All Forum Posts by: Stefan Forsberg

Well said Jon,

I think what most people forget about the 50% rule is that it should always be calculated assuming 100% financing regardless of if that can be achieved or not. If a property cash-flows using this calculation, each individual can then decide if they want to "buy" additional cash-flow by putting down more money.

Hi Brandon,

Welcome to BP, plenty of good information and great people here.

I believe that your question is best answered by yourself, what is your long term strategy? Build long term wealth and equity or generate fast cash for other investments? Both strategies work well as long as you are buying right and have can get buyers qualified for your flips.

Congrats to both of you...

Hi Eduardo,

Welcome to BP, there is a lot of experienced people on here so I am sure more people will chime in soon.

I have one rental that I bought fixed up and put my own tenants in. If the deal is right from a cash-flow perspective I would say go ahead. You just have to make sure that you consider a few things..

1. Get a copy of the signed lease so you can familiarize yourself with the terms and conditions (If there is no lease I would not buy).

2. Make sure that the previous owner gives you the security deposit the tenants put down when they moved in, in some states you will have to have this deposit in a separate bank account from your own.

Learn the tenant/landlord laws for your state.

As far as cash-flow is concerned, do a search for the 50% rule here. In short it means that 50% of the gross rent goes to operating expenses (taxes, insurance, repairs, legal fees, evictions, etc.) the other 50% should cover your profit plus the Principal and Interest on any loan you have on the property.

Hi Bryan,

There are still parts of Oak Cliff I will never set foot in :idea:

Hi Jon,

More like McKinney, there are lots of streets between 5 and 75 in the older parts of McKinney where the homes that are rehabbed or rebuilt goes for the low 100's and you can pick up the older ones for 15-17K, I know they are in bad shape but with 45K you can work a lot of miracles on a 1300 Sq. ft home..

That would put you in at or around 70-75K with all the closing/rehab/insurance/selling costs and an ARV of 100-110.

Just a quick question for you seasoned rehabbers and flippers. Certain neighborhoods here in the Dallas area have houses listed for below 15K, they are in pretty bad shape for the most part a complete gut job. The layout of the homes are alright, traditional 3/2 homes most of the time without a garage (if there is one it is usually freestanding).

These neighborhoods are being revitalized, some homes are remodeled with the latest amenities while keeping the original charm of the house. Others are being torn down and replaced with traditional brick homes from various builders.

Maybe I am being way to sentimental but I love taken the old rundown house and modernizing it with all the latest technology while still making it look "Old style". I really dislike the new boxy looking brick homes but if it makes financial sense to tear down and replace maybe that is what one should do.

What are your opinion on this, is it worth trying to salvage the "old style" look or does no one care anymore? (note that these homes are not in a historic district).

Excellent advice Will.

+1, Now is the time to start stocking up on some nice cash-flowing units..

Hi Chris,

I am trying to get started as a rehabber in the Dallas area, my target market is first time homebuyers and lower income rentals (without being in the slum). My max ARV is 125K and with that in mind I would expect to make at least 15K when I flip a property, my goal is that the rehab should take less then 2 months to complete and sell (get under contract) within 1 month upon completion of the rehab.

If I am buying a rental I am a bit more flexible, I want the rental to cash-flow 150-200$ a month using the 50% rule. There is plenty of information here regarding the 50% rule but in short, the Gross rent/2 should cover my Principal and Interest plus 200$. Using that formula I can calculate my maximum allowable offer (MAO). If that is 75-80% of ARV and I still meet my Cash-flow needs I would look at a deal like that. Reason being I intend to keep my rentals for a minimum of 10 years which will give me enough time to build equity and still be able to sell quickly if needed without to big of a loss. I would not buy over 80% of ARV on anything.

Hope this helps.

//Stefan