All Forum Posts by: Henry M.

John,

I hear you (or technically read you;), I always see the glass half full, but that's the easy part in real estate. Guys like us are risk takers in general. Of course, typically calculated.

It would be different if you know or worked with this guy before. But, it doesn't mean it couldn't work.

Look I have a formula I use that can be adjusted. It's a formula I created and use every time. 

Your Example with "Big" Henry's Quick & Dirty Formula:

ARV - 47% - Repairs = MAO

This includes all costs up to six months and a 30% potential profit or cushion. You can do it at 20% (if so, then use X 37%).

$150K (ARV)

- 47% (All Costs Acquisition, CC, Hold, Resale, CC, etc.)

=

$79,500 (Sub-Total)

-

$50K (Rehab)

=

$29,500 (MAO)

or 

X 37%

=

$94,500

-

$50K (rehab)

=

$44,500 (MAO)

-------------

In a nutshell:

Potential Profit @

47% = $45K

37% = $30K

It comes down to speed. As you know the less in holding costs and saving money in material and labor, the more money you make in profit.

Good luck and please keep us posted.

Btw, I may have a HML who can do 75% LTV on ARV - Just hit me up if you want to go that route.

As always, Please VOTE if you likey my posty. 😂

Your Real Estate Ally,

"Big" Henry

John,

There are many concerns... Let me preface that I don't know the handyman. 

First, is the handyman providing 50/50 in expenses such as materials and payments.

Next, define handyman. If he's going to be the one to do all the work himself (which I doubt), the holding costs will eat into your profits. No offense, but he has nothing to lose.

I'm presumming he will be paid as well along the way...

Even if you could get everything financed and incorporate the purchase and rehab, there will be issues. I guarantee it. Meaning, there will be things you find that you won't expect.

What about permits?

Is he licensed? What recourse if he isn't and something occurs post retail sale?

What work is he expected to do?

What is his skill set?

You mention builder... Is he a General Contractor? Is he Licensed and Bonded?

How are you going to solidify this partnership? Through handshake (or elbow bump), Joint Venture, etc.?

Who are you going to pay if he has to get third party sub-contractors?

Are you paying them directly? Or are you paying him? If him, what's to say there isn't a double dip or increase for profit?

Who is going to buy the materials?

Have you seen his work? As in all aspects of his work?

Look, to be frank, it is very concerning to place yourself in a compromising position especially, if you're not involved.

Eventually, good workers will not show, you will be chasing him, he will most likely try to do other jobs in addition to your project... At first he'll be there five days a week, then it will be three... You'll light a fire under his *** and give him your "Any Given Sunday" speech talking about "inch by inch". Then he'll start working five days a week with weekends off, but then he'll start showing up for a half a day or just a couple of hours... Now your project is taking three to four times longer to finish.

How will you monitor this? Will you visit? Have cameras?

What happens if he gets sick or does?

How much is it in your area to hire a skilled worker? Pay by the day, hour, or project?

Again, is it possible? Maybe.

Is it worth placing your trust into one person?

Nope.

Best case scenario, he is the greatest handyman on earth. Time is of the essence! Not to mention, work has to be permitted... Otherwise, if they (Code Compliance) catch him working without permits, they will shutdown the project. Not to mention, a buyer or Realtor (buyer's) can check with the city to see if permits are pulled. 

Even if he does the work perfectly, they (CC) will not see that it was done to code and neither a potential buyer. How about pictures of the progress of rehab? Nope. It still won't justify the process.

I hate to be the Petty Roosevelt of this post, but trust me, I've been there.

Just my two cents and believe me, there's more on the subject.

Please VOTE if this made sense or touched your heart in some special way. 😂

from SAN ANTONIO, TEXAS!

"Big" Henry

Congratulations... Care to share that napkin math with us?

I would just like to thank everyone for making me feel so much better. I am not alone in making myself look like a jackass. 

So many failures over the years and even someone who has a tremendous amount experience, still make mistakes from time to time.

i have way too many stories, but honestly, many are similar... 

As they say, you learn a lot from losing and I will say, I am an expert at losing. It's what makes me better. 

How?!?

.Because I know what definitely doesn't work and that makes me an asset.

Just my two pesos,

"Big" Henry

So, San Antonio, what is an update today October 2020?

How do you feel the market is currently?

How has the market changed for you in regards to deals or lender requirements?

I’ll give my spill when a few participate.

“Big” Henry

 Aaron,

You added a few things I should have addressed. Great Points. 

I guess it may be too soon to laugh out loud when reading "Blood Bath"... But I did because it seemed too true.

I agree properties are still selling quickly, and the truth is there is still an average of 66 people moving here per day. 2017 to 2018 there were 122 people moving here per day. However, times have changed.

I have also noticed although an active seller's market, I believe there has been some price adjustment due to the "pandemic". In my opinion, it seems there are much better deals than last year.

As for lending, you hit it right out of the park. Lending requirements for both retail and wholesale (HML) have tightened up such as requiring more money in the bank or increased FICO score, from 620 to now 680. Previously, like with one HML lender, you needed a minimum of $10K in the bank six months ago and today, you'll need $50K. I have seen several HMLs either stop, pause, or postpone certain programs due to what is transpiring today.

There is always more than one way to skin a cat and sometimes you have to either have to be creative or not take a "no" for your final answer.

If you're being rejected by a lender who would otherwise approve you or your client... Then shop around and you will find another lender willing to move forward with you.

Lastly, I have seen many properties come BOM due to people losing their "non-essential" jobs... Not sure what others are seeing when it comes to this. I am hoping it is getting better for those who were and have been affected by this pandemic.

Thanks for your info!

"Big" Henry 

From my experience... Real Estate is on fire here in San Antonio and surrounding areas. 

I've probably showed 70 to 90 properties and have placed over a dozen offers which were beat out by multiple offers the last six weeks. I finally had a couple go thru.

In regards to distressed, investment, or rehab... There are still some very good deals... However, it is survival of the fittest.

If it is a great deal, there are a dozen to over forty offers (no lie) if it is on the MLS.

Very rare to get a pocket listing or off market property without having to contend with other investors. 

As for AirB&B I have a friend who owns multiple properties in multiple states, however his Texas props are doing much better. However, a few in San Antonio and Austin downtown are having issues because  of CoVid 19. Canyon Lake is doing best and is being mostly rented by folks inside Texas. During off season, two to three weekends per month. Typically,  from Thursday  to Sunday.

My friend mentioned Air DNA has all the data and stats of what props earn. I think there is a subscription per month. Not sure how much.

I am an real estate investor (since 1996) and Realtor (since 2019)... If you need any advice or want to do business. Resch out to me anytime. 

Just my two cents.

"Big" Henry

I'm all about HELOC/Personal LOCs... I use the Velocity Banking Method... Whether interests are higher on HELOCs are only relevant if you're paying the bare minimum.

That's with any high-interest rate/source. 

HELOCs are roughly (may very) about $14/$1K... Payment per month in my area.

If I pay down an LOC, I.e. $10K, I can pull it out the same day. If I pay that same $10K to a mortgage... I can never pull out that money unless I have equity to refinance.

With this much control, imagine what you can do in real estate. 

$200K will earn you up to $160K to do what you want.

If you do in fact use the Velocity Banking Method, it is only applicable and truly executable when there is a substantial amount of cash flow.

Just my two pesos.

"Big" Henry

HELOC... Get it and use the Velocity Banking Method is you use it for a down payment.

 Awe... Nina, Thank you so much for reading and acknowledging the point. 

I thought I would write this so I can reference it vs. having to explain it for the 1000th time.

Btw, what calculator do you use, out of curiosity?

Again, I appreciate the support and compliment. 

"Big" Henry