All Forum Posts by: Bill Hinshaw

Fantastic work! What is the sq footage and how long did it take from close to list? Were you able to salvage the old exterior siding or is that new? I'm guessing the electrical had to be completely redone? Plumbing, too? Beautiful job. 

@Jackie Lange - sent you a PM.

Doesn't seem shady to me. Let her know what your final and best offer is, and follow up with her over time. And some empathy would probably go a long way. 

Speaking from firsthand experience, heirs make emotional decisions and tend to overvalue their parent's possessions. 

@Will Barnard

Will - would you mind giving us the scope of your recent flips from a rehab budget and timeline perspective? I am at >100k and roughly 5 months on the homes I've done so far. These have been large scale renovations with layout modifications, new electrical, mostly new plumbing, etc as well as a mid higher end finish (quartz counters, marble tile, etc).

I'm looking for a benchmark, particularly on timeline. I know budgets will vary greatly by location, market, etc.

For those planning to partner with a GC and a 50/50 split where the GC has no cash involved... If you are paying cash, I would recommend including interest on the bulk of the financing you provide. Maybe 20% of the cash could be your investment, and the other 80% needs to be a loan to the partnership/JV at a set interest rate that is paid before profits are split. If you aren't doing this, you are likely putting way more in cash into the deal than your GC is putting in time.

I also agree with @Greg H. comments around losses. You may do 5 successful flips with the structure above, then lose on flip 6. How will you account for that loss if the GC has no cash in the deal? Carry the loss to the next house? Count it against previous houses? Eat it? This is an important aspect to comprehend up front. 

@Jon Graham

Congrats on some amazing work! I am wrestling with this same issue. We've almost completed 4 flips, with each one having a rehab budget over 100k and an ARV over 500k. Each project has taken a minimum of 4 months to complete. Of course, I expect both our budget and timeline to improve as we gain experience, but this is where we are currently.

The first thing that comes to mind with your question is the time value of money. Another thing is the availability of houses in various markets and conditions. If I could, I would build a business where all I did was minor cosmetic upgrades, maybe some staging, and back on the market within 2 weeks on houses built after 1990 in high demand areas with low days on market. In my mind, that will probably produce the better return over time. The problem is finding a steady stream of those to build your business around.

My plan is to do both the minor cosmetic rehab and the full gut jobs, with hopefully some wholesaling and real estate development mixed in. So far, all I've found are the full gut jobs.

Good luck! Let us know when you figure out your next step.

50 piers? How much is that going to run you? Existing piers can't be shimmed? If you are planning on holding the house for a while, I'd fix the drainage issues, shim the house as level as you can, then see how things hold up this summer. 

I don't use the 70% rule and don't know many people who do.

Yes - if you use your own money AND you're ok not charging yourself interest on your money as you rehab the property, then it follows you should be able to make an offer that goes above the 70% rule. Many on here would say cash buyers need to pay themselves interest and make a profit. That's a separate discussion, though.

Check out @J Scott's inputs in this post. I think it will add some clarity. Bottom line - the better the terms of your financing (example - zero interest), the more you can offer on the property and keep the same profit. Someone funding a property through hard money will probably need to stick close to the 70% rule. A cash buyer has some leeway.

We typically charge around 1% for houses in the 500k - 600k range for full staging, which usually doesn't include the smaller bedrooms. That includes up to 3 months if needed, furniture and decor. 

@Franky Juwana The numbers are close enough that I would want to go walk the property with a contractor. Come up with a scope of work and try to get a better estimate on your rehab cost. As @Account Closed was saying, a $100/sf rehab is not typical. I'm worried that you've way over estimated and talked yourself out of a decent deal.