All Forum Posts by: Bill Jacobsen

We found the piece of property first.  It had been a mobile home park before so there was lower development fees. bankrupt  A developer had purchased but then went bankrupt.   We then went to another developer/builder.  He was willing to tell us what he would pay.  He bought the property and built 52 houses on it.  Since we found the property he allowed my wife (an agent) to sell each of the properties.  We have, since, found other properties.

I guess the first step is to find a property that is large enough.  It ideally should have the proper zoning.  You can find out what the city or county fees will be.  Then contact builders.  You learn by doing.

Good Luck.

Bill  

I usually estimate $2,000 per year for a single-family.  I usually end up cash flowing it or pay out of money laying around.

Bill

Sorry, I don't know what happened. Continuing from above. I add 2% in case it doesn't sell for ARV. I then divide that answer by 1.2. I want 20% profit on money I have put up. I then subtract $3,400 for costs during rehab. I subtract 120% of rehab costs.( I include a 20% overage factor. The remaining number is the maximum I will pay.

Good Luck.

Bill

I start with 88% of the ARV. This accounts for 6% commissions, 1% for my closing, 3% for buyer's closing(most buyers ask for it)

Most properties I buy need some rehab before I rent out.  I would reserve funds for that.  I would also reserve 3 months of expenses of the duplex.  At 5% interest the mortgage is about $644 per month plus other expenses per month.

Since you are living in one-half of the duplex it will  probably break even before the mortgage payment.  Unless the duplex is a great deal I would probably not go ahead.

Just my opinion.

Bill

Based on your numbers my formula gives a price of $242,600.  A wholesaler would have to buy below that to make a profit.  In other words you can buy above the price a wholesaler would and make profit.

Good Luck.

Bill

As has been mentioned before there is something wrong with the expenses.  I would expect them to be about $20,000higher.  You have closer to a 5% cap property than a 7%.  If your cost of money is 5% this is not a good deal.

Good Luck.

Bill

As a flipper I would value the deal at $31,000.  That means that cost of rehab +20 percent + acquisition cost would have to be $31,000 or less.

Good Luck.

Bill 

Sometimes you can't see inside without an accepted offer.  You either comply or go on to the next one.

Good Luck.

Bill 

Using your numbers and a 50% expenses ratio I get a 6.3% cap.  Given my estimate of expenses I get about a 7.3% cap.  I also agree that insurance looks low.

Good Luck.

Bill