All Forum Posts by: Charlie John

@Account Closed if you have a real purchase agreement for a deal then bring that to the meeting and you will have plenty to talk about. You learn as you go in this business. The attorney will teach you exactly what you need to Know throughout the process. Planning to buy flips throughout the year will be different legal/tax advice than buying rentals.  If you are flipping it may make more sense to create an s-corp vs Llc so you could ask about that. Good luck!

hi @Vee Vu I guess I calculate it different. Holding costs to me are things like water, electric, property taxes, insurance, etc while owning the property. If my Arv is 200k and the flip will take 6 months, that formula gives me 4K to cover those costs which is very accurate for that kind of deal.  

I take interest costs for my loan out of the deal profit. 

Once you find a conservative arv and estimate the repairs needed in order to get to that arv, then you can set your profit margin. 70% rule is 20% profit and 10% costs (realtor 6, closing costs 2, holding costs 2). It's 70% of arv. 

If you are buying a hoarder house as is, you will really want to lower that 70% rule to the 60% or 55% rule. That means you are now shooting for a 30-35% margin instead of the standard 20%. You are now creating a larger margin to cushion the unexpected and hopefully more profit for taking on a wild project like that. On the other hand, you could lower your profit to a 15% margin (75% rule) for a quick paint and carpet townhouse turn. Does that make sense? Run your numbers. Shouldn't matter if you're buying from a wholesaler as long as the number work. As @cornelius mentioned, when you market for you own deals, it's easy easier to get these deals as you can negotiate them direct with seller.  

@Ben Valentin the 70% rule just means that you will make 20% of the list price of your flip! 

@Account Closed most of the calls I get the day or two after I drop a bunch of mail is always from the people who are pissed off at me and want me to take them off the list. The real sellers call after a week or two or two months of thinking about it. .... which is why everyone is telling you consistency is key. A custom Driving for dollars list is by far the greatest list you will ever get. Don't give up now manne 

@Josh Wagner Josh I wouldn't send the generic letter that's for sure. With more competition in the market, you need to stand out to the homeowner that's reading your letter. If I personally received a letter saying "I want to buy your house for cash, l call me" in handwritten font- I would not trust that person because it doesn't convey trust. 

My letters are like a typed professional letter you would get from your CPA or financial planner. They have my company letterhead, are dated, my contact info and the content. The content just states that I have an interest in their property and if they ever consider selling to think of me. It also goes on to tell them features and benefits of working with my company vs a realtor. Forexamlle,  I buy in as-is condition so they won't have to make any repairs to the property prior to selling. 

I come off as a professional contractor looking to renovate houses in the local area. I probably resemble the HGTV shows to them since everybody watches those shows. 

A guy just told me that my letter has been on their fridge for the last year and every time something comes up related to their house that frustrates them, they would point to the letter and say we need to call this guy. Well they did, and I just bought the house. 

Good luck man! Be serious about it and genuine. Almost all of the "yellow letter" templates are junk. If you want to be respected and taken seriously, stand out and look like a real local company. 

@Account Closed LOL when I saw the exterior photo. Dude just paint it and put a new roof on. Do architectural shingles. You could even do one of these rooflines with a metal roof to accent it. 

Don't try to mess with the structure. Turn the project

@Matt Gragg looks like you made money! How did you find the deal man

@Michael H. hard to say. We spray and back roll stucco. You back roll it so that the paint gets worked into the porous surface of stucco. That tends to soak in more paint that if you had typical "siding". However, there shouldn't be as much prep involved since you are not needing to scrape, feather sand and prime any siding boards. They should offset each other, know what I mean. 

Your interior is hard to judge because I'm not sure if you wanted just walls and ceilings or walls ceilings and all trim. The latter is definitely more labor intensive. 

Keep in mind that subs want/need to make their daily/weekly labor rate. Instead of asking them how much money it costs to do X task, just ask how much time it will take to do the work. Adjust the hourly rate for the tradesmen. For example, we as professional painters are at $45/hr (it's high but we get it all day long here). But someone specialikng in fixing old foundations may charge $90/hr. 

So if the painter says he can do the work in 3 days, then it should be around 1100. If his labor comes out at 3000 then you know he is trying to make huge margins off you and you need to check his a$$. Good luck man. Go big or go home! 

@Michael H. those paint estimates are ridiculous. I own a house painting company. Just ask how long it will take to prep and paint the exterior. I doubt you would use more than 40 gallons of paint just based on the house Sq ft. 40 gallons at $50 = $2000

We charge 3,600 a week for labor for a 2 guy crew. I bet it would take a two guy crew 2-3 weeks to prep and paint the house assuming it looks like your interior.  That totals $12,800 for paint and labor. 

Your contractor is marking up his sub contractors cost at 250%. It should be 10-30%. You need to get more bids and should probably dump this guy as he is bidding it so high he is almost hoping to not get the job. Hope that helps.