All Forum Posts by: Dave Gibson

Thanks, Tyler. I don't have the contract yet. Don't want to do that until my buyer wants it - then I'll get it under contract and double close. I'll get a discount for the B-C close at the title company - as a result of doing IT support work for them, I had a chance to meet and explain my business to one of their closing attorneys. He gets it and knows that it could be a good thing for the both of us. It'll be private funds or worst case, transactional funding (that'll eat up a good portion of my profits). The hardest part of it all is getting enough capital to do deals yourself - it's teaching me patience, though - it's finding the RIGHT folks to fund your deals and your ability to put in laymen terms what you're doing and showing how/when they'll get paid. Regardless, I wish you the best in your endeavors as well.

Got it.....thanks, J.

Will let you know the results later this week.......

Steve and Curtis (your tag lines are hilarious),

Yes, I am a licensed agent, but my funds and credit are limited.....see my earlier post. Wholesaling (to be more specific, all the due diligence done) is not a pain to me. When you do something you enjoy, you don't view it as a hassle or "pain in the neck"....so my investor may be makin' off w/ some good profit and I'm receiving not as much as I should for my fee.....I understand. But, I'm learning the ropes and will adjust going forward. Guys, after what I've been through in my life, this is truly a piece of cake. And as an IT projects guys, the planning, number crunching, etc. is easy. I wanted you all to review and pinpoint possible pitfalls and you've done that. I appreciate it.....anything else before I contact him?

JScott,

Response to "Why is your father-in-law doing the rehab?"

My father-in-law (FIL) may do the rehab. it's up to the investor. My FIL is a part of our overall business strategy as he is a contractor and has a team.

"Why are you shelling out $$$ for the labor costs?"

I'm not shelling out cash for the labor, the investor would be paying us for the work IF he decides to use my father-in-law as the GC - that's up to the investor - who knows, he may use his own team. I'm simply providing options to him from contracting all the way down to property management - he can choose us or he can go with someone else.

Curtis, keep in mind, he's handling most of the material cost. As for the water heater, it's in good shape and is working properly....

Anything else? JScott, have I answered your questions? Again, I'll add in landscaping after I get some quotes....

JScott, Curtis, and Will,

Thanks for your responses.....As for the rehab, the contractor is my father-in-law and he's been doing this for nearly 20yrs.. He's good at what he does, but he also provides cost effective estimates...here's his break down. Investor is getting materials as needed:

*Painting (including wallpaper removal and patching)
3BR/2BA
Two LR
Hallway/Entryway
DR
Total - $2150 (we have most of the materials on this)

*Popcorn ceiling removal = $1200

*Laminate flooring installation (w/ removal and disposal of carpet)
1550sq. ft. x $2ft = $3100

*Four door installation = $800

*Painting and repair of shed = $200

*Fence replacement (144ft) = $500

*SS apps = $1750

*Total = $9650 x 15% = $11,097

Outside looks good....I should add in some landscaping, Will. I'll make the adjustment...windows are good, roof is good. Inspection will bring out costs, if there's any other functional issues....if there are electrical issues, we can address as we have an electrician.

JScott, I would love to do this myself, but I simply do not have the funds, nor am I in position to do so (from a credit standpoint - me and my family lived from hotel-to-hotel some years ago and we're still recovering...almost there....finally know what my purpose is in life and that's REI), YET. I'm working to get some cash, currently repairing my credit, and then will start doing what you suggested. I'm holding off w/ increasing my wholesale fee, because I know that he's outlaying funds for some materials.

Will, outside is in good shape. Not stucco, full brick. Exterior paint not needed, except for the shed. Again, yes, I'll adjust as landscaping will be needed.

Anything else I'm missing?

Hey JScott (The Man),

Glad that you were able to chime in:

1. The ARV is accurate as I pulled the comps myself since I'm an agent.

2. Wholesale fee is included as I am flipping to an investor.

3. Keep in mind that I have a team in place that includes a contractor - even though my contractor is my "go to" guy, I still have another contractor carry out a walk through for me. Just in case......so the numbers are pretty accurate. Mostly cosmetics....roof is in good shape, etc...biggest thing looks like we'll have to patch some walls as it looks like someone to a baseball bat to the place before they moved out, some doors are missing, and carpet throughout will need to removed.

4. End buyer is an investor....I'm not sure if he's taken out a loan or not. Even so, I'm outlining this as if he is taking out a loan. If cash, then cool....I can pair him w/ a local bank to bypass any seasoning issues. I will adjust the holding cost as you mentioned and explain to him why if he ask.

As mentioned in an earlier post, he knows that I have tenant buyers (I have qualified buyers now)/retail buyers too...we can do the property management and my wife can do the staging, if needed. So we have it covered.....I just wanted to run this by the big guns (you guys) first. As I am committed to not sending him crappy deals and wasting him time....

If I can get his deal for him and show my buddy (REO agent) that I can deliver, this triangle will be a good one. :-)

Thanks, JScott.....appreciate your advice.

Guys,

I'm simply not going to give up locating a good deal for my buyer. I met w/ my buddy (REO agent) last week and he took me to one of his homes. 3BR/2BA (20yr. old home), rancher w/ deck (needs work), two car, decent community, good schools, close knit comm.. Hasn't been listed yet...agent and I are friends, but business is business and he wants to see if I can deliver. The numbers are below. Did I miss anything? Please let me know:

ARV - $120k
PP - $42.5k (also includes DP, CC, Insp., LF, RE Comm., and Appr.)
Repairs - $11k (this includes a 15% markup and addition of SS kitchen appliances – always my recommendation)
HC - $1440 ($480mo x 3[Avg. DOM], Taxes, Insurance, Utilities)
Selling Costs - $9900 (RE Comm., CC, Warranty)
Wholesale Fee - $5k
Total Cost - $69,840k
Sell below market @ $110k
Potential Profit - [b]$40,160
[/b]

63% ARV

Keep in mind that I can save him some commission cost due to me being an agent.

P.S. Spent most of this morning putting up more bandits signs and speaking w/ folks that are still responding to my rent-to-own signs that I put up a couple of weeks ago.

Better yet....I'm not going to waste his time if a Sub2 w/ owner finance wrap cannot be done.

Thanks for the responses, guys. How did I miss basic subtraction? I do agree that the % is high for this market...before I send him my analysis, I'll brief him on it. Sub2 w/ owner finance may be work instead if the family is open to it. Let me check and I'll post this evening or tomorrow morning. Again, thanks for the responses and I'll post an update later.

P.S. I did meet w/ a friend of mine who happens to be an REO agent for Rise Realty here in Huntsville - from what I've been told, he's one of the top two REO agents in town. I remember a few years ago he tried to get me into buying some REOs, but I laughed him off (I had the "mind" of a boy not thinking about doing the job of a man, I guess). Yes, I regret it and told him so, but recognize that this is a good second chance opportunity. He did show me some properties that are $.50 - $.60 on the dollar - that only means so much to me as I need to research the area and do my due diligence. I'm having lunch w/ him again this afternoon. We'll see what comes of it.....thanks again for the responses....I appreciate it.

The hard work and due diligence will be well worth it IF my buyer/investor is satisfied, closes on the deal, and make his money on the back end. Let me know if I'm missing something....not as nervous as I thought I would be and that's mainly due to feeling like I'm close to getting it right - meaning the location, property criteria and numbers are about where he wants them. Here's it is:

Situation - Family moved closer to the city (husband works in the city, in-laws are there and have been helping babysit so wife can locate a job - cuts down their daycare and travel expenses). They have been paying two mortgages for about 6 months. Had it listed, but had issues w/ agent and pulled it. Wants balance of mortgage and moving cost paid. Nice, established subdivision, comps $145 - $150k....they saw my bandit sign two months ago, but did not call until now. Been working with them for the past two weeks.

ARV - $145k
PP - $80k (also includes DP, CC, Insp., LF, RE Comm., and Appr.)
Repairs - $17k (this includes a 15% markup and addition of SS kitchen appliances - my recommendation)
HC - $2800 ($468mo x 3[Avg. DOM], Taxes, Insurance, Utilities)
Selling Costs - $8300 (RE Comm., CC, Warranty)
Wholesale Fee - $5k

Total Cost - $113k
Sell below market @ $135k
Potential Profit - $28k

Of course, the above numbers are more detailed in my analysis spreadsheet. Please chime in, though....I have a small buyers list right now, but w/ a few good profitable deals for them, it'll grow. Their references will be the best testimony of my work. It's exhausting...all the due diligence and everything else, but that's my strength and that's what I love to do. Good thing, I have some possible retail buyers/rent-to-owners lined up due to my marketing activities a few weeks ago. Just trying to make things as easy for him as possible.....