All Forum Posts by: Benjamin Ervin

J Scott isn’t just self promoting here. Or even if he is, I wouldn’t care. His book on flipping houses and estimating rehab costs were the primary drivers in my early education and gave me the confidence to do my first deal. I definitely recommend these books for anyone interested in getting started flipping/rehabbing. Only caveat would be don’t get too fixated on the prices in the estimating rehab cost book. It was written a while ago and will differ greatly by area of the country. But it is fantastic conceptually.

Originally posted by @Craig Curelop:

@Benjamin Ervin - I have no qualms against the 203k loan. It's great! I just wanted to make you aware that you not be able to do your own work with it. If your plan was to hire it all out, then you can ignore my comment and proceed :). 

 Craig, have you used a 203K before?  If so, do you know if the approved GC is able to hire out any subs of his choice, or will they have to be lender approved, as well? 

@Steve Pollack, I am a new house flipper who on 13 August, barring any setbacks, will have completed my first intentional flip from close-to-close. 

Here is what I would submit:

- Get Educated:  There are endless resources available to aspiring real estate investors today.  New flippers can choose formal (paid for) educational programs, free education with due diligence from resources like BiggerPockets, podcasts, etc., low cost or free "mentor" scenarios through networking, shadowing or otherwise.  The key is to learn the language, learn the math and learn the market.

-  Commit fully to your goals: Getting started is hard and finding success is against the better odds.  Most, if not all, newbies will fail without a strong commitment and clear focus on what they want to accomplish.  You have to start with the end in mind, and clearly defining (at a minimum) your short term goals and reason for wanting to achieve/ commit to those goals is a must.

- Set realistic expectations: Understand that you will not get rich over night and certainly not on your first deal.  Expect challenges of all kinds (delays, scope and budget creep, lost sleep at night and anything else you can imagine), and embrace them.  If you haven't committed, this part will beat you every time. 

- TAKE ACTION: This is by far the most important piece of advice I could give and if I was required to give only one (as your post requested - sorry).  You can become the most formally educated investor in the world, but you'll never make a dollar if you don't do a deal.  The action isn't important, what is important is just to DO SOMETHING. 

Originally posted by @Craig Curelop:

@Benjamin Ervin - The great part about a "live in flip" is that you are living in the house while you are making repairs. If you do a 203k loan, you are not allowed to do the repairs. It will need to be licensed contractors that your lender approves. 

Rather than do a 203k loan, I would suggest either a 3.5% FHA loan or a 5% down, owner occupant conventional mortgage. That way you can do your own repairs while living in the property.

Craig, I think I can still make it work with an approved GC if I buy right.  I am however a little confused about the difference between standard and streamlined 203K options, and when you can and cannot occupy the residence.

I haven't ruled your suggestions out, but as I mentioned to David above, I am concerned the types of moderately (or worse) distressed properties I am looking for will be tough to qualify for a standard FHA loan. Additional to that point is the benefit the 203K provides in not tying up any cash reserves that would otherwise be allocated for the rehab.

Originally posted by @David Baier:

Hey Benjamin, have you thought of find an area were USDA loans are accepted? 100% Financing, I know of another such lending option without the geographic restrictions but there are certain thresholds to meet. 

David, I am aware of the USDA loan.  In fact it is how I bought my current primary residence.  The issue there is going to be the condition of the fixer upper type properties I am interested in for the live in.  I'm not convinced I can add enough value to make this worthwhile unless I am buying an at least moderately distressed property. 

I am considering buying a live-in flip in Florida with the intent to buy, rehab, live-in and sell.  To avoid tying up cash I can leverage for other flips, I am contemplating financing the live-in.  I am hoping there are some house-hacking or lending gurus here that could provide some expertise with respect to funding this project.

I am aware the 203K loan is potentially an option due to the condition of the homes I will be looking at.  Are there any experienced 203K users/lenders out there who could speak to the requirements, pros/cons, etc. of this product?  Further, are there any other financing options I should be considering?

Thanks in advance for your thoughts and suggestions.

Originally posted by @Yehuda Smith:

@Benjamin Ervin Did you get into contract? Did your game plan change?

Yehuda, yes we are under contract slated to close on the 13th of August.  We are still in the contingency period, though.  I will be happy to share final details after we close.

@Matt Jones, Terrific Job on the rehab.  Numbers look solid, too.

I am also interested in who your contractor/subs were for the project.  If you are comfortable sharing, I'm happy to send a PM.

Originally posted by @John Moon:

@Benjamin Ervin congrats on your 1st flip and a success at that!

I'm working to get my 1st one under my belt soon (close next month) but there is a lot of work that needs to be done. How did you organize and plan your rehab? Also, your rehab looks amazing. How did you keep the rehab budget so low? What type of rehab was this?

Thanks

John, not sure what you're asking exactly when you say, "what type of rehab was this", but we kept the budget low with a lot of sweat equity. I would have loved to do some more landscaping, maybe build a carport, etc. But realizing the surrounding area, we used the money where we believe it made sense from an ARV/re-sale perspective. It was important for us to keep a clear mind and make rehab determinations based on reason rather than emotion.

And frankly, we did what we could with the liquid funds we had available.  It's amazing what you can accomplish when you give yourself definitive budget parameters.  You just find a way to make it happen.  Similar to Parkinson's Law, if you're familiar.  In our case, it meant some late nights, massive commitment and YouTube videos to teach ourselves how to do things.

As it pertains to preparation, if you already have a property under contract, you should already be underway with that process.  I use a simple spreadsheet that I modified based on the one @J Scott built.  If you haven't read J's Book on Flipping Houses, I highly suggest you do so.  But you need to be doing your due diligence NOW.

Originally posted by @Sinh Tsang:

Nice job! How long did you take from Acquisition date until posting for sale date?

And can you elaborate on all the repairs you did and how you came up with what to repairs?

Thanks!

 Sinh, thank you! We closed on February 15th of this year and are now in discussion with three interested parties (one which has offered and we have countered), so we hope to have it under contract very soon.

I could really write an entire blog post on the rehab front.  It was such an incredible learning experience and there are just too many details to outline here.  But I can tell you, in retrospect, the only item we didn't address that I wish we had was replacing the hot water heater.  It still functions fine, but I am sure it is pretty close to the end of its lifecycle.  I am considering a credit at closing to the buyer to have it replaced to throw in as a sweetner.  Just one of many lessons learned.