Closing three deals this month for a total of 98,692 profit

[Devan Mcclish]

Starting off 2016 in a good way. I am hoping to keep the momentum going throughout the year. Details of the deals are listed below.

The first two deals I did with no money. These are great examples of working your network, consistently being active, and helping others grow their business. I am a huge advocate for co-wholesaling deals. It's a great way to increase deal flow and increase revenue.

DEAL 1:

How I found it - This is where I have to thank Biggerpockets! I did not find this deal. Another member of the site found the deal. It's a member that I've bought a rehab deal from before. He found the deal through his mailing list. He got it under contract, and he texted me asking for assistance on the deal. He asked if I knew anyone that would want the deal. Since I am actively networking, I had a list of about 10 people I knew I could instantly sell the deal to. The seller wanted to sell it because the property had become more of an issue that an asset.

The numbers - These numbers were quite simple. It was a 1300 sf house, 3 beds, 2 baths. The house was partially renovated. I had estimated about 50k in rehab was needed to get the house up to retail standards.

The ARV was approximately 260,000

260,000 x .7 = 182,000 - 50,000 (repairs) = 132,000 - wholesale fee.

My partner on this deal ended up getting it under contract for 110,000, so I knew this was going to be a good deal. Wholesale fee seems like it's going to be 22,000 right? Wrong. We ended up selling the deal to the last buyer I called at 120,000 equaling a 10,000 assignment fee

 It was still a good day. I will explain why it was difficult to sell this deal below.

Obstacles - The reason we only pulled down 10k on the deal in my opinion was the very low ceiling height in part of the house. So attention wholesalers: deduct from the ARV for low ceilings!!!!!!!

Luckily, someone ended up buying it. Every buyer I called had a serious problem with the low ceilings (6-7 ft ceilings). 

At the end of the day, he made 5k from another deal, and I made 5k for networking. Love deals like these!

What I learned - 

networking pays off. I usually sit down with a new person and an old person in my network once per week. 

discount houses with low ceilings by a significant amount!!

Deal #2

How I found it - Again I found this deal from a member of Biggerpockets. This was a different member. It really pays to network (literally). He found the deal in a rough part of town, but he had no buyers in that area. I however knew a few people who would buy near the gates of hell for the right price. 

The Numbers - My partner on this deal found the property for 45,000. It was a 2 bed, 1 bath. This house needed NO repairs. First house I have ever done a deal on that needed no work. It was currently being rented at $600 a month. tenants have been there for 3 years and had no intention of moving. Rents should be $800 a month. 

Investors that I know use this formula for rentals: potential rent x 70 less wholesale fee = MAO

800 x 70 = 56,000

I asked for 55,000 to my buyers. 

I made 3 phone calls and had a buyer. He ended up buying the deal for 49,000. I could've kept shopping the deal but there was one major obstacle that is listed below.

4,000 fee on this property is still a good day for everyone, especially when networking is how I found it

Obstacles - The problem we had with this deal was the seller was VERY reluctant to allow anyone to get inside the property after it went under contract. He was obviously being unreasonable but you have to deal with these people in order to make the deal happen. I was only able to get one buyer through the property, and we were pretty much married to that buyer from there on out.

What I learned - 

 Luckily, I took a video of the entire house inside and out. It was the only reason we sold the house in my opinion. Since it was extremely difficult to get any buyer in the house, being able to show a video to perspective buyers is fantastic. It is also a lot better than taking a million pictures. I would advise people to narrate the video (floors are sagging, water damage on the ceiling, carpet needs to be replaced, windows look really old and dated, etc) I take a video of every house now and it saved my butt on this deal.

Deal #3

How I found it - I found this one through my direct mail campaign. My lists are strictly driving for dollars. I had sent this guy 3 letters when he responded to me. Driving for dollars is by far one of the best ways to find deals. The guy was an absentee owner and the renter had just moved out. It's all about timing!

How I funded it - I called a few people in my network. I could either have borrowed all of the money at 12% interest and 4 points with 20% down or I found a guy that would fund the entire deal and in exchange I get 30% of the profit. I took the 30% deal because I did not have any money to do this deal. If someone was going to take all the risk, I was fine with 30%.

Numbers - When the guy called, I build some rapport quickly. He asked what my offer was. I gave him an offer of 150,000. We met at the property and he did not negotiate back. He took the deal. should've offered less!!!

House details: 1890 sf, 3 bed, 2 baths

ARV was very difficult to determine since the property is in an area of ALL new construction homes. There were virtually no rehabs to use as comps. So I ordered a subject 2 appraisal. He came back at 330,000 on the appraisal.

After walking my contractor through the house, we came up with a 90,000 rehab budget. House was a total gut inside and out.

330,000 - 151,500 - 90,000 - 26,400 (8% for closing costs) - 5,000 (holding costs on this deal) = 57,100 profit.

 After doing the appraisal it made me think about other exit strategies. I started looking at this deal as a wholesale deal.

We ended up closing on the deal with the first exit strategy being wholetail, the second was rehab

I listed the property at 219,900. I got 4 offers within 24 hours. The largest offer was 242,000. They are paying all closing costs and the buyer's agent is reducing her commission to 0% because she is the buyer. I am the listing agent on this property.

242,000 - 151,500 = 90,500 - 14,520 (I keep 60% of that so 8,712) = 

75,980 split 70/30 with my investor: 22,794 for me plus the 8,712 for a total of 31,506 for me. And I will have owned the property for 30 days. Not bad!!!!

What I learned -

 Always look at a deal more than one way. If you can get the same amount or more in a shorter period of time. Take that exit strategy

I am looking forward to the rest of this year!