Double check numbers

[Brandon Hurlburt]

Hello,

 My name is, Brandon. I'm currently a union tradesman. I got into real estate investing a little bit ago and always wanted to try flipping. Another tradesman friend of mine said he would help me through one at 20% of my net profit. So I finally started searching for flips. 

I currently have one locked down and I'm going to sign the purchase agreement monday. I wanted to first double check my numbers with more experienced people. I got a place for $140k. There was a 5% charge added onto that for 7,000. Holding costs and realtor fees are $14,000. Loan fees are $3,500, and repairs are $25,000. 

Comp homes in the area are selling for $295,000 and selling fast. 

Do these numbers make sense to you guys? Did I leave enough of a profit margin? Factor in enough fees?  What am I missing? 

[J Scott]

Originally posted by @Brandon Hurlburt:

I did just find one of your posts about it. I guess when you look at it that way, it doesn't really make much sense to do cheap things you could just pay someone $15-20 an hour for. I just obviously have that small town redneck personality where I hate paying people to do something I can do myself. Ha. At the same time, I've built myself up too high to go back to working for $15 an hour. So you definitely made a good point.

My general philosophy is that I got into real estate so that I could earn $500/hour or $1000/hour or more.  When I'm doing a task that I could hire out for $15/hour, I'm essentially earning $15/hour.  When I'm doing a task that I could hire out for $40/hour, I'm essentially earning $40/hour.  For $15/hour or $40/hour, I could go back to my old job where I made a lot more.

So, instead of focusing on doing the $15/hour or $40/hour jobs, I prefer to focus on the $500/hour or $1000/hour jobs.

What are those?  Those are finding deals and finding money for deals...

Think of it this way:

If I spent 20 hours trying to find my next deal, spent 20 hours trying to find a lender/partner for my next deal, and then spent about 10 hours hiring and managing contractors to renovate and sell my next deal, that's 50 hours spent on my next deal.  If that deal generates $25,000 in profit, I just earned $500/hour for the 50 hours I spent.  If that deal generates $50,000 in profit, I just earned $1000/hour for the 50 hours I spent!

While you're saving $40/hour by doing your own plumbing, you could be out finding your next deal, finding money for that deal and hiring/managing contractors for that deal -- instead of saving $40/hour, you're earning $500-1000/hour.

THAT'S how you make money in this business...