All Forum Posts by: Bill Mitchell

@Will Barnard I definitely agree with what your saying. If you can specifically long hand out the repairs, you will likely be able to offer more to the seller and have a higher chance of getting the offer accepted. When you use conservative $ psf it definitely will lower your offer that you can give to the seller.

I haven't rehabbed enough of my houses on my own where I would personally feel comfortable long handing everything. But in the future its something I would definitly consider, would be another factor to help you win in tough competition.

Curious here,

I know most in my market have written off the MLS at this point, but I would like to start looking at some houses to buy here in the DFW market.

• Often must opt out of an option period entirely
• In the state of Texas REOs are not required to provide a sellers disclosure notice. Providing this in a typical transaction provides the buyer 7 days to back out of the contract for any reason after receiving it.

Will that is fair, these are generalizations using $psf. It really depends on the level of finish out of comparables and the exit strategy for the house. I regularly have my clients tell me they paid well UNDER what my estimated rehab costs are, that is why I say to be conservative. And in your example if house A needs an entire new kitchen, and house B already has a great kitchen, then guess what if you are conservative and use big #'s for the rehab estimate it wont really make that big of a difference.

Because if you say House B needs 40k in rehab, but its kitchen has already been redone, and the actual rehab is more along the lines of 32k you were overly conservative with your rehab that is a good thing.

That is why i like $ psf if you are very conservative with it, it leaves a lot of wiggle room for you or your end buyer because you are over estimating repairs and rounding up the final estimate.

Henry, its simple in my opinion, deliver to the market what the market wants. When you understand your local market and sub niches its not that hard to do. For instance there are many areas where landlords will pay 80% less repairs and that is considered a great deal in this tight market. Makes sense we only have a 3 to 4 MoS inventory in Dallas-Fort Worth right now.

Anyways, from there its about getting the house under contract for the right price. Here is where your money is made. Then you simply mark up the contract to the price the market is willing to pay and dont be too greedy and you shouldnt have any problems.

I use large inflated general numbers for estimating my rehabs, and I am very conservative with both my ARV and rehab estimates.

A basic rehab should be at least $10 psf; however it goes a little deeper than that.

A property built after 1975 might be about $10 psf for a basic rehab, on a 1955-1975 house I would start around at least $13 psf

From there I would mark it up depending on the nature of the repairs. Here is where you might want to get a contractor if your not great at estimating repairs yet. For instance if a house needs foundation on slab its probably going to be at least $4 psf. If its really bad, depending on the amount of int ext piers it might be as high as $7 psf, you will get a feel for this as you do more houses. If it needed furnace + condensor +$5,000 at least.

So if a hosue was built in 1978 and needed some foundation work I would do $10 psf + $4 psf foundation +$1 psf contingency and then I would round that final number up to be conservative.

@Henry M. I wholesaled part time in addition to my 9 to 5. 2013 was my first year, and I assigned 10 contracts that all closed.

@Henry M. I am confused on some of your points Henry, you stated the majority of cash buyers you deal with are very greedy? I don't experience that at all. For instance lets say I have a property under contract and I market it at 45k. Lets say several investors are interested

What typically happens is the first one or two people will put in their "offers" at 43k 42k etc to try and reduce the price a bit. Then I will have other people come in afterwords and they will go ahead and pull the trigger at 45k, and put down the non refundable deposit with me.

I also black out how much I am making on the contract, and this is legal as long as you phrase the assignment of contract correctly, because it should not be a concern to the end buyer how much I am making if his numbers work, whether 5k or 15k profit.

After the deposit is successfully received, I go ahead and send them the unblacked out copy of the contract that shows what I originally put the house under contract for, effectively showing my profit margin. If they have a problem with me making 15k, well they just gave me 3k in non refundable earnest money wired to my LLC. They don't back out at that point.

But as I said, Ive probably only dealt with 1 "greedy" buyer or so, that was really trying to beat me up on the price even though I was offering the property at 73% less repairs. The very next guy that came into look at the house bought it on the spot because it was a great deal. The guy that was beating me up now had egg on his face because he missed a property that he wanted very badly and let a few grand stop his way.

I assign the contract they close. I don't write contracts that wont perform.

I have don a ton of deals with only $100 down for EM just for the record WITH an option period to boot.

@Ron Carlson Welcome to the forum, I am just south of you. Mainly wholesaling right now and looking for my first few rentals to buy and hold.

You mentioned that you ventured into subject 2 deals. Are you buying the subject 2 deals for yourself and paying the balance, or are you assigning the sub2 deals to someone else? If the latter, sometimes problems can occur.

Some people are not intersted in cash flow. I don't want it, I use the extra money to pay off the loan. My goal is to have free and clear rentals.