All Forum Posts by: Charlie John

Based on the photos and your arv estimate, you need to buy for under 50 to break even. The exterior photo showed how deferred the maintenance is there so you have to plan to replace almost everything or atleast have a budget line item towards repairing/cleaning it up. I would easily spend 100k for rehab. You would possibly be into a higher arv range though too. 

@J Scott is right in the fact that this scope of work is a bit intensive for a first timer. You also have to consider the distance from your house. not fun when they are far away

@Gregory A. yes you have that correct. I am focused on fix and flip only right now. Buy and hold will come down the road when I actually have the capital to put into long term investments. I guess I would do a buy and hold if I found a lender that would be open to a lower interest rate and longer term. Bottom line tho- you need to become a master a generating your own deals. Once you learn how to do that you will not depend on anyone. People will want to work with you and then you are in control of negotiating the lending structure. 

@Gregory A. if you are new and without a successful track record you are going to need to bring value to the table no matter what otherwise why would someone work with you. I think most important would be- finding a seriously discounted deal. 

I have one private lender for my single family fix and flips that lends 100% of the purchase, closing costs and rehab funds.  My company buys the house so I have title but we record him as the first lien position to protect his investment. Then I get rehab funds as needed. I pay him 10% cash on cash return when the house is sold. So he gets back all of his investment plus 10%. I don't pay any interested payments.

Another private lender we did 55/45 split of net profit. I gave away a lot of equity on that deal but honestly didn't mind. It was a 50 day rehab, cosmetic repairs and the house sold quickly. I just wanted to find the deal so I gave them a big portion of the profit. But once again they funded all purchase, acquisition and rehab costs with no interest payments. No money in the deal and no hassle. 

I think you will need to give up a good amount of profit on your first few to develop those relationships and a track record for yourself. 

Convincing family or friends to lend to you at 6-8% would be awesome but that's why it's family/friends - most of them don't understand what return they should charge. Hope this helps! Good luck man

@Don Chambers the only lists I hit are my custom driving for dollars lists where I am identifying houses that need work! I do not know if the homeowner is motivated or not but I know that if anyone of them suddenly became motivated to sell, they know they are in a dilemma: do all of the repairs themselves or sell as is to an investor. I think most people become interested in your letters right then and there. The only way someone is going to sell their house at the discount you need is if the house needs a lot of repair. 

I target anything from grandmas house with the original house numbers and rusty mailbox to a house with broken down cars in the yard to a decent smaller house on a great lot that could be added onto or knocked down and set for infill development. I am sure @justinsilverio would agree too. 

And let me tell you-- a lot of these people are only getting letters from me! Or at least I am the first one before they start getting on that code enforcement list. I made the first impression and they call me first. 

@John Thedford it's what happened on my first deal. Instead of being TOTALLY HONEST with everyone and let them know that I didn't have the money to purchase (which could have disappointed a lot of people), I was "dishonest". However, I worked my *** off to make sure I took care of the sellers and that everything went smoothly. They were so happy after closing because I did just that. I am not promoting dishonesty but when you are doing your first deal like the OP, you've gotta move forward. 

My cash buyer on my first deal is now funding my current deal, two years later. I said judge your cash buyer accurately because he helped me close that first one without hassle for me and more importantly my sellers. It was a great education and now I have money to close each one of my deals vs assignment. I was just trying to help the OP get thru his current dilemma. 

John, you gotta chill out a little bit with your caps lock and emotions running thru every wholesale post. 

@Aaron Phillips it's not the hard really, just make sure you judge character of your cash buyer accurately. And when you show the house to him, go with him and tell the homeowners that this is one of your contractors. Make sure you tell the cash buyer what's going on too. This way the homeowners still have confidence in you. Who the hell would just let the cash buyer go to the seller directly?! 

Honesty though man, you should find the cash buyer that is ACTUALLY flipping houses and structure something with him. Since you wrote that you want to eventually be flipping these, you should partner with him. Take a percentage of the profit and offer to help with renovations. You bring the deal and help the guy out with the Reno. It's a win win. Even if you aren't skilled, you can do cleaning and landscaping or something! Then you will learn how to do a transaction start to finish and things won't  get messy with your sellers. You may even make More on the % of the deal than your assignment!

@Tarl Yarber I like seeing these kind of flip story posts from guys who are truly running a flip business like yourself. Fun read and the pictures show that your quality and design is baller style. Good work. 

Can you please share a few bullet points about what makes your contracts with contractors so great? I have my second flip underway and need to use new contractors that I don't fully know yet. I am sure your tips will help me and other on here. Thanks a lot! Hopefully we can see more posts from those others 9 flips soon. 

it's funny, we all talk about finding deals but in reality your great deal could become a not so great deal because you had ****** contractors. This business requires you to : source deals, source capital to fund your deals and source contractors to get the work done. We need more discussions on contractors/how to renovate properly. 

@Alex Lane ritch is right- you cleaning up after them is worth 50$ an hour. That's fine if you negotiated that off their price but if their price was to include that and they didn't do it, then you are overpaying already. 

Honestly, get off craigslist. i have found a few decent subs on craigslist had success screening them out because I am a subcontractor myself so it's easy to see if guys are legit or not. Most guys that are skilled and have integrity with their work/business are NOT posting on craigslist. We all know that that's where cheap people go. Go to local building supply companies or even menards/Home Depot and ask for some recommendations. The good one s are in there every week buying materials and the people that work there know who is the real deal. Once you find a couple good guys ask them for more references. Then your contractor list will grow. 

Good luck 

In MN if you do more than one project for speculation in a 2 year time frame, you can not do any of the work without having a licensed remodeler/contractor pull an overall building permit for the project. You basically have to get a permit unless it's a cosmetic only and you can do the work in less than a week or so 

I have a red stop work order on one of my projects right now because the inspector peaked thru the window and saw that we were demoing the interior which was only ripping carpet and taking down wall paneling. I pulled a permit for the dumpster like I was supposed to and that's what probably caused him to stop by that day. it's bs honestly. All of my subs are pulling their own permits (roofing, hvac, electrical, etc) , but inspector said I can't even do the demo or paint without having a general building permit pulled thru a licensed contractor. 

Definitely check into it! But try to pull the permit as a homeowner. Do not tell the city that you are flipping it. Just say you plan to do the renovations and move in.  Good luck