Our Investor Made $675 a month for 4 Months!

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Our Investor Made $675 a month for 4 Months!

Ryan Janssen
Flipper/Rehabber · Elm Grove · Member since 2019 · 45 posts · 15 votes

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $70,000
Cash invested: $20,000
Sale price: $230,000

This was a slam dunk deal! We added flooring, paint and some light fixtures to profit $100,000. Deals like these seem to be too good to be true, check the listing to see the numbers for yourself! Our investor made a nice chunk of change too. The property took 4 months to rehab and sell, making them $675 a month for 4 months on a $90,000 investment.

What made you interested in investing in this type of deal?

Low starting price and high interest area,

How did you find this deal and how did you negotiate it?

Milwaukee Auction

How did you finance this deal?

Private Money Investor

How did you add value to the deal?

Updated the condo and made it very attractive to the new home owner.

What was the outcome?

Sold condo in 4 months, made $100k!

Lessons learned? Challenges?

Why it is important to offer quality fixtures to help attract the buyer to match the purchase price.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Nicole Bruckner at Point Realty

2Reply
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Most Popular Reply

Mike Dymski
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
6y

Congrats.  The condo looks nice.

You may want to reconsider your investor compensation.  You made $100,000 and your investor (who took all the risk and put up all the money) only made $2,700.

15Reply
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  • JoAnn Melgar
    Napa, CA · Member since 2014 · 9 posts · 2 votes
    6y

    Congratulations on this great flip. Where is it located? This looks like a condo building complex in Pewaukee where my nephew lives.

    1Reply
  • Frank Geiger
    Rental Property Investor · NC · Member since 2018 · 776 posts · 776 votes
    6y

    Nice job! What was the investor turn out like at the auction?

    1Reply
  • Mike Dymski
    Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    6y

    Congrats.  The condo looks nice.

    You may want to reconsider your investor compensation.  You made $100,000 and your investor (who took all the risk and put up all the money) only made $2,700.

    15Reply
  • Brock Mogensen
    Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes
    6y

    Great return!  Definitely hard to come by in this market.

    1Reply
  • Kyle J.
    Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    6y

    Great job @Ryan Janssen.  Kind of curious though why you titled this thread the way you did because as @Mike Dymski pointed out, that's not a great return for the investor.  Hopefully they were happy with it because after all they're the ones that agreed to do the deal at that rate.  However, it appears the real success here is you and your huge profit on the deal - not the small amount your private investor made.  

    5Reply
  • Tato Corcoran
    Investor · Milwaukee, WI · Member since 2019 · 68 posts · 12 votes
    6y

    @Ryan Janssen wow where is this?

    0Reply
  • Todd Rasmussen
    Rental Property Investor · Clarksville, TN · Member since 2016 · 1k+ posts · 1k+ votes
    6y

    @Ryan Janssen

    9% return for a short term loan seems like a reasonable rate of return for a private investor. How'd you develop the relationship with your private lender?

    1Reply
  • Ryan Janssen
    OP
    Flipper/Rehabber · Elm Grove · Member since 2019 · 45 posts · 15 votes
    6y

    The flip was in Franklin, I always give my investor a fair amount of return. I give them the interest rate and they decide by their monthly return if they want to invest or not.  We do not always make this much money, as most of you know.  This was an anomaly flip, we fell into it by chance, it was a huge risk because condo's are sometimes not the easiest to sell, especially in the middle of a Wisconsin winter!

    0Reply
  • Irina Belkofer
    Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes
    6y
    Originally posted by @Todd Rasmussen:

    @Ryan Janssen

    9% return for a short term loan seems like a reasonable rate of return for a private investor. How'd you develop the relationship with your private lender?

    It's not 9% for the 4 months, it's APR. Investor made 3% on these money taking all the risk.

    The real life example: investor who finance flips charging 2.5%/mo for the first 4 months and 1.25% thereafter.

    So, for $90K used for 4 months, the cost of money would be $9K.

    OP just got lucky to find good private money source. 

    4Reply
  • Todd Rasmussen
    Rental Property Investor · Clarksville, TN · Member since 2016 · 1k+ posts · 1k+ votes
    6y

    @Irina Belkofer

    Hi Irina,

    I thought it was obvious but I can confirm. The rate of return I was referring to was per year. Without knowing if there was a personal guarantee, collateral, or other compensation in case of default I hesitate to agree with you or the previous responses that the lender took ALL the risk. Like any loan, they certainly took on some. The OP looks like he has more margin than most bank underwriters would need let alone someone who is making 9% (annualized for comparison purposes) and only has to lock up their money for a few months. Looks to me like the proceeds have been dispersed proportional to the level of effort involved and the OP's cost of money is supported by the current market rates of institutional private lenders. An investor who is involved deserves a portion of equity. A lender who walks to the mailbox doesn't need to be compensated like they are more than the money.

    @Ryan Janssen's real offense was subliminal advertising for hard money in an environment where most of us are making 3-5 times the return he is offering.

    1Reply
  • Ryan Janssen
    OP
    Flipper/Rehabber · Elm Grove · Member since 2019 · 45 posts · 15 votes
    6y

    My investors are happy with their returns.  I have a few bigger investors from CA that offer the same rate with a point or 2 in the front.  I really think it is a different ball game in the mid west!

    1Reply
  • Irina Belkofer
    Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes
    6y

    @Todd Rasmussen it depends on the market but I'd be happy to pay 9% APR, especially at the time like 2015.

    I bought 3 houses with 50/50 split plus the investor got his 5% APR on his money.

    Now it's tripled so for these 4 years he's got not just 9% APR but close to 45%.....Well capital gain taxes still apply though

    0Reply
  • Todd Rasmussen
    Rental Property Investor · Clarksville, TN · Member since 2016 · 1k+ posts · 1k+ votes
    6y

    @Irina Belkofer

    I bet you he answers his phone no matter what time you call! Did he bring more to the deal than just money?

    0Reply
  • Irina Belkofer
    Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes
    6y
    Originally posted by @Todd Rasmussen:

    @Irina Belkofer

    I bet you he answers his phone no matter what time you call! Did he bring more to the deal than just money?

     Everyone answers to my call....lol

    I helped many people. 

    He brought money and was a big deal when I already was overleveraged.

    He’s out of country most of the time so it’s only money....but it was just the right timing

    Only few months after we bought these 3 houses, I've got an access to HELOC and bought another 3 totally mine with lousy 3% back then. So, yes, I have something to compare with.

    Money is critical when you have a deal and nobody wants to invest - it still was uncertain time how far prices will go and in what direction. So, yes, I’d made whooping zero if he wouldn’t finance it. Fair and square 

    1Reply
  • Todd Rasmussen
    Rental Property Investor · Clarksville, TN · Member since 2016 · 1k+ posts · 1k+ votes
    6y

    @Irina Belkofer

    Lol, I see why you did it and would have done the same. Going to send a thank you note with my HELOC payment all the same this month. :)

    0Reply
  • Josh C.Pro Member
    Property Manager · Indianapolis, IN · Member since 2010 · 1k+ posts · 1k+ votes
    6y

    I just the love the “investor made a nice chunk of change too!” I make a 100k, they make <3k for 100% financing, they are so lucky. Lol

    If they had an instant home for their 90k and it just came from another investment you could say they made 9%, but in reality it’s unlikely so they made 3-7% on their money during that 12 month cycle. I’m sure you have other assets and their money is safe, but that return is not great when you make 100k if you subbed out all the labor and they have $2700. Now totally different if you where they everyday swinging hammers.

    1Reply
  • Ola Dantis
    Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
    6y

    The other didn't get upside in the deal? Nice investor!

    Congratulations on the deal. 

    2Reply
  • Anthony Rosa
    Rental Property Investor · New York City · Member since 2019 · 703 posts · 538 votes
    6y

    @Ryan Janssen - The place looks nice, congratulations!  You didn't profit, you made a SCORE! The headline of the page is as if the investor did extremely well on the deal....Where?  Not to take away anything from you but saying that the investor "made a nice chunk of change" - Really?...I get it, those were the terms he/she agreed to but Christmas is coming soon, take the investor for a nice dinner and give him a thank you envelope.

    2Reply
  • Matt P.
    Investor · Columbus, OH · Member since 2015 · 625 posts · 601 votes
    6y

    @Anthony Rosa lol the entire thing reads like an advertising attempt to find an investor but I'd have to agree with everyone saying it wasn't all that great for the guy risking all the money. Nice job on the flip though... No doubt about that.

    2Reply
  • Henry Lazerow
    Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    6y

    Congrats!

    1Reply
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