All Forum Posts by: Stephen Fryer

Presently my partner and I are doing fix and flips in addition to my buy and hold investing. We are thinking of adding property management to our repertoire, practising on my purchases before seeking out new clients. In your collective BP wisdom/experience, any suggestions for resources we could use to get started? 

Hi Cedric.

The first time that I used a private lender it was a colleague at work. We had talked real estate many times, but he could never really pull the trigger. I had come across a fix and flip opportunity and asked him if he would like to be the bank. He had money in an account that was earning very little interest. We negotiated a 10% interest only loan with a balloon payment at the end. Since then we have done multiple projects together. 

Hi Brittaney. I am from Ottawa, Canada. I am investing in two markets right now. SWFL and South Bend/Elkhart IN. I do all my analysis on a property via the internet (the world is a small place). My team includes an Investor friendly agent, an awesome property manager and a local partner for boots on the ground.

@Scott Szurek

I think there might be some confusion about how wholesaling works. When I re-read your post you seem to be under the impression that the wholesaler buys the property at a discount and then sells it for retail. While this may happen occasionally, I have never seen it. Normally I would get a property under contract and then sell it to a rehabber who will fix it up to add the value necessary to get market rates, or another investor who will fix it up to rent it out.

A common formula used by investors is ARV (market value) x 70% - the cost of repairs. So if the property is worth $100K, with 15K in repairs, I would have to get it under contract for less than $55K. So, if I want to make $5K I would have to get the property under contract for $50K, as I get paid on the margin that I create between the contract price and the $55K that most other investors are willing to pay. This is my market price. Contrary to popular belief, market forces should keep me in check because if I have screwed up on my comparables or rehab estimate, other investors will not buy the property and I stand to lose both my reputation and EMD in the deal.

The only time an appraisal would be needed in this exercise is at the time of final sale, when the rehabber sells the property and the end buyer needs a mortgage, or the investor is refinancing to pull out their capital.

@Scott Szurek

I have done both wholesale and fix and flip deals. Contrary to the comments above, I have not found any of the people that I have worked with to be brain dead, dupes or idiots. Most of the time they are reasonable people that find themselves in a circumstance where they have to move the property quickly or it is having a negative impact on their lives. If they could sell it for retail, they would, but for some reason or another they cannot. Wholesalers serve a segment of the marketplace that conventional realtors normally don't bother with. The same way that @Chris Masonserves a segment of the market that banks don't serve.

Hi Scott. 

I just had an appraisal completed last week for a refi that I am doing on a property that I own. It used both the cost approach and a comparison of sales to arrive at the value. If you have a good realtor representing you, they will likely perform a CMA to establish a sales price for the property you are selling. It's in their best interest to make certain that the property is not overvalued or it will sit on market for too long and not help anyone. Since both the realtor and the appraiser are using similar methods to establish value, it's reasonable to conclude that the two would be close.

Maybe you can help this person in two ways by having him owner finance:

1) provide ongoing revenue in his retirement. This may look good considering what the banks are paying; and

2) help him avoid capital gains onthee 95 K.

Hi Soroush. 

I have exactly the same challenge here in Ottawa. High property values make cash flow difficult. Values in many US markets are still attractive and investing there is possible with the right team in place. Having boots on the ground is the key. Feel free to PM me and I'll be glad to share my experience.

Stephen

Hey @Logan Allec @Joe Santiago

 @Ahmad Ali. I sent the details in a colleague request.

Stephen

HI @Kyle Payne. 

Sent the details via PM.

Stephen