All Forum Posts by: Gregory Childs

Sorry that you have experienced this - I am sure you went into this with your eyes open; this is no suprise if you are honest with yourself! But thanks for the heads-up.

TTFN,
Greg

First of all congrats for getting something under contract - hopefully you have a contingency in the contract.

Your one big issue is that you don't sound confident in your numbers. Once you have a contract in place, time is of esscence to confirm your numbers.

Step I: Get at a minimum a desktop appraisal done (sub $100). Provide the apprasier with the rehab punch list you have established and have him provide you a projected ARV. He will use local comps to establish this #.

Step 2: Get over to the house today with a couple of GC's and get a firm bid on the project including timeline and financial breakdown (draw schedule, etc.)

Step 3: Identify your exit strategy (retail flip, wholesale flip, landlord flip) and what your actual sales price will be. As a guide 80% or ARV for retail, 60-70% of ARV for investor, wholesale.. whatever you can get committed from someone.

Step 4: Run the numbers - FYI, in your analysis (for a retail flip) you missed clsoing costs for the "C" transaction, seller contributions, and punch list allowance.

Step 5: buy a large Mocha Frapachino and work the numbers backwards and forwards.

Step 6: Decide a. to run for the hills, b. to go for it, c. to see if you can assign the contract if it looks decent for w wholesale flip.

We did two or three deals in AZ last year, made OK on two and lost money on the third. The market was VERY unstable - I wouldn't touch this if I didn't have a 30% margin.

Remember this is a business designed on the premise of making money - get your ducks lined up in advance or get out of the water and lookk for a new place to enter.

If you think it is "skinny" now - why risk it? The right deal will come along if you look hard enough.

TTFN,

Greg

Josh,
I would be very nervous "selling" to someone with an IRS problem.
Why don't you do a long term "rent to own" with a decent down payment. That way you don't transfer title, but after X years (enough time to satisfy the IRS) they have an agreement that they can buy for "$Y."
They take care of all property maintenance - so you are off the hook for "landlording" issues. Which I assume is what you are trying to avoid from 2.5 hours away.
TTFN,
Greg

Absolutely - give her a call. I hate filling out forms too and often will do the minimum. Maybe she just overlooked it - although I somewhat doubt it. It doesn't hurt to ask.
TTFN,
Greg

If you really are new at this your post should read thus:
Hey guy's help me out - I have narrowed it down to these eight deals & two of them I have under contract (with contingencies).. I have the following exit strategies.. the motivation of the seller is... my timeline is XYZ, I can put up $x and I need to find a way of funding $y.. What's my best method of getting these deals funded.. How can I wholesale a couple of them to build my cash reserves.. etc, etc.

If you are looking at only one deal at a time you will get emotionally attached to that deal .... "the last melon" (Ice Age). However, if you have a bunch of deals that you are comparing, can see the exit strategy for each, undertsand your ROI/ROE (easy concept for an accountant), how much skin you can put in the game and what you need to make the deal work - then you are on the road to finding the "right" deal.

As a company, we intentionally put out blind offers on properties so that we can control the asset - once we have it under contract we can then assess our position. We already know that the deal works fiscally for us - we only have to assess how realistic our "vision" is for the project and does the "advertsing" (i.e. listing information provided) live up to reality.

If you have the right deal idenified, get it under contract (with contingencies) - the money will be found. The problem is most people don't put in enough effort to look at a plethora of pottential deals to get enough "good" deals to select from. RE investing is a contact sport.

Also, when you post please provide enough information to help us help you - you don't even provide the part of the US that you are located in. A deal in D.C. or Seattle is very different to Tampa or Cleaveland. The more information you provide the better advice you will receieve and also the more serious your enquiry will be taken.

Keep up the good work - just put your investing into a new level of activity and analysis. Just think of this as an auditing process - get into the details and look at enough reports to come to a conclusion that is valid!

TTFN,

Greg

One other point in getting a deal written (at your desired price) is to offer a greater "earnest money" deposit. Sometimes that skin in the game will count as a major incentive to accept. Putting $10,000 vs $1,500 up front says something about your seriousness to get the deal closed - and maybe then you don't have to comit all your cash (providing a better ROE, as Bryan suggested).
I don't believe in leveraging assets highly - but I always want to ensure my cash is working to its fullest extent.

TTFN,
Greg

I've always found that the people who will lend you money for a deal are those who know "beyond a reasonable doubt" that they will get it back with interest - despite the circumstances. That's a product of integrity, and integrity is earned.

The posts I see on BP and elsewhere often don't provide a compelling and defined business reason to invest or offer a source for due dilligence of the individual or the deal. People with capital only lend to those who are qualified to receive capital. It's that simple - otherwise it would be called a hand-out rather than an investment.

I doubt you will find any direct "success stories" from casual one off posts; although I bet a better result would be achieved if the question was posed - who, after buidling a relationship with someone on BP, eventually partnered on a deal together. I bet those stories would be compelling - and relevant.

TTFN,
Greg

Just be aware that the rules change - a bank we were using in Indy just last month changed their criteria on us mid-process for an out of state refi we were considering for a take-out investor. So the whole deal got stalled.
TTFN,
Greg

I hate to go against the trend - but we always use a GC. They have the license, experience, and a reputation to maintain. Plus they do add value, if they have the right team and have to work to a budget and draw schedule.
That way I can concentrate on business matters and not construction snafoo's.
TTFN,
Greg

If you want him to accept the deal as it stands - resubmit the deal but "up" your earnest money by 50%. That way he see's you're serious, which he might be doubting, plus you get to keep your $20K seller concession.
Put your money where your mouth is - it can be a key indicator that you are serious on closing the deal and not just another "offer mill" candidate.
TTFN,
Greg