Jeff Pasquino
Footballguy
70% of after repair value minus all costs, including
urchase priceClosing costs (Buy)
holding costs
repairs
Selling costs (realtor?)
Closing costs (Sell)
Good luck.
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- Thread starter jeff_eaglz
- Start date
urchase priceClosing costs (Buy)
holding costs
repairs
Selling costs (realtor?)
Closing costs (Sell)
Good luck.
Jeff Pasquino
Footballguy
Jeff Pasquino
Footballguy
Tough market, what can I say - although market is turning around here it seems (DC/MD area).By the way, I'm often busy in the Shark Pool during the season..... go figure.PMs are fine if you need me.and only I would be considering changing from the retail banking industry to the mortgage industry at this time.Wow, the housing industry has crashed so much that this thread has been dead for almost three weeks?
It makes a little more sense considering I am unemployed right now but still.
Jeff Pasquino
Footballguy
All costs are negotiable. I'd ask for closing help in a slow market for certain.
Jeff Pasquino
Footballguy
Depends on the type of property. I'm regrouping / retrenching / raising capital for commercial investments in the Spring / Summer.
Jeff Pasquino
Footballguy
Ask an accountant and he'll say "It depends." Ask an attorney and he'll say "It depends."Neither will give a straight answer.Ask one of each that specialize in real estate law in your area to explain the differences/ ramifications of each from a protection (attorney) and tax (accountant) standpoint. S corp, C corp, LLC, even partnerships.Most use LLCs (I have seen some trusts), but an S or C corp can make sense and many investors have >1 company.
Jeff Pasquino
Footballguy
Mike / BNB prefer the umbrella insurance option.I lean towards the LLC.Also check local laws on transacting property vs. selling an LLC. Selling an LLC avoids transfer taxes in my area, so many sell LLCs rather than sell property.
Jeff Pasquino
Footballguy
Good suggestion Mike. I'm waiting to hear what's up with Jim.
Jeff Pasquino
Footballguy
Rent to own is really renting with a glorified label. 70% of the time the tenant doesn't buy - for many reasons.It is a safe way to rent though as the renter / leaser thinks like an owner and takes care of the place.With no equity and hoping for a bump in value, this might be a way to go - and protect your investment too.Good luck.
Jeff Pasquino
Footballguy
Do the math or provide numbers and I'll comment.
Jeff Pasquino
Footballguy
Sell it.$20K (assumed after taxes) is better than $200 a month with a headache, and you can't even get that thanks to the lenders tightening.Consider owner finance / creative financing (hold a second) if they put 10+K down as well if the market is slow.You can get more creative but the key is to get > you'd get from a refi if you owner refi it. (For example, wraparound mortgage - they pay you $900 a month, you pay off the 1st and keep the difference).Good luck.
Jeff Pasquino
Footballguy
Um, HELLO!!!!I'm in commercial so I definitely know self storage. I've investigated many but right now in my area the rent per sq. ft. is too low.Send me a PM and we can talk offline directly.
Jeff Pasquino
Footballguy
Don't know a thing about that area, so wouldn't know.If you're familiar with it and the laws, go for it - otherwise think about an international REIT.
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Googling this as we speak, but do you have any personal recommendations?
Random
Footballguy
But wouldn't it be 20K (selling after taxes), vs 26K + 200/mo (cash out equity + rent cash flow)?
Jeff Pasquino
Footballguy
None personally, sorry.
Jeff Pasquino
Footballguy
We're gonna have to dumb down the numbers for me here....How much do you get if you sell, and how much if you rent?Is it $20K vs $26K and 200/mo?If you can get the $26K out and still have $200 a month coming to you, that's not bad as you have $26K to do something else (re-invest). The only downside is if the house drops in value and/or the tenant does damage to it while you own it.
Random
Footballguy
Sorry if I'm not clear. We have a total of $46K in the house as we speak. Its listed at 90K. If I were to sell it today at full asking price, I would make about 37K before taxes (90K*93% minus 46K). Tax that and its about 26K.If I were to get a HELOC on it and it appraised at 90K I could pull out 72K (80%*90K). Less the 46K investment is 26K. But now I have a note for 72K on it. Comes out to about a 365 pmt (int only), add in taxes and insurance and make it about 450/mo going out. If it rents for 650/mo thats +200/mo. Obviously not counting vacancies and repairs.So its more like 26K vs 26K cash + 18K equity + 200/mo + headaches.
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Jeff Pasquino
Footballguy
Well, remember you get to deduct all costs in buying, renovating, holding, and selling the house before you pay taxes.That said, if you can get 26K in a HELOC I'd do that, as you get the same as if you sold it plus the equity and cash flow. The only issue is the headache.If you can find a property manager for $100 a month, I'd do that just to reduce the headaches. Let the equity grow as well.Good luck.
RoarinSonoran
Footballguy
Isn't the going rate for a realtor's commission = 6%? It looks like my mother is going to sell the ol' homestead, against my better judgment; I feel she should rent it out, as it's in a prime location near downtown and ASU, but she doesn't want to have to worry about finding tenants, vacancy, etc. My feeling is that someone will buy the house on the cheap, fix it up, then rent it out anyhow, so she's leaving money on the table for someone else. She had a walk-thru with a realtor the other day, who said her cut would be 8%.
Should she tell this realtor to pound sand and find someone else (mom is 82yo, so maybe the realtor is taking advantage?), or is 8% the new 6%?
* no contract signed yet, as far as I know
Should she tell this realtor to pound sand and find someone else (mom is 82yo, so maybe the realtor is taking advantage?), or is 8% the new 6%?
* no contract signed yet, as far as I know
Jeff Pasquino
Footballguy
The going rate is whatever you can get. As a buyer, you really don't care.Isn't the going rate for a realtor's commission = 6%? It looks like my mother is going to sell the ol' homestead, against my better judgment; I feel she should rent it out, as it's in a prime location near downtown and ASU, but she doesn't want to have to worry about finding tenants, vacancy, etc. My feeling is that someone will buy the house on the cheap, fix it up, then rent it out anyhow, so she's leaving money on the table for someone else. She had a walk-thru with a realtor the other day, who said her cut would be 8%.
Should she tell this realtor to pound sand and find someone else (mom is 82yo, so maybe the realtor is taking advantage?), or is 8% the new 6%?
* no contract signed yet, as far as I know
As a seller, if you start leaning on them, it could cost you as (A) the listing agent may not want to work on it and (B) the other agents looking to bring people by won't if the commission is low.
Also if you actually motivate the realtors to come with an extra 0.5 or 1%, it actually gets more attraction.
Mike Anderson
Footballguy
Thoughts:How long on market, is 90K REALLY correct in the Midwest? If it takes 400 days on market, $90K wasn't the right selling price.Interest only payment with little to no appreciation in the Midwest?I love to cash out my properties, do it ALL the time. My strategy is cash out and rent, it how I keep moving forward. It's proven, it works, it works WELL.My concern is that you are taking too much. $200 a month profit, well... Sucks. Do you feel comfortable with a $72K mortgage on it?Assume rent of $600 to be safe, and assume $200 a month profit. Assume a Tenant moves out after a Lease, and does ZERO damage of any kind, and leaves the property 100% ready for the next tenant to move in. But it takes a single month to re-rent. You've lost $600, or 3 months to get back to even. 2 Months open and you are renting the property for the next half year just to break even.This is under every SINGLE ideal condition we can give you except that it takes a month or two to re-rent. What about Damages, dead beat tenants, and so on.... I had a house once that was tight ($135/mo), the outgoing tenant left me with a true mess, and it took over almost 4 years to get back to EVEN. EVEN. If it were me, I would get out what I have in it, pay myself back or buy the next project, leave the equity on the table for a rainy day (Get the $72K HELOC, only take $50K, and NEVER touch the remainder, leave as emergency fund, have self control). So I would try and make more like $335-$350 a month profit on a $650 a month rental.Much more comfortable in the Midwest.Cash out and Rent is my bread and butter, I'm for it, there is just no need to push the envelope.
BassNBrew
Footballguy
That's what you pay a property manager for.
Sabertooth
Footballguy
This sounds like great advice and will be less likely to find you in the lurch. There is a price to be paid for that. Along a similar strategy, here is my situation.I have a mobile home for sale. I live in such a rural area, the banks generally will finance a mobile home here. Paid cash for it, have about 6k into it total. I am selling it through a realtor for 14k. I will probably get about 12k for it I think when all is said and done. Anyway I have my eye on another mobile home that is alsofor sale. It is the only comparable on our MLS. It is a bank repo. It is a 3/2 whereas mine is a 2/1 in nicer condition. However I discovered yesterday that the repo has about 3 square feet of mold on a wall where the stove was and some (old) water damage. It is bigger, and cheaper than mine, listed at $12,500.Here is my thinking on this. I want to go down to the bank, get a loan on the one I own in the amount of 6k (don't think I can do a Heloc on a trailer
) Then I am going to bid $2500 on the other mobile, with picts of the mold, busted window, and water "damage" and see when happens. If I can get this one on the cheap, I'll simply cut the moldy wall out and replace with green board, although I am pretty certain the mold is already dead.What kind of experience do people have with mold? Does this sound like a feasible plan? I'll get my cash out of the original trailer, and be able to still make a profit when it sells, but basically have complete agility on selling the other one. Questions? Comments? Advice?I have some urgency to buy this because it is tax return season and many would be buyers have the cash for a down payment right now and won't again for another year. I want to sell this new one for $2500 down and payments of $200 per month.
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Random
Footballguy
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Mike Anderson
Footballguy
Funny, I own the Properties at 1118 Fulton, 1205 Fulton, 1211 Fulton, and 1225 Fulton. Here 626 Fulton would be the sales office for the Local Newspapers, just south of the River.My fear is that too many investors trying to get started grab that $26K, and it's gone before they know it. It's easy to do. I would caution you to be diligent and not get upside down in a Property. You know from Experience that you aren't going to be able to sell quickly at top dollar to bail yourself out.Random said:
Best case, max out the HELOC, and take as little as possible, tapping it ONLY to buy a house.
Mostly, I am waving the biggest red flags of caution I can find. What you're suggesting is how I have personally seen/witnessed more than one investor lose everything dragging their family down with them. Not that you don't have the best of intentions, you just aren't leaving much escape room if all heck breaks out.
That said, yes, max it out, buy more houses that Cash Flow. If you ever want to quit the day job, you have to build up residual income. Be it through Rentals, or 6 flips a year, but somehow.
I was unfairly being overly cautious towards you. I'm sorry about that. It's just that I have seen this play out poorly more than once.....
And generally I am the guy that "saves" them by swooping in at the last second with Pennies on the Dollar financial aid to bail them out.
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Red Apples
Footballguy
just put in an offer on house here in los angeles...we offered 10% less than list- we will be the 3rd offer
in 2005 we bought our house in LA and had to go ver 11% over list...15 offers
in 2005 we bought our house in LA and had to go ver 11% over list...15 offers
Mike Anderson
Footballguy
My Buddy lives out in LA, bought a Home 2004. 2 Bedroom ranch out by the dessert with maybe a thousand sqft, MAYBE. I was something just ridiculous like almost a Million. Had to take a First and Second out to buy the same home. After losing out on the first 7 or so houses, they massively overbid to get it.
Red Apples
Footballguy
yeah, buying on the east side is bad..lots of forclosures out there toowest side prices are down but there isnt that much inventoryin 2005 we just went to an open house, found the place we liked and went through the listing agent. sat there by the fax machine in his office and matched the highest bid.a week after it was accepted- an offer of over $100,000 came in...it was crazy back then, but prices are still high compared to pre-bubble
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Sabertooth
Footballguy
Could somebody break down the "cash out and rent" strategy? I am going to look at a foreclusre that has been on the market for 2 months. The realtor showed me the "super secret realtor's only" web page that has the note in the section that the general public doesn't get to see "$1000 bonus to agent that has this house under contract before 2/28."
The house was listed at $31,500 and it is now listed at $21,500. I am going to look at this and 4 other properties later today. Thinking of offering about $14,500 for it or something liek that depending on the property.
Is this a reasonable lowball offer on a place like this? It is a single family in a rougher neighborhood but I'd be able to get $425 per month rent on it probably pretty quickly.
So what is the rent and cashout strategy and any other tidbits of advice for me would be appreciated.
The house was listed at $31,500 and it is now listed at $21,500. I am going to look at this and 4 other properties later today. Thinking of offering about $14,500 for it or something liek that depending on the property.
Is this a reasonable lowball offer on a place like this? It is a single family in a rougher neighborhood but I'd be able to get $425 per month rent on it probably pretty quickly.
So what is the rent and cashout strategy and any other tidbits of advice for me would be appreciated.
Jeff Pasquino
Footballguy
How much will that loan cost to get?
Mold is tricky and there's no boilerplate answer. I am used to hiring a mitigation out - but only on a big job. On a small area, I'd cut it out like you said and greenboard it. That should work - but I'd still clean the hell out of the trailer before moving in. Treat it like a science project before you move in, and disinfect / clean EVERYTHING.Here is my thinking on this. I want to go down to the bank, get a loan on the one I own in the amount of 6k (don't think I can do a Heloc on a trailer
So let me get this straight - Bank repo trailer, 3/2 - double? Where in the US is this? $12K list, but you THINK you can bargain basement it to $2500?If you can get it for $2500 and flip it / owner finance ("Lonnie Deal", if you follow), that makes great sense.If you don't know a Lonnie Deal, you've stumbled onto it. Google "Cash on Wheels" and find Lonnie's books. I highly recommend them.
Random
Footballguy
Say you get the property for 15K and put 5K in it. Go get a bank to appraise it and it appraises for 50K. They will generally give you a loan based on their appraisal. 80% LTV would give you a $40K mortgage/loan on the property. Cash out up to 40K (read Mikes cautions above) and rent the property.
Sabertooth
Footballguy
You are the one that suggested I read the Lonnie Scruggs book to me way back in this thread. I did so. After doing so, I've purchased two mobile homes. One was listed at 17500, I bought it for 4500. The other was listed at 10000 and I bought it for 3000. I am located in Northern Michigan. Basically two hours north of Green Bay but in Michigan. This trailers is a bank repo, 3 bed 2 bath, single wide from 1987. The bank doesn't know it has mold. But I'll attach photos of the mold to me bid. I know a person that put in a bid for $1000 on it. I don't know that I'll get it, but I think I have a real shot at it.How much will that loan cost to get?Mold is tricky and there's no boilerplate answer. I am used to hiring a mitigation out - but only on a big job. On a small area, I'd cut it out like you said and greenboard it. That should work - but I'd still clean the hell out of the trailer before moving in. Treat it like a science project before you move in, and disinfect / clean EVERYTHING.Here is my thinking on this. I want to go down to the bank, get a loan on the one I own in the amount of 6k (don't think I can do a Heloc on a trailer) Then I am going to bid $2500 on the other mobile, with pics of the mold, busted window, and water "damage" and see when happens. If I can get this one on the cheap, I'll simply cut the moldy wall out and replace with green board, although I am pretty certain the mold is already dead.What kind of experience do people have with mold? Does this sound like a feasible plan? I'll get my cash out of the original trailer, and be able to still make a profit when it sells, but basically have complete agility on selling the other one. Questions? Comments? Advice?
So let me get this straight - Bank repo trailer, 3/2 - double? Where in the US is this? $12K list, but you THINK you can bargain basement it to $2500?If you can get it for $2500 and flip it / owner finance ("Lonnie Deal", if you follow), that makes great sense.If you don't know a Lonnie Deal, you've stumbled onto it. Google "Cash on Wheels" and find Lonnie's books. I highly recommend them.
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Jeff Pasquino
Footballguy
This realtor just showed you the MRIS page. There's no super secret pages. Every realtor can see these.Any offer is reasonable - if they accept. If you're an investor, your thought should be to how to get the property as cheap as possible. You woke up this morning not owning it, and if you do the same tomorrow you'll be fine. If you do own it, you have to take on the responsibility of ownership - so the price you pay for it better justify it.Offering $10K isn't insulting. Offering $5K isn't either. They may be desperate enough to take whatever they can get.Now, if they owe $12K on the property, then that's your floor. You need to find out their motivation (such as "I just need to pay off the mortgage") and then you know whether it makes sense.Just remember - there are more houses than you can ever buy. They have to sell you on buying theirs, especially if it is their headache.As for the rentout - you want AT LEAST 1% of the purchase price in rent. Example: $100K houseEven if 0 down, mortgage is ~650-700 a month. Maybe a little higher if an investor rate.Property management, taxes, repairs, vacancy - all can chew up that 300-350 extra. That's why you need $1K - to cover the costs.Hence, 1%.At $425, you can cover a $30K house or under pretty easily.Personally I'd buy it as low as I could and consider selling it with owner financing or a lease option.Good luck.
Sabertooth
Footballguy
In a small town, would you be concerned with lowballing the repos too much and damaging the relationship with the banks?
beavers
Footballguy
I have been considering flipping and/or renting in the Columbus market for a year or so... (Currently live in the suburbs)... What area of downtown do you feel strong about? Also, I have been holding off because I am almost finished with my Master's this June -- I was thinking about going to real estate school to get a real estate and or broker license. What are your suggestions to get started?
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Jeff Pasquino
Footballguy
If it is a business transaction, they should respect your interests to get an investment for as little as possible.They may even start to contact you directly as a serious player and someone they can divest their inventory to - which is exactly what you want.
RoarinSonoran
Footballguy
I've suggested this as well. I'm moving out of state this summer, otherwise I'd help her out with that aspect. She's 82, and not to be morbid, I'll likely inherit the house in a few years (my older brother would just as soon burn it to the ground lol), and rent it out with a manager anyhow.I'm just being a sentimental old fool. It's the family house. My brother and I were born (well, not literally) and raised there. I'd rather keep it in the family and make a buck or two off it, rather than sell it to someone who'll buy low-sell high, or worse, raze it.
My wife is similarly sentimental. She wanted to buy her childhood home, but someone beat her to it, and remodeled it, taking away its former charm.
Oh well.
Sabertooth
Footballguy
I went out and looked at six properties yesterday. Here they are:
Mobile Home. I have some comfort level in mobiles as I've bought and sold them in the past. This one has a slight mold problem that I am not worried about. I am offering $2500 as-is with pics of the mold, water damage, and a sagging ceiling in the entry way. Credit Union repo, and the officer for them is a buddy's wife. If I don't get it, I move on. If I do, I should have it sold for $9000 on payments before March 1 being that it is tax return season and all.
Mobile Home on an acre. Piece of crap. Not interested. The lot would be worth more without the trailer on it.
Completely gutted larger home. I like this one, but seeing as I haven't ever flipped a property, it seems like a lot to bite off. I think I can get it for about 10k and put about 25k into it to sell for approximately 60-70 or so. Realtor (I trust his judgment) said the same thing. Iffy on this but it offers great potential. Windows are all newer vinyl as well.
Another dump. Needs completely new interior including subfloor. On 5 acres, but very small. Looks nice from the outside, but that's about it.
Nicer place. Tax assessed at about 65000, repo. If I wanted to buy it today, I could rent it as-is. I'd be more inclined though to buy now, fix it up and sell it for nearly 75k.
Couple of questions. If I want to generate cash, how do I do so. I can use debt to buy one of these no problem. But if I want to sell it this summer, is there a seasoning issue? Is this considered an illegal type flip if I buy wholesale, renovate, and sell retail? I will be adding about 45k to my purchase price in the process.
I plan on doing most of the work myself. I am afraid of heights, so I won't be siding anything. Other than that, how do I proceed. I guess on my first one, I'd like to cash it out, move to another and cash that out. This would prove to myself and my wife that I can do this as my livelihood (which has been a longtime dream of mine and in 08 I"ve decided to just start doing it instead of planning).
Mobile Home. I have some comfort level in mobiles as I've bought and sold them in the past. This one has a slight mold problem that I am not worried about. I am offering $2500 as-is with pics of the mold, water damage, and a sagging ceiling in the entry way. Credit Union repo, and the officer for them is a buddy's wife. If I don't get it, I move on. If I do, I should have it sold for $9000 on payments before March 1 being that it is tax return season and all.
Mobile Home on an acre. Piece of crap. Not interested. The lot would be worth more without the trailer on it.
Completely gutted larger home. I like this one, but seeing as I haven't ever flipped a property, it seems like a lot to bite off. I think I can get it for about 10k and put about 25k into it to sell for approximately 60-70 or so. Realtor (I trust his judgment) said the same thing. Iffy on this but it offers great potential. Windows are all newer vinyl as well.
Another dump. Needs completely new interior including subfloor. On 5 acres, but very small. Looks nice from the outside, but that's about it.
Nicer place. Tax assessed at about 65000, repo. If I wanted to buy it today, I could rent it as-is. I'd be more inclined though to buy now, fix it up and sell it for nearly 75k.
Couple of questions. If I want to generate cash, how do I do so. I can use debt to buy one of these no problem. But if I want to sell it this summer, is there a seasoning issue? Is this considered an illegal type flip if I buy wholesale, renovate, and sell retail? I will be adding about 45k to my purchase price in the process.
I plan on doing most of the work myself. I am afraid of heights, so I won't be siding anything. Other than that, how do I proceed. I guess on my first one, I'd like to cash it out, move to another and cash that out. This would prove to myself and my wife that I can do this as my livelihood (which has been a longtime dream of mine and in 08 I"ve decided to just start doing it instead of planning).
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Red Apples
Footballguy
just made a bid for a house...
beach property in los angeles. offered 5% less than list...
and i didnt get it, went to someone w/ a "substanialy higher offer"
take it for what its worth-
beach property in los angeles. offered 5% less than list...
and i didnt get it, went to someone w/ a "substanialy higher offer"
take it for what its worth-
Jeff Pasquino
Footballguy
Start with something < a full gut job if you're (A) doing yourself and (B) doing your first flip. (BTW, some parts of the country still cringe at the "flip" word, but it is better now). Use the 70% of retail rule as a starting point, then start subtracting costs. That pretty much rules out the 65K one.
The 10K one sounds good, but can you really redo all of it for 20-25K? Sounds cheap.
Honestly, if I were starting out, I'd find a local RE club, put that one under contract and sell that contract to an investor. If the numbers work, the investor should give you a few K just for that deal.
As for the one worth more if the trailer is gone, make an offer. Seriously. Offer what you think it would be worth without the trailer AND minus the cost of ditching the trailer.
Find a local RE club. www.nationalreia.com can help.Get an investor loan - should be available for something like this using the math I said above.
PM me if you want more details or need some handholding. (I do coach people on this as well).
Good luck.
Jeff Pasquino
Footballguy
RE is highly local. Values aren't the same everywhere.You underbid for prime real estate. There will always be people / buyers for prime real estate, just like there will always be first time homebuyers. It's the middle ground that's the issue in many areas now.
Sabertooth
Footballguy
Jeff, would the 70% rule basically be that you don't want your total costs after everything including fees, holding costs, and repairs to be more than 70% of the retail value of the home? If this is the case, then the one appraised at 65k might be the best bet. It is listed for only 37k. Here is the quick and dirty math on that as I calculate it. Mind you, I think I am estimating high on all costs.
Code:
30000 bid3000 closing costs10000 renovation costs1000 holding costs44000 total costs70000 retail price63%Jeff Pasquino
Footballguy
Here's the basic thought process:Goal is to sell at retail value. Call that 100%.
Closing costs and RE agent - 10%
Profit (why else are you doing this) - 15%
Oh #### factor - 5%
That's 30% off the price.
70% must - MUST - cover all other costs, otherwise why are you buying the house? This isn't a sport, it is a business.
70% is NOT the "MAO" or Maximum Allowable Offer - it is the TOTAL COST to get the house ready to sell at retail AND the holding costs until you sell it. Never ever forget that.
Some will say "well, if you have a $400K house, you don't need to make 15%- That's $60k!!!!". I say
on that one. Why else buy that house? Why not buy two $200K houses?Guess what - the holding costs and all other costs go up. The mortgage on that house is probably $200-220K, so you're talking nearly $2K a month in holding costs. Now that $60k can whittle down quickly.
70% minus all costs gets you to the MAO. If the house was in PERFECT condition, you could offer 70% - but why would you? Something's wrong with either the owner or the house. Figure out which one it is.
Good luck.
Random
Footballguy
One thing to add when analyzing flip profitability... time involved. Once you have you expected profit, you need to have an expected rehab time (do not include market time). Example, would you rather do a flip that makes you 1)10K orHere's the basic thought process:Goal is to sell at retail value. Call that 100%.
Closing costs and RE agent - 10%
Profit (why else are you doing this) - 15%
Oh #### factor - 5%
That's 30% off the price.
70% must - MUST - cover all other costs, otherwise why are you buying the house? This isn't a sport, it is a business.
70% is NOT the "MAO" or Maximum Allowable Offer - it is the TOTAL COST to get the house ready to sell at retail AND the holding costs until you sell it. Never ever forget that.
Some will say "well, if you have a $400K house, you don't need to make 15%- That's $60k!!!!". I sayon that one. Why else buy that house? Why not buy two $200K houses?
Guess what - the holding costs and all other costs go up. The mortgage on that house is probably $200-220K, so you're talking nearly $2K a month in holding costs. Now that $60k can whittle down quickly.
70% minus all costs gets you to the MAO. If the house was in PERFECT condition, you could offer 70% - but why would you? Something's wrong with either the owner or the house. Figure out which one it is.
Good luck.
2)30K?
1) is paint and carpet and misc cosmetics (one month tops)
2) is a full gut and rehab (6 months)
1) is 10K/mo
2) is 5K/mo
Sabertooth
Footballguy
Good point. THe one I am looking at should be about 2 months. My expected retail price is about 70k. So that leaves me with 49k as my total allowable costs+renovation. My estimates come in at around 43k. So that leaves me some wiggle room. I'd like to have it for sale May 1. So two months for 21k = 10.5 k per month. Obviously I have to split that with my partner. But even 5k per month is pretty good for my area. I'd be hard pressed to find a "job" that pays me like that.Random said:
Thanks for all the input.
Sabertooth
Footballguy
Ok, I am going back to look at this house tomorrow. The problem with it, as I can see is that there is no formal dining room. And the upstairs "bedroom" is just a finished attic. Also, the plumbing appears to be shot. The place has hot water heat as well. My realtor told me I could replace the whole works for $5000. This sounds way low to me. I mean potentially all pipes for plumbing and heating could need replacement. I saw three different spots where the pipes had split and there was exposed ice in the lines. This home is about 1200 square feet.
Any input on this? I am going to have a plumber give me a bid on replacing the entire works. I was thinking more like 12k to do something like that but I might be way off as I've never had that done.
Anyway, any input would be appreciated obviously. This home is in a great neighborhood and is assessed for $61,000.
Looking to "flip" my first property here so anybody with nuggets of wisdom, I'd greatly appreciate your input.
BassNBrew
Footballguy
I did a new heat pump in a 1000 sf home for $4000 as I recalled two years ago. Existing duct work was in but not insulated.
Random
Footballguy
I put in a new furnace and AC in a 3000sf house for $2700. Check out these guys. They're about 30 minutes from me but sell low eff scratch and dent stuff cheap. As for the plumbing, its really cheap if you're planning on doing it yourself. We practically re plumbed the last house we did for less than $700, and thats using copper. Would've been much cheaper using pex, but we've never used that before, so we passed.
The $5K estimate from your Realtor could be ballpark. But remember her motivation is to sell you a house and collect her commission. She may be to the point where she'll say what you want to hear to get that sale.
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