All Forum Posts by: Brandon Halley

In my experience if you want to do flips you do not necessarily need a lot of money - what you really need is an exceptional deal. Money believe it or not is a lot easier to find than a good deal. Most people shop with a budget but I think its a bad idea. If you can spot a 150k value add on a 500k project - trust me, you'll find the money. Make it your goal to be the best deal finder and learn to recognize one when you see it.

I am a contractor as well and I hear this all the time - people trying to "save" money by buying stuff themselves or through partial involvement. This is not a good idea in many cases for multiple reasons.

1. Cheaper. Any decent contractor has accounts with building suppliers and they get discounts. I get about 15% discount on most things. One way I make money is by marking up materials 10%. This profit is part of my calculated margins and if you want to cut me out then I need to raise my rate on the labor or its not worth it. For my business this is transparent and is a win/win! 

2. Product Knowledge. Ordering windows is more confusing and complicated than meets the eye. Getting the most value for your situation is not always about the lowest price. Here are some questions that I am considering for a window order I am doing on a current flip. 

Should I order custom windows to give myself exact frame dimensions of the old aluminum ones or should I save 20% by buying stock sizes that are fairly close to the old ones? Will this outweigh my increased labor cost?

Will buying the stock sizes in vinyl alter the dimensions of the trim on the exterior? Will this lead to me having to buy new trim or modifying the existing siding?

What is the setback of the new windows? Will this allow me to leave the interior jambs and trim in place? 

What locations do I need to have tempered glass? More than you might think. 

Sliders, casement, double hung, fixed pane etc. Which is best for your situation? Climate, weather, Durability, Function, Price, Aesthetics... all have pros and cons. 

3. Responsibility. Window orders are commonly messed up and generally the blame goes onto whoever ordered them.

4. Time value. If you really want to be a carpenter or a contractor or seriously need to save money then you should do the job yourself start to finish. Ordering windows is half a skill which you have no use for. If you have the time and want to learn something, pick something useful that you are committed to. 

I also have has this experience. As a flipper myself I currently am working on a project that involves mold mitigation due to a base board hot water leak. Thin layers of surface mold are everywhere. Now that I own and have ripped all the drywall off I would like those pictures removed! The place is of course getting professional mitigation w/ 3rd party testing but the old profile on zillow still has it listed as a foreclosure with mold pics! Hard to start my marketing of this 600K beauty... 

Investment Info:

Mobile home buy & hold investment in Durango.

Purchase price: $125,000
Cash invested: $29,000

Abandoned REO foreclosure single wide on a mostly steep 3 acre lot in a great location. Aesthetic issues and tough to finance.

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

It was near my personal neighborhood and had been sitting for a while. I knew I could work on it easily being so close and keep an eye on it if I turned it into a rental - which I did.

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

I found it on the MLS and made a low cash offer with my agent which was initially ignored. The asking price kept going down as it went in and out of contract about 3-4 times over the course of summer and fall. Eventually, the price dropped down low enough that it is was close to my original offer. I resubmitted my original offer and it is was accepted.

How did you finance this deal?

I used short term private lending for the initial purchase. Then I got renters in it and established 6 months of rental history before I switched to a portfolio loan from a local bank. 5/1 ARM 15yr commercial loan 65%LTV.

How did you add value to the deal?

I was able to confidently take on the risk of many of the unknowns that come with an REO foreclosure. Just to get the heat, water, gas and electric back on can have a lot of unknowns involved. I also fixed a few frozen pipes and did a major cleanup too but mostly surface. I also repaired and resurfaced the decks and put on a new roof.

What was the outcome?

Outcome was a low money down purchase with a huge equity gain and a cash flowing rental.

Lessons learned? Challenges?

Be persistent and keep track of the house/projects you look at. This deal took me about 6 months to get my original offer accepted. When the day came I was ready and had an offer within hours of it hitting the market (for the 4th time). I thought I would have less money down on the refinance but the LTV offered was only 65%. I was disappointed I had to tie up 20k in the purchase but a higher cashflow and a stronger equity position isn't the end of the world. Still happy with the deal.

I have looked into buying a property a few times for re-zoning. I would suggest calling the local planning dept to see what the process is as it varies slightly for each location. For me, it involved getting approval by the planning department and then going to a vote at the city council. In general, the project has a better chance to be approved if it supports the cities direction and goals. Perhaps affordable housing is in high demand and a local problem and the city would love to see some more of it and already has lots of churches... Also the cities always like it when you make public improvements at your own expense which can be a selling point, such as getting service lines buried, off street parking, decorative landscaping etc. Show them you are willing to pump some money into the local ecosystem. I used to rock climb in a church converted to rock climbing gym in Dayton, OH that was super cool. You could climb all the way up inside the stained glass steeple. 

I am in the process of getting a single wide manufactured home refinanced w a portfolio loan from a local bank. My appraisal has just come back lower than expected and the comps used I feel are not appropriate, however, I am unsure. Looking for some insight.

My home is on a permanent foundation and purged to 3 acres. The appraisal is making its conclusion mostly based on 3 comps. 2 of the 3 comps used are also manufactured homes but not purged and not on foundations. They have each been adjusted $6000 for this fact. I feel that these are not fair comps because the lack of foundation prevents the home from being classified as real estate (right?). More importantly it prevents the home from being financed by mostly all lenders and therefor greatly restricts pool of potential buyers and therefor the resale value. Is there any appraisers out there that know what the guidelines are around this? Are these fair comps? Thanks!

Hey Allie, I started out working with Jeff Reynolds as a carpenter some years ago flipping houses and since then have moved on to flipping houses myself and using Jeff as my agent. He has personally bought and sold lots of houses and his experience shows. I love working with him because his construction background helps big time when it comes to identifying a homes true value or potential. I highly recommend him!

I am a cash buyer and have recently been connected with a guy whose home is in foreclosure and he would like to try and avoid it. At this point all I know is his principle balance. With this price I am  confident we can help each other but it might get a little tight depending on the full cure amount. He talked to the bank yesterday and put in the request to cure so we are now waiting. In the mean time he said that he asked the bank if they would take less and they said it's possible and he should submit a written offer by mail and gave him an address. Is this common practice for a potential short sale? or is this something different? Does anyone have any recommendations for strategy of getting the best price from the bank? If we did submit an offer to the bank does he submit the offer via an informal letter or should I use a legal contract? Thanks!

@Pete Erikson

Whatever you end up doing I recommend getting a mold mitigation specialist to give you a bid. If they are legit they will offer at least a 3 year warranty on there work. When it comes to major mold, you do not want to DIY. Too much liability.

Wow great stuff thanks. @Linda Osborn@Jared Bouzek@Aaron Gordy@Kris Wong@Justin Fox@George Taylor I'm actually in SW Colorado but is it just some weird coincidence that everyone responding to this was from Texas? I am literally going to Austin tmrw. Nice folks down there!

Yes i am 100% owner of the business and it has owned it for 2 years. 

I think after some thought and advice I will try and find a new broker. But, I'm still a bit hestitant on protocol of getting rid of my old one. I feel extremely disrespected by him because he told me he could do the cash out refi w out seasoning and i was very clear about my situation. Now he is saying he can only do the refi on what I owe my private lender. I have already locked a rate and had an appraisal. Do i have to pay for the appraisal? Can i use it again on the next try?