All Forum Posts by: Danny Day

Thanks for the response everyone! I appreciate all the feedback.

I knew the learning curve would be huge on this first deal. I can understand why you would want to get the property under contract before you sink any of your money into it. It just makes sense. Unfortunately I was not able to do that with this deal.. but I also would not have heard about this deal without the help of a wholesaler.

I can understand the importance of getting houses in pre-foreclosure now and negotiating directly with home owners themselves. Also, another thing that I have realized is cost estimations and projections. This is something I have multi-family knowledge in, but not residential. Thankfully I have itemized prices on everything I need done.. now I know what prices are for the next deals.

I've been meeting with contractors to get bids on the work I need done. After meeting with a GC and getting the 1st bid, I've realized I am going to sub everything out myself. I think I'll be alright manging the project on this house. I've got some experience rehabbing multi-family.

Again, thanks for all the responses. I started this thread so I would have a log of my first deal on a daily basis. If you notice, the thread was started about 4 months ago. It was at least a year before I was ready to start even thinking about looking for a house. I've spent a lot of time reading on here and trying to absorb as much as I can.

Hopefully this thread will help someone out in the future.

Danny

Yeah I understand that.. The houses listed at the $125k range have nothing upgrade and look like they were built in 78. We will be doing noticeable upgrades throughout the house.

Yes I checked comps throughout the MLS. The ARV I calculated with my formula was $125k, there are comps in the MLS that support it less than 1 month ago.

Right now there are houses listed at the $140k range with the finish we will have on this house. I am using the $125k as a conservative estimate and if we decide that we can list it in the $130's then that would be great. The DOM is what worries me about the comps. I think we'll be alright though. I want to price the house aggressively to sell fast.

Thats just the way this brokerage works. Here is what their website says about it.

Do you inspect all of your properties?
We do not have a formal inspection done on a property. We address all issues that are visibly noticeable and figure a number that will remedy those problems. If there is a problem with a main component of the property (such as electrical, air conditioner, roofing, etc.), we will acquire a price for repairs from a licensed contractor in that particular field. It is in the investor’s interest to do all of their own due diligence before entering into a contract on one of our properties. In the event of unforeseen repairs, we will aid you in every way possible.

Can I do my own inspections?
Yes you are welcome to do any and all inspections while the property is accessible. However, your inspections must be completed prior to contracting the property with us

02/14/2011 Update

Something very interesting happened at the property today..

I was a getting a bid from a GC just walking around the house, and a man walked up to me neither one of us knew. He asked me if I was the broker, and when I told him no, he walked back through the house and sped off.

I realized he was probably another buyer, so I cut my meeting short with the GC and headed down to the other side of town and got the property under contract. The broker told me I would probably be getting back about $2,500 at closing since we put $5,000 down as an earnest money deposit.

We close in 10 days, on the 24th.

Excited!

Just got done with the inspection on the property and meeting with the 1st GC.

The inspection came back great. Nothing really too big.. all small stuff. Some outlets need to be replaced to GFCI and other little things like that.

The roof, foundation, and structure are all good. There are some minor changes I need to make to bring the house up to code in the attic. The inspector is emailing me the report tomorrow with pictures of what needs to be changed. I was happy to hear we don't need to convert the 150 amp panel to 200. He said unless we're putting a pool in then we won't need it.

Interviewing 2-3 more GC's tomorrow then we'll close on Wed.

Yes it is a "wholesale brokerage"

They find deals here in the Houston area and get them under contract. They get 3 bids and write up an estimated repair list (with real bids behind the numbers) and send this along with 3-5 comps on the property.

In order for you to secure the deal with them you typically pay $2,500 which goes to your closing cost. In this deal the payment is $5,000 which will be subtracted at closing.. so when we close, if closing cost are $7,500, I would pay $1,500 at closing.

What I'm worried about is that the water and gas have been turned off for winterization. I spoke with my inspector about this and he let me know he won't be able to give a full inspection on the house today. So when we close, he is going to come back and finish the rest that he can't do today.

The wholesale brokerage charges $5,000 on this house to secure the contract. If the inspection goes well we will be buying it

http://online.wsj.com/article/SB10001424052748703989504576128403630694340.html#

Just got this emailed from a lender today. Interesting news. The article states that Fannie and Freddie will be phased out under the Obama administration.

The article predicts less government regulation / intervention in the mortgage market will increase borrowing cost.

I'm not sure how I feel about this. I am all for free market, but a few questions I had about this article:

1. Isn't this type of de-regulation promoting what started the crisis in the first place? Won't lenders be more inclined to look the other way on bad reports and just sign off?

2. Why would no government intervention raise borrowing costs? Economics 101 says that free market encourages competition and the real winner is the consumer. I'm lost on this one.

I've read through some of the responses, and I feel like some of these bad characteristics could be good traits.

Billionaire Mark Cuban said the key to his success was eliminating fear of failure. One of my favorite quotes from Mark,

"In business, it doesn't matter how many times you fail. No one cares how many times you fail, and you shouldn't either. All that matters is that you get it right once, and then everybody else can tell you how lucky you are."

I agree with this, but I also find the fear of failure a positive thing. I've been interested in doing my 1st deal now for over a year, and have spent that time researching and learning as much as I can. Today I am confident enough to make an offer, because I put in so much time to learn about all different things.

It boils down to how much you want to succeed and how determined you are. Some RE investors I see want to sit back and not work or put in any time.. some want to manage the project themselves.