My Preliminary Business Plan

[Sean Brennan]

After some in depth study over the past few weeks, including hours of BP produced audio, interaction with the community, reading 123flip.com, and Marty Boardman's book, I think I finally have an understanding of the basics of this business. I'd especially like to thank Ann Bellamy, Joshua Dorkin, J Scott, and Brandon Turner for answering my questions.

My plan for the next two months is to network in my local market, attend local reia meetings, speak to actual investors, and begin to develop my "master mind" group. Of course I will continue to read and interact here.

I hope to find one or two active buyers that I can directly market for. Then, around the first of April, I plan to begin direct marketing in search for deals. I will start very slow at first with a budget of $100 for the first month. Then I will add $100 per month to my marketing budget until I am happy with the results. I know patience and discipline will lead to success here, so I am in no hurry.

My goal is to do two wholesale deals by the end of 2013. Once I have those under my belt I will attempt my first flip. From there I think I can really start pushing the pace. Another goal of mine is to slowly reduce my reliance on my appraisal income through 2014 and become a full-time investor by the end of that year.

So, what do you guys think?

[Brandon Turner]

Just an idea, Sean Brennan, but let's say you follow the flipper's rule of 70% minus repairs. So you find a property that should be worth $300,000. 70% of that is $210,000, less $10,000 for new carpet, paint, and fixures. This isn't a trashed house, just one in need of some cosmetic fixes.

So you buy it for $200,000. You could, theoretically, use hard money or private money to fund the majority of that purchase, if not all, and maybe even enough to cover repairs. Maybe. Add 10k for repairs and 20k for holding/closing costs and points. Then, you get Home Depot to do new carpet and hire a handyman to paint and do new lighting.

You then rent it out, hopefully cashflowing some. At this point (might need to wait 6 months) you go to the bank and say "here are comps showing this house is worth $300,000. I need an 80% LTV loan on it, for $240,000." Fixed rate, 30 year, cashflow, good equity.

And you'll have an extra 10k to start your marketing for wholesaling, or to fund your next down payment.

Thoughts? I'm not saying "Go for it" but I'm just opening up discussion on this kind of strategy.