All Forum Posts by: Charles Whitaker

I would also agree with Lucia......IMO Paint the cabinets, add hardware and call it done - the fake wood look is a major turnoff. The rest of the kitchen looks just fine. Leave that $ in your account

You can never tell what the insurance covered or paid off when working with burnouts, you just have to know what other investors are willing to pay. The house will have to listed or sold at a huge discount anyways. First thing would be following jawsette's advice and check local codes and regulations. Assigning a contract could be tricky if you become liable for the property while it is being condemned.

Like mentioned above, many of these expenses vary while some are standard.
Maybe some of this info will help:

Taxes - can be found at your local tax assessor's office or by using their online database(if they have one). To clarify Jawsette's statement, the taxes will be prorated when selling in mid year, you don't need the buyer's consent for them to pay the remaining tax for the year, that's a given.

Holding costs - Interest/loan payments, utilities, insurance, and any other costs incurred while "holding" the property. Hard money lenders usually have 12%-18% interest only payments and 5 points on the loan. A point is the same as 1%, these points can sometimes be rolled into the loan. You can calculate the utilites yourself for however long your hold time may be. Insurance is usually $50-75 a month(fire and storm coverage) for limits of coverage below $200,000.

Closing costs - buying - the majority of these costs are fixed. To gain a better understanding of the costs involved contact a title agent/attorney (depending on who does closings in Ohio) and simply ASK for the standard costs involved in a closing. Each closing is unique - mine have varied - one day you may have to pay 2K to close, another day you may get paid 2K to close. Many variables - all of which you will be acquainted with soon.

Closing costs - sell - these costs get trickier. Depending on the terms of the contract you might have to pay your buyer's closing costs or other misc costs incurred in the transaction. Typically included is realtor commissions(up to 6% of total sale), any of the buyer's costs that you agree to pay, more recording fees, legal fees, etc.

To answer your original question - When buying a property to rehab I do not want to spend more on the renovations than I expect to gain. When using the standard 70% of ARV minus repairs formula, all the closing costs, attached fees, holding costs, and your profit are included in that 30% reduction. I like to see all the costs(not profit) well below 15% so that their is room left to actually make a profit.

One last note - emergency/cushion$ - this can factored numerous ways. Make it a habit to purchase with VERY conservative numbers when starting. The ARV needs to be conservative - you want to sell soon, right? The repair estimate - I do my own repairs so it's slightly different but I have found that a 20% cushion for overages is good to start with - then adjust accordingly as you become better.

Just my $0.02 - Best of luck

Sorry for the late reply Terry.

I say this because once you leave the path that many successful investors have treaded before you, you always stand the chance of....................chance. Being creative is great in many ways but having the risk factor under control is ALWAYS more important.

I prefer to be creative, to try new things and explore ideas, however, I don't stumble too far from that elusive path.

Very true, I carry stock that comes cheap but am quickly running out of room. Some items are better to carry then others.

The bad thing about buying excess materials is storage; then having to dig and find it later.

IMO, buy as needed unless you come across something great (flooring, appliances, door locks, etc). Otherwise, get ready to dig.

"creativity" is always good, thats where innovative products and strategies are born. That's also the harvesting point of bankruptcies.

If the both of you have an agreement then that's just fine, just remember that your "verbal" contract can expire at any time.

Let me rescend the previous statement. Not the worst approach but not the best. It may be different in your area but around here competition can be quite fierce and not having the prop under contract NOW often leads to a lost deal. If you are unsure of the deal then, by all means, obtain more data. Being able to jump on a good deal makes all the difference, moderate investors can't jump when asked.

Options and contingencies have one specific goal - to allow YOU an exit. Your proposal gives the seller an exit. Like said earlier, that's fine but here it wouldn't work to well.

Just my $0.02

Just a side note, be weary of the assessor website, these take time to update and may reflect old data. Watch for the recorded date of each instrument to verify accuracy.

Terry,

One signature on a contract does not fulfill the requirements of that contract and also does not hold up in court very well. If the seller signs but YOU hold out until a buyer is present, the seller can legally sell to someone else. IMO, this is worst than any option or contingency and doesn't look good on your part.

If it's a great deal then get it under contract (actually under contract, not half way) and then resale. If you have doubts about flipping the contract then it's not a great deal after all.

If you don't have competition then take your time.

Chris,

Did you get any info on this topic?

A simple answer is the LA is a document typically issued by a probate court which appoints a manager of the assets/liabilities of a decedents estate. Does the record also show a PB (probate) or AH (affadavit of heirship)?

I would assume that the LA has nothing to do with the aquisistion from the owners perspective. Could be wrong!