All Forum Posts by: Alberto M.

What formula do most fix and flippers use to calculate their max purchase price?

I have been offered a few properties from wholesalers and would like to learn what to expect, how the process works and advice on things to consider.

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I have been in real estate for over 6 years now. So far, I have been sourcing my deals the traditional way: MLS (I'm a licensed agent), brokers, direct sellers and so on.

However, due to the high demand and allocation requirements of some of my investors I had to start looking for deals elsewhere.

I joined real estate Facebook groups and started networking with as many people as possible.

Last week, I was offered by a wholesaler the possibility to purchase houses way below market value; and here is where I got introduced to Auctions.

I heard about it many times in the past but was hesitate to learn about it as it looked highly risky and competitive (you don’t get to do inspections, buy as-is, can’t enter the house until after you buy it, and so on).

What this person said is that these houses where foreclosed from people and now getting sold by the bank on the auction.

The way they say it works is:

A) you look at the house (form the outside and you are lucky if you find some pictures) and run your numbers.

B) if the deal make sense you send a “Agreement to Sell Real Estate” as the offer.

C) if it get accepted you have to pay and the house it yours.

Note: I was asked to put a 5k deposit to send the offer. I also was told that once you buy the house the property could have a tenant inside, a landlord that doesn’t want to leave (hence I would be responsible for the eviction process), and there could be surprises in the title, some hidden debt or in the conditions of the house.

When looking at the numbers it totally makes sense to go this route as you can get some really good deals on auction. However, I am still unsure about it based on the potential exposure and risks involve in these transactions.

Does anyone here have experience with auctions? Is there any piece of advice you could share? Do you think is worth trying?

I would be open to give some “consultant fee” to someone with experience that could take me throughout the process.

Thanks!

@Fradel Barber

Thanks for the initiative Fradel. I would be interested to meet with like minded people.

Do you already have a place in mind? With everything going on I rather do a virtual meet up or meet in an outdoors environment with limited people.

Let me know if I can help with any of the planning.

@Natalia Comas

Hello Natalia, reach out to mortgage brokers instead of direct banks or financial institutions. They will be able to show you all your options and products available. If you don’t know anyone, email me and Incan introduce you to the one I use.

What are the legal documents that you use to perform house flipping with partners?

I’m not referring to the documents to close on the transaction such as the Purchase Agreement but more to the documents between partners depending on their contribution.

Let’s say there are two individual looking to flip a house. One of them will bring all the knowledge and experience and will do all the work (sweat equity) and the other one will invest all the necessary funds to complete the deal. How would you legally structure it and what documentation would you use?

@Traci Penkala

What a useful link! Thank you Traci 🙏

I have been working for a while with a great contractor for tile installation and flooring. Him and his brother are such a hard working, professional and ethical people. They have made their way from the bottom and now own their own company with all the corresponding licenses, insurance, and legal documents.

Sadly, today they told me that they had been working for this other construction company for two full weeks, performing a lot of work for a few of their properties, and now, the owner doesn’t want to pay them.

Not only is an important sum of money and they depend on it to live but they also rejected a few other jobs to complete this one.

The biggest mistake here, is that they didn’t sign any contract or evidence that they were hired for that job and/or supposed to be paid. However, they told me there are a few people that where there as witnesses.

I really want to find a way to help them as they don’t deserve any of these.

Can you guys please give me some advice on how they should go about this? They don’t have money to hire a Lawyer but are willing to sue, or do whatever they can to recover that money.

Any advice would be helpful as I don’t know much about the matter but want to help them out.

Thank you!

We are house flippers looking to expand our business and partner up with experienced wholesalers and agents to help us find single family properties to buy and flip.

We are interested in Miami Dade and Broward county and constantly looking for deals. 

I have been doing some house flipping and rental properties for the past 5 years. However, I keep buying real estate the old fashion way: MLS, LoopNet or through Brokers.

However, I still haven’t been courage enough to buy from Auctions or Foreclosure.

My perception (which it might be wrong) is that you cannot perform inspections or use financing, which for me are the two key things I do when buying a property.

I have heard that by buying from auction you could buy at a really good price well below market. However, without the proper inspection, I feel I just can’t really project my numbers as I have no clue what to expect (having surprises down the line like replacing all the plumbing, electric, termites, mold, etc).

How can you reduce the risk of intensive CapEx when buying from auction?

What is a good process when buying from Auction?

Any advice or suggestions to buy from auction?

Best books, courses or podcasts to learn how to buy from auction?