All Forum Posts by: Jonathan C.

@Chris K. no before photos on this one my man.  Odd considering I always get before photos, but can't find them on this one.

@Jerred Morris yup, I will

Picture of method 3 for finding cash buyers

Bought this from a wholesaler I found.  This person reached out to be because I send a property advertisement flyer out to about 6,000 Realtors about once a month advertising a property I've renovated for sale and letting them know I'm always looking for deals.  I've found this to be a great way to build credibility and awareness among Realtors.

Details:

Buy: 147k

Rehab: 75k

Sale (Projected): 300k

Profit (Projected): 37k

Problems:

Kitchen is too small and galley style, which I did not want.  Misunderstanding with contractor resulted in him putting the door to back yard there instead of in the dining room like I wanted.  I ended up having him extend the kitchen out into the dining room to help somewhat.  

Agree with what everyone is saying. Hardest part is finding a deal. If you find a property that is at or near the 75% ARV less repair criteria then you'll probably be able to move it. Most wholesalers aren't finding properties anywhere near that and usually end up not being able to sell them. I've found only about 10% of wholesalers will find a property meeting the 75% ARV less repairs criteria.

I'd also suggest the following for trying to find cash buyers:

1- google we buy houses XXXX (your area)- call every one of them and ask if they'd like to be on your buyers list

2- drive around your target areas and call every 'we buy houses' sign you see and ask them same question

3- best way (but requires MLS access:

a) search 'cash' for 'new trust loan type' field; 90 days; your target county; property condition need work/renovation potential 

b) find the agent ID for the selling agent (that is buyers agent)

c) go to 'roster' tab and search that buyer agent ID and grab the agents email address

d) add the agent to your list- they either are the cash buyer themselves or are likely to work with investor buyers

Wanted to post my experience in trying to 'wholetail' a property last month in case it's helpful for others.  Also ask for any tips from people who have done this successfully.

So wholetailing is when you buy a beat up property that isn't too beat up- it's in decent condition- and instead of rehabbing it and selling it renovated, you try to sell it in the same condition you bought it in to an end buyer.  In my case, since I'm a Realtor, I bought a property in Southern MD for a good price and it happened to be in livable condition with major systems working OK.  

I bought it 149k. Didn't touch it and immediately listed it for $219k. Got some low investor offers which I couldn't do anything with, but then got an end buyer offer that would have netted me 189k. Would make solid profit (around 27k after closing costs, realtor commission, etc) at that price so accepted it, however the buyer was an FHA buyer.

I had only owned the house about 3-4 weeks at that point, and due to the 90 day flip rule, you have to have documentation on repairs/improvements you made to the property to justify the increase in purchase price.  Usually I have this, but in this case since I didn't do anything to it I didn't.

The buyer's lender, due to short time home was owned, also required a home inspection and (despite attempting to sell the house in 'as is' condition) ended up having 2-5k in home inspection repairs to do.  That would have been fine, but just doing that wouldn't have worked, according to 2 lenders I talked to, to justify increase in purchase price.

I considered doing a very minor amount of work- just painting the house, putting new floor in kitchen or swapping out existing countertop for cheap granite- something like that. But the buyers lender couldn't give me firm guidance on how much needed to be done on the house to be able to justify the increase in value for them to be able to get the loan done, so there was a chance that 30 days down the road before we close they'd have told me- 'nope, cant do the loan'- because what I did wasn't enough to support increase in value.

So, ditched the buyers and rehabbing house myself- wasn't worth the hassle for the ~20k or so quick profit (after inspection repairs) I could have possibly made.

Anyone who has done this successfully have tips to share?  Guessing there wouldn't be any issues if buyer had a conventional loan?

Jon

Competition in the DC metro area (like most of the rest of the country) is fierce for beat up properties that are priced well.  If you're a new investor with limited funds, you're best bet is to find the lower price point counties in the DC area and focus there- Prince George's County, Waldorf, Anne Arundel, Montgomery (certain areas), Baltimore, etc (really most of Southern MD is pretty decent)

Trying to go into the District itself as a new investor can certainly be done, but a) prices are going to be higher than surrounding areas so for the same amount of money to spend you're going to do less houses, and b) it's harder to comp properties- DC property values can often vary block by block, proximity to metro station matters, finishes matter, whether or not they've 'dug out' the basement to increase ceiling height matters, the exterior style of property- federal, victorian, etc matters.  A lot more complex than comping simple, say, 1200SQFT ramblers in PG County.

I've completed about 45 flips now since I started in the DC area but only done 3 so far in DC- and all of those were this year.  That was the first time I felt comfortable with it because of the added complexities when figuring out what the houses will re-sale for, plus the fact the price points are higher (though price points vary based on where in DC you are, of course).

So if I were you, I'd check out Southern MD

Best to learn from another investor. 

To do that, offer them something:

a- hang lock boxes on properties you're going to be rehabbing

b- do other random errands at properties as you need them

c- give you a 0% loan of XXX amount

d- go hang 'we buy houses' signs for you

e- bring you a deal and just ask for a small wholesale fee or no fee 

Then tell them all you want in return is to ask them a couple of questions and tag along from time to time while they're visiting properties that they're evaluating and/or rehabbing. Hopefully can get to know them well enough where you can joint venture on your first rehab- that's when you'll learn the most.  Then after a couple of those you'll be ready.

I do 10% return on capital- capital being what the total amount of money is that is invested in the property (not just your money- all the money).  So: purchase price, rehab, closing costs, loan, etc- everything all totaled together.  

10% is my rule of thumb.  Was 15% about a year and a half ago, but too hard to get that now :)

I use a screen shot of my online banking portal.  Just 1 page but shows my accounts with balances.  

That's worked with REOs, short sales, standard sales.

Nice work!