All Forum Posts by: Octavia D.

FSBO Deal, Seller Not motivated, did I do this offer right?

Based on what I've learned about recognizing a deal and understanding the numbers, even-though the seller was not interested or motivated to sell, I saw it as a good practice instead. Did I negotiate or calculate the numbers right?

Octavia

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(( POSTLETS AD ))

FSBO

Irving, Tx.

Single Family Home

4bdr. 3bath,

sqft. 2200

No H.O.A

Free & Clear (100% equity)

Seller: No Repairs

My personal thought: huh!, yeah right

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(( NUMBERS ))

Ask: $198,900

ARV: $264,900k (6 months, sold comps, 1) click here

$198,900 divide by $264,900 = 0.75% (ARV)

$264,900 x.70% - $10krpr - $10kpft = $165,430 (MAO)

$165,430 divide by $264,900 = 0.62% (ARV)

*** Knowing a buyer / rehabber has many other costs that need to be considered, I was told to not worry about those, just only my profit and the repairs needed. I still consider them though, I just didn't add them in the calculation. ***

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(( TEXT CONVERSATION ))

Me: Why selling?

Seller: Moved to a new home

I Offered: $150k, as is, all cash

Seller: No

Me: You selling full price?

Seller: Yes

Me: Will you do Owner Financing?

Seller: Not in a hurry to sell, I have plenty of other decent offers

Me: Ok, thank you for you're time

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Did i do anything wrong?, thanks for you're help guys

Wholesaling in Texas, what's not allowed?

1) Does Texas require anyone (licensed or not) to use their Purchase and Sale contracts or will they accept the one you or you're attorney writes up?

2) When doing a lease option, does the 6 month limit also apply to a Master-Lease Option when buying apartments?

3) A lease option on residential properties, how many times can you re-write the contract to extend the lease option period?

4) Does anyone who does deals in Texas have any recommendations for a:

    * Title Company

    * Escrow Agent / website

    * Notary

    * Attorney, Enrolled Agent, Accountant

    * Rehabbers

    * Realtor/s

( who works best with investors? )

Thanks so much guys

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End Buyers Termination Letter, should I add a liquidation damage / penalty fee?

This will also be added to the Purchase and Sale contract when assigned to the end buyer, does this help with them not backing out of the deal along with a memorandum recorded? Should I also include this liquidation fee for the seller if they back out, who gets the penalty fee, the seller or the end buyer?

Octavia

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Receiving a non-refundable EMD from an end buyer, which way is best?

Just wondering, since there's ways to fake a check or some other money transaction, what way do you consider is best that has worked for you on receiving a non-refundable earnest money deposit (EMD)? 

Octavia

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Getting a lot of good feedback from you guys including through PM, I've been practicing more and more to understand the numbers to get it right. Here is another sample (not real) deal, did I get it right?

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Ask: $150k

ARV: $200k

$150k divide by $200k = 0.75% (ARV)

$200k x.70% - $10k rpr - $20k pft. = $110k (MAO)

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Knowing there's expenses the rehabber has that I remember reading a wholesaler has to consider, such as:

$$$ - Buy ( Assign fee. + MAO)

$$$ - Closing costs (4% / 5%)

$$$ - Fix up

$$$ - Interests ( possibly from a hard money lender)

$$$ - Holding (for sale, 6 months probably)

$$$ - Re-sell (retail price)

$$$ - Rehabbers Profit ($10 - $25k)

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Would it be ok to include in the ARV formula the % of closing costs of the ARV that the rehabber would possibly pay (ARV x.70% - rpr - 5% closing - pft = MAO) or not.?

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Thanks chaz, the %'s are guesses on how much it might cost the buyer for closing, repairs, etc. based on the high price of the home. How come I should not worry about the buy, sell, hold, and fix costs the rehabber (buyer) will be paying for, isn't my profit determined by theirs and don't I have to make sure that there's a good spread for them as well.? also i wasn't putting myself down when i mentioned my learning disability, i was mainly just confiding to those who read this post that if some have math flaws that they as well as me will figure it out. So would my formula (knowing I should not base my deals heavily on this) look like this:

Ask: $285k

ARV: $310 - $331K

$320k x .70% = $224k

$224k - $65,100 (repairs) = $159k (max offer)

$159k - $21,700 (profit) = $137,300 (flex offer)

Ever since I started learning multiplication, division, fractions, etc. in school growing up I've had many, many problems with math. To the point where I just hated it because my brain could never process it when it started to get more detailed leading to the mind working more on solving the answer. I even was diagnosed with a learning disability in math, despite that I believe with patience and step by step process that I will understand whatever math formula that's needed for any task, it might take a little while to get it but it will come through. This ARV formula I'm still working on getting down right and need some more help from you guys on what I'm doing wrong and or missing with the whole thing. Below I have an example of a deal that I would wholesale to a rehabber,  It's not a real deal just a sample I put together to see if I got this right or am close. Please tell me what am I missing here?

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Ask: 285k

3bdrm, 2half bath

2 car garage

No mortgage

No H.O.A

A.R.V = $310k - $331k

( $25k spread)

$310k x .70% = $217k 

( $93k spread)

 - $ 65,100 (30% repairs)

- $ 32,550 (15% closing)

- $21,700  (10% profit)

= $97,650 (max offer)

( $212,350 spread)

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I figure that since me and a rehabber are going to be involved in helping a seller by buying their property, that my profit will be mixed in with the rehabbers and in order for me to make a profit I have to make sure the rehabber makes a bigger profit. I'm not sure where the rehabbers profit is at in this sample LOL! and since this probably looks insulting to a seller to ask for their property at that low of price. I think the only type of properties where my low ball offer would work for such a high valued property would be foreclosures, but I don't have what I need to do those, or do I, does any of this work or make sense?

Wow thanks guys so much for all you're help, I will try out the lowest comps ( Michael & Dawn) and then add $5 per sqft. ( Andy ) for repairs as a cushion. 

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Question:

1) How does one know how much a rehabber will pay for a property?

2) How much profit are they trying to make off a deal.?

3) Using the lowest comps. for this post, should I use the 70% or 60% for the "plan for the worst" option?

4) What does it mean to be conservative when using the 60% rule?

Huh!! Yeah.......apparently, all the things I've learned so far doesn't seem like I've learned anything based on my posts about deals and numbers I mention. It's ok because I'm a taticle learner, I will only get better with hands-on practice; constantly sitting, listening and reading is obviously not helping me. Or Maybe it is and i'm just ignoring my preference to see if I got the numbers down right when dealing with any property. Sorry for wasting you guys time on posting this.

At this very moment i'm speaking to a broker about a 33 unit apt. that the seller is selling and is talking to me about doing a mortgage wrap. Heres where we at so far:

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33unit apt.

3 bldgs.

     (1): 1bdrms, 1bath

     (2&3): efficiency & studio

N.O.I = $94,287.21 (yr.)

         = $7,857 (mnth)

Ask: $ 1,300,000

No H.O.A

------ Mortgage Wrap -------

Seller: $700k left on loan

$500,000 down (1st)

$800,000 (2nd to Seller)

Month to Seller: ???

(broker won't disclose, want's to see proof of funds)

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My Questions:

Should I have even bothered with posting this due to the unit sizes?

How does a mortgage wrap work when wholesaling this to an end-buyer? 

yes I know there's most likely not going to be a buyer for this due to some reason, or I could be wrong. Right now the broker is willing to help me get a low rate mortgage for my down payment which I have no intention of getting. Also he has not mentioned to me who the company is that's managing the property and won't give me the rent roll to see the most recent financials. 

What do you guys think about this, I'm not sure.