All Forum Posts by: Boone Tyson

Hey Real Estate Family! Let's talk WHOLESALING! One of the main reasons we all love real estate so much is due to all the various strategies there are to create a life worth living in this industry. We have long-term hold rentals, flipping, hard money lending and many more. This month we will be joined by two very seasoned veterans in the game of wholesaling real estate. Our friends @Jonathan Flores and @Jake F. will dive deep into their respective niches of residential and land wholesaling; giving us an inside look at what makes their business stand apart and maybe even learn from some of their past failures that have lead to their success today. As usual, bring your notepads and a list of questions as we all look forward to another fantastic BiggerPockets Meet-Up hosted by
your TNT Real Estate Group. See you there!

Investment Info:

Other fix & flip investment.

Cash invested: $1,500
Sale price: $30,000

Our only land flip. We bought this as part of a foreclosure from the MLS last Christmas. When we saw the property, we noticed it had a vacant lot attached that we were able to subdivide at the closing table. It was already metered separately and didn't need any work. We held it for about a year debating whether to build on it or sell it and elected to liquidate in order to pay off a loss we had when another property of ours caught on fire last summer.

Investment Info:

Other fix & flip investment.

Cash invested: $1,500
Sale price: $30,000

Our only land flip. We bought this as part of a foreclosure from the MLS last Christmas. When we saw the property, we noticed it had a vacant lot attached that we were able to subdivide at the closing table. It was already metered separately and didn't need any work. We held it for about a year debating whether to build on it or sell it and elected to liquidate in order to pay off a loss we had when another property of ours caught on fire last summer.

What made you interested in investing in this type of deal?

The land was a huge win. It allowed us to take a loss when we sold the house we bought with it, and still come out well ahead on the value of the dirt.

How did you find this deal and how did you negotiate it?

MLS. Made an offer to listing agent. It was a foreclosure, so there was very little back and forth.

How did you finance this deal?

LOC

How did you add value to the deal?

Subdivided the house and the 2nd lot to sell seperately.

What was the outcome?

Made about 15K

Lessons learned? Challenges?

Call the city first when needed questions related to subdividing and zoning. Also, make offers quickly. I'm convinced we got this deal because we were faster than most people.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

n/a

Whats up everybody! It's time once again for our McAllen, Edinburg, Mission, RGV investor meetup next Tuesday May 25 ! We have had some high level speakers the last few months, so this month will be focused on networking, deal pitching, and facilitating a connection with your next big WHO in your business.

If you have deals, bring them. If you know who the missing piece is within your business, let us know so that we can point you in the right direction.

Excited to see everyone there.

@Account Closed Congratulations dude! Sounds like it will be an awesome foundational deal to keep you set up for the future ones. What a great opportunity. Did you put some sweat equity into it or did you hire most of it out?

@Patrick McCracken Many local lenders will also allow you to use line of credit capital as your down payment source FYI. 

@Patrick McCracken first off, congrats on having a solid asset. I bet it feels good watching the market shoot up right in front of you after you have owned this bad boy for a decade! Well done. 

Short answer to your question from me is yes. I think it’s a great idea to go ahead and refi out to use that money for a down payment or two. 

Another option that was hinted at above is taking out a LOC on the total equity. Not just the 25k but all of it. Let's say you have total equity of about 135k. You should be able to get an LOC for 80% of that. Let's call it 110k.

Under normal circumstances, I’d do the cash out refi, but I’m tempted to suggest getting this larger line of credit and maybe investing in a cheaper market and seeing if you can pick up some better deals by offering cash, then refinancing out of those instead. Then just keep recycling this money from the line in order to do more. If you cash out refi and use it for a down payment, the game is over after 2 deals until you build up enough equity to jump back in. But if you keep recycling it, you might be able to get more doors faster. 

@Nick Robinson that’s what I get for not reading the entire thread. Thanks for clarification. That sounds much more accurate

@Kasia Harmata at first glance, I think your Capex is high. I see you don't have any upfront repairs which leads me to believe it's in relatively good shape and you will probably have an inspection done to confirm or disconfirm that.
my opinion on capex is that it’s property specific. Some may use a percentage, but it’s not one seize fits all. $12,000 per year on a $600k property seems high. Maybe I’m wrong, but that would be 120k over the course of a decade. In 10 years, you might have to replace 6-8 HVAC units, a roof, your hot water heaters, and some other miscellaneous stuff at worst, but on day one, you should reasonably be able to identify what will be needed coming soon. I would estimate capex should be closer to half of what you are estimating. Also, those high taxes make me think you are looking in a state without income tax that has prop taxes only because they seem somewhat high otherwise. Is that the case? I only ask that because I’m from Texas and those look like Texas taxes.