All Forum Posts by: Alex Huang

 Oops. My bad.

Thanks for the clarification!

Thanks for the feedback.

I suppose that flip becomes more attractive, if I were confident that I could use that flip and find another adequate rental replacement via a 1031 exchange that cashflows better?

What if it is a cash purchase?

Would love to get some feedback on the following deal. I think I know which direction I would like to go, but I would be curious to hear what people would do in my shoes. The options would be to to rent the property out long-term (keeping it for 15+ years) or to flip it and use the capital to look for a Multi, which I know provides better numbers.

Area is an A-/A area with a solid school district. The neighborhood is one with many beginner families. The house is within walking distance of the nearby elementary school and it has a good-sized fenced yard.

Property: 4 bed / 2 ba. ~1,350 square feet

Purchase Price: $38,900 cash (originally listed at $70,000)

Rehab: $20,000 - In all likelihood, this is a high estimate, but I have remained ultra-conservative on these things since it's my first deal and I don't want to overlook anything.

All-in After Rehab: $58,900

I estimate that rehab will take around 2-3 months. It's pretty much all cosmetic.

ARV - Comps in area are around $80k-$90k

The numbers:

Rent: $1000 - This is probably a conservative figure. Area rentals for 3 bed properties are ~$900 and I've seen 4 bed properties as high as $1,300. None of those properties are as updated as mine will be.

Management: $100

Maintenance (15%): $150

Vacancy (10%): $100 (no idea if that's a good figure)

Tax: $140

Insurance (0.035% of purchase price): $21

Monthly net cashflow: ~$492

Annual CF: $5,900

~9.9% cash on cash return

Are there any rules for Owner-Occupant bidders of HUD properties with regards to how quickly the occupant needs to move in?

For instance, is someone allowed to buy a property as an owner occupant, leave it vacant for 3-6 months while the house is being renovated, and then move in afterwards and live their for the required amount of time?

I've been learning a bit about wholesaling and I'd love to hear from experienced wholesalers what the potential is. Obviously, the perfect storm of circumstance, timing, a motivated seller, etc can lead to some jaw-dropping figures.

So, wholesellers, what's the best deal (buy price relative to ARV of the property) that you've landed when working with motivated sellers?

Just to piggy back off this, do you have similar experiences for Rentals?

This is something I've researched heavily and I think the best route is to start off doing it yourself, for the reasons listed above, but to include PM fees in your calculations (even if you aren't using one to start). 

Your life and circumstance will evolve and change and you never know when you might want to make the transition to a PM company. You should be prepared for the possibility you may need to transition to using one and, for that reason, you should include it in your numbers.

Thanks.

I'm hoping some others might chime in on how they account for this type of thing. Obviously, not all houses are created equal, but comps are comps and there's got to be some way that people are able to quantify these things.

I'm sorry for your loss.

Honestly, you have this great network here at BP. I would try to connect with a few investors in the Chicago area and provide them with some pictures, etc and ask them for input. They'd know the market best and better prepare you for expectations.