All Forum Posts by: Peter Hanson

Hi all,

I bought a house 64380 Thumb Dr, Palm Springs, CA as an REO for $75,000. My goal is to resell the house, I don't want this as a rental. I put in new flooring, new windows, new kitchen, new bathrooms, new paint, cleaned up the landscaping, all in about $21,000 spent on repairs. I listed it for $139,900 and it's been on the market for a little over 2 weeks. I only got 2 calls on the first day, no showings or calls since. I think I might be a little over priced but it's totally remodeled and I think the price is fair, perfect for an fha buyer who has no money to fix up a house, it's turn key.

My question is do I just reduce the price until it sells, or is there something a little more creative I can do to get my $140,000 sales price?

I have a loan on it currently for $60,000, payments $600/month

Any advise from seasoned guys would be the best. What's the best way to maximize my return? what options do I have?

thank you for your time,

Peter Hanson

this is not to brag, this is to show what is possible in southern California, your basic approach should be fix and flip the expensive homes and keep whatever you can that make sense as rentals. You make a few bucks flipping but you make millions buying, fixing, and keeping rentals. if you keep the rentals you have write offs, appreciation, depreciation, rental income, and it's taxed different than flipping.

All deals done in Southern California....over the past 21 months

Deal #1 got offer accepted at $100K for a duplex, wholesaled it for $107,000 to a cash buyer, netted $3500 +/-

Deal #2 got offer accepted at $105K for 3/2 SFR, wholesaled it for $112K to same cash buyer, netted $3500 +/-

Deal#3: paid 85K cash for 2/1 SFR, spent $15K on rehab, sold for $140K

#4: paid $86K cash for 2/1 SFR, spent 15K on rehab, sold for $156K

#5 paid $104K used hard money for 2/2 SFR, spent 14K on rehab, sold for $170K (put 20% down, plus rehab, and holding cost, total investment was $40K, netted $30K in 90 days

#6 paid 85K used hard money for 3/1 SFR, spent ZERO on rehab, sold for $127K (buyer paid $110,000 cash, and agreed to a $17,000 1 year balloon note at 9%, which will pay off next month, created $125/month income for 12 months, and a nice pop is coming!)

deals 7 and 8 had a partner - he found the home, I fixed it up, managed the rehab, he sold it, we split the net profit...these were ok deals we split $20,000 on each deal but they took 5 months and 9 months respectively due to issues with contractors doing shoddy work....so if you figure our profit at an hourly rate these were not barn burners...but hey it's $20,000 I didn't have before, so I am fine with that

#8 paid $265K used hard money, spent ZERO on rehab, wholesaled it in 12 days for $360,000, that was a nice one (sad back story on this one, owner of the property was busted for selling drugs and arrested, then deported to Mexico, so wife took over the drug selling biz...then she got popped, in order for me to be able to close on the home, Escrow had to go to the jail to have the wife sign, then hire a mobile notary to drive down to the SD/Mexico border to have the husband sign) death, divorce, drugs, disease....the 4 D's that create real estate opportunities, sad but true

#9 paid $205K used hard money, spent $25K on rehab, sold for $300,000

#10 paid $90K for 3/2 SFR, used hard money, spent $3500 on rehab, rented out for $850/month, slight negative cashflow currently (-$150/month), market value is $130K now, plan on refinancing into better loan in 3 months

#11 paid $108K for 3/1 SFR used hard money, spent $3000 on rehab, rented out for $850/month, slight negative cashflow currently (-$190/month, market value is $140,000 now, plan on refi into better loan in 3 months

#12 paid $125,000 for 4/2 SFR used hard money, spent $0 on rehab, house already had a tenant in it paying $900/month, will be raising rent to $1100/month, market value is $160,000, plan on refi into better loan in 3 months

#13 invested $50,000 with my parents to buy a triplex, for $530,000, property cashflows $1000/month from day one, and value has increased to $700,000

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in current pipeline/in escrow - thru these deals I've made good friends and I've made my hard money lender some good money, hard money lender let me know he has $5,000,000 +/- sitting in the bank looking for houses to invest in, and he's given me the green light. So if I think it's a deal, he is on board

deal #14 $75K purchase for 3/2 SFR, needs $21000 in repairs, will sell for $150,000, will use hard money, fix and flip, or might keep as a rental, will rent for $900/month

deal #15 $105,000 purchase for 4/2 SFR, needs 13K in repairs, will sell for $160,000, will use hard money, fix and flip, or might keep as rental, will rent for $1100/month

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Real estate has allowed me to create over $600,000 in cash and equity in less than 2 years, I'm still pretty shocked by that, but very happy as well

I've never done direct mail, these were all done by networking with agents and writing 300 + cash offers to purchase on properties listed on the MLS. If somebody knows anything about direct mail I'd love to learn that part of the business. Direct mail gets you to the seller directly, no agents involved, I know working directly with sellers is the way to get great deals.

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BP is a great source if information, and the contributors are so positive, I love it here and check back often. Thank you for what you do.

@ find a mentor, talk to seasoned and successful investors. You will be surprised how open they are and willing to teach/coach you. Read books on flipping and property management and become as educated as you can. But don't just read 50 books and never leave your office. Read 1-2 books, then start making phone calls to owners, start knocking on doors of distressed homes. Learn what all the contracts mean, read and really know the main contracts you will use most often on each deal

An agent friend of mine door knocks 4-5 hours a week in his farm and gets out there and talks to people. He sold 55 homes last year and did 15 flips his average commission on a sale is $5500 and his average profit on a flip is $35,000. Not bad for a 30 year old guy

Also, follow this plan and you will be a millionaire before 10 years. Sell homes, every 5th home you sell, buy a rental for yourself, fix the rental, rent it out, and pay extra on the mortgage each month. if you sell 20 homes per year, that means you will be buying 4 homes a year, in 5 years you will have 20 homes, if those 20 homes appreciate by $50,000 each, BAM you are a millionaire. It's possible, get out there and do it

@ you are right, I am dealing with that right now, flipping is great quick money but it's not wealth creating/long term which is what I am trying to do. All these deals are a side business to grow my nest egg. I realized after all those flips that I would have made 5-7 times more money just buying them renting them out and holding onto them. HMLs for 1 year at 12% were just my way in the door with sellers. I offered them cash and a 12 day close as is so they would accept my offer, after inspections, etc I would ask them if I could change to hard money, they said no problem, so I did. Qualifying to refi 3 rentals as a self employed person is proving to be challenging...worst case I evict the tenants and sell them, but I don't want to do that.

sell your option back to the builder, or talk to people who walk into the new development, tell them you have a lower price locked in and will give it to them for an assignment fee, you could probably make $20,000 and just assign them the contract to purchase

thousand palms, ca REO, active listing asking price $28,500 SFR 2 bed/1 bath 1,136 SF

market rent is ?? nothing has rented in that area in 3 years

found a rental for $125K that rents for $900/month, bought it with 20% down payment 4 months ago, value has gone up to $170K

found a rental for $90K that rents for $800/month, bought it with 20% down payment 3 months ago, value has gone up to $135K

found a rental for 108K that rents for $850/month, bought with 20% down payment 3 months ago, value has gone up to $130K

found a rental for $150K that rents for $1800/month, in escrow right now, plan on putting down 20%, fixing for $5000 and selling for $180K

found a fixer/REO for $75K plan on fixing for $10K and selling for 110K, in escrow now going to pay cash and plan to resell in 6-8 weeks

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Short sales waiting for bank approval:

4/2 SFR for $105K needs $12K in repairs, will sell for $160K

4/2 SFR for $440K needs $15K in repairs, will sell for $600K

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Moral of the story I can find decent priced flips/rentals but I keep running out of money. What is my next step in this business? I can sell some of my stuff, but I'd like keep it because I know a year or two from now it's going to be worth much more than it is now. How do I balance between flipping and keeping? what would the more experienced guys do? Ideally buy, fix, rent, refi the cash back out, and keep as a rental forever?

Sorry for rambling...any help would be great

Pete

do your own intel on the house, do your numbers match the numbers of the wholesaler? from what Ive seen, after networking with 10 wholesalers...is they all get emailed the same list of "deals" which they forward to you the potential buyer. So I see a house that looks good, I call the guy, he says..."it's not mine...call bill...who says it's not mine call jim...who says it's not mine call jane.....and on and on and on. then I look on the MLS, it shows active and it's listed by an agent of the seller themselves is an agent. Check it all out yourself, don't believe some random persons analysis...

part a: they never have control of the deal, it's a broker/wholesaler chain of people

part b: if it's really their deal they've marked it up so theres no more room in the deal to make any money (not always true)

part c: if the numbers work, set up a time to see the house, if you like it put some money in escrow, and set up a date/time to close

part d: fix it up and rent it out, or fix it up and sell it

part e: Profit....if there is any

banks call the shots...not you. you will never get a bank to waive their deed restriction, don't waste your breath

@ I like your approach, flip the little higher end, keep the lower priced as rentals, great strategy. What lenders are you working with? are they local credit unions, local banks, private money? $100/month/unit is a good goal and is doable, just takes a lot of offers. As for conv. lenders I'm working with Union Bank, they have a 4.25% 7/1 arm for n/o/o loans, my payments are doing to be cut in 1/2 from what they are now....I really hope I get approved, I'm refinancing 3 SFRs as we speak.

Private message me so we can talk more...

thanks again