expect if/when I would go for a HML. Please be honest, and constructive. If you would not loan to me, please let me know what I can do to to improve my chances.

This isn't a specific request for funding.  I am just looking at what I should be prepared for.

First, the property:

2/1 Twin 936sq ft

Radiator heat

No A/C at this time

Purchase price:  $20,000

Rehab Costs:  $35,000 (hypothetical,  I am assuming one major repair on top of cosmetics)

ARV: $95,000

Rehab costs are inflated.  Based on pictures, it is mostly cosmetic stuff, and my partner thinks 15-20k should do it.  I am overestimating.

ARV is conservative. Comps in this neighborhood would be around $110,000 at this size.

This would be my first flip.  My partner will do the rehab and sub out any necessary jobs.  (Electrical, etc.).  Our partnership is 50/50.  I am responsible for finding properties, negotiating, and financing.  Basically, I am the "face" of the partnership.  He will take care of the rehab.  As such, our rehab costs consist of supply costs.  He will be paid when the house is sold.  He has a history of flips and rentals, but has been out of the game for about 3-4 years.

So, those are the numbers and I come to you as a first-timer looking for financing.  My credit score is 700 on the nose. (Damn you ex-wife!).  Based on these numbers, if you require out of pocket money, it will come in the form of a 401(k) loan, which I would repay after I sell.

How does it look for me as I search for funding?

"Out there"? Yes, for sure! However, if they are that thorough with cleaning the plunger, they are probably thorough keeping everything else clean. Look at the positive at all times!

@Nathan Paisley 

My email is in my profile, if you could send it, that would be great.

@Jon Holdman @Nathan Paisley 

Thanks for the replies.  Maybe I've confused myself reading up on all different kinds of financing.  I figured it would need to be money down regardless, but one chart I looked at had a column for downpayment that said "20%/equity".  That's why I asked.  My plan was to use this for a buy and hold, but thought I would look into the idea of a flip, if the costs were lower.

Nathan--I'd love to see any info you have.  Thanks for the offer!

I've been doing some research on the Homestyle loan for investors. I get most of it. I know there are hoops to jump through and it can be drawn out. From what I can tell, as an investor, I could get 75% ARV on a SFH. So, hypothetically, if I find a house for 50k that requires 25k in rehab and costs, with an ARV of 100k, will I need any out of pocket money, since I will already be at 25% equity, after rehab?

Other questions--Is mortgage insurance required with that amount of equity?  What kind of rates are offered?  Are you allowed to flip, or must you wait for a certain length of time (anti-flipping rule)?  If there is MI, can you refi in a short period of time?

I am surprised that this is such an uncommon occurrence. When we sold our house and buying new construction, there were delays and we wouldn't be able to move in until about three months after our settlement. We explained the situation to our buyers about a 90 day lease paying above market rent, due to the inconvenience, and they accepted rather quickly. It was a young couple moving out of a parent's house, so I guess the extra 90 days didn't bother them much. We had no issues.