All Forum Posts by: Brian Burke

This might sound totally ridiculous, but take your best estimate after doing your research, and double it. If you get a contractors estimate, multiply it by 1.5. Until you have done a few of these you will grossly underestimate the costs. After the final tally, you'll ask yourself, "where did all of that money go?" One of the most common reasons that most people never do a second flip is that they totally underestimated the costs on the first one.

You mean that there are actually sellers with equity? :) That brings back old memories. I make a lot of offers because I do high volume. I don't think I could keep up if I were only working with the elusive motivated equity seller. I think you have a good point though, K. Marie, because working directly with motivated equity sellers without competition from the rest of the investment community should yield a higher hit rate than listed properties.

Just don't spend so much time reading that you don't spend any time applying what you've learned. I made that mistake when I first started. Get out there and get your first deal! You'll absorb more of the concepts that you are reading about when you can relate the information you are reading to an actual experience you've had out in the field. Good luck!

I'm sure different people look for different things, but I just want to know what the property is worth, what I can get it for, what it will cost to fix it up, and what it will rent for. I want an above market cap rate and a below market price.

I run my sales comps and rent comps and, in my opinion, all of the "boring data" is factored into those comps. Higher income, higher prices, better schools, higher prices, etc. I leave the data up to the statisticians.

Just because you know the guy does not negate the arms length transaction. If he comes to grips with the fact that he has to move, you are fine. It sounds as if his primary motivation is not to sell, but to stay in the house. My guess is that he will probably find an inexperienced buyer that doesn't know any better and doesn't read the affidavit that they will be required to sign.

I agree with J Scott, we are also in the 5-10% range. Our offers are always all cash, closings in 21 days or less with short (or no) contingency periods, and a $25K deposit. Pretty competitive terms, I think, but when you want a discount from market value, your terms won't compensate for the low price 90% of the time.

I guess they called their own bluff. Is it cheating to play against yourself in Poker?

The one thing working for me now is the press. News articles reporting the improvements in the market have given my investors confidence. That's great, but nothing beats free publicity. Yesterday's Sunday edition of the San Francisco Chronicle featured a story on the cover of the business section that heavily featured my company. That is what fuels credibility, and credibility builds trust, and trust brings investors, and investors lead to additional investment capacity, and that adds to profitability.

There is "one thing" that you really want to work in your business, and that is "profitability." Having the media on your side can help, and having them work against you can destroy you.

Welcome to BP Aaron!

Your choice of investment is a personal decision as is the choice of not using leverage. I could go into reasons why using conservative leverage at or near a market bottom makes sense, but nothing beats sleeping well at night. Being risk averse and leveraged don't always go well together.

I'll just make a couple of quick comments and I'm sure others will fill in the rest. Look carefully at the homeowners association for these town homes. Insolvent HOAs and impending special assessments and dues increases can wreak havoc with your plan. Secondly, I'd scrap the plan to furnish the units. It might bring in higher rents, but tenants of furnished units tend to have shorter tenancies, and the turnover expense, extra vacancy, and damaged furniture could completely reverse the extra income (or worse).

Good luck!

That's completely stupid. The only thing I can figure is that one or both of these loans is serviced by Chase but owned by someone else, so Chase doesn't see it as bidding against themselves. Either way, when it comes to bank stupidity, nothing is surprising anymore.