All Forum Posts by: Stefan Forsberg

Thanks Bryan,

Working on that as we speak :)

Your input and recommendations are greatly appreciated and taken to heart.

Great points as well J Scott,

This was kind of the whole point with my original post.

As there are multiple ways of funding a business (some of them you just listed here), will a person be better of using all of his own cash to start the business or is he/she better of using creativity to try to use as much of other peoples money as possible?

Personally I think that it is more beneficial to try to get funding from other resources then using your own cash. Like you mentioned, they will scrutinize your business plan, your experience etc. with much more detail and objectiveness then you would as you are biased towards yourself.

If you can get other people to fund the business (maybe not family and friends) then you should feel confident that you have a solid business plan and that you have done your due diligence well. Now that doesn't necessarily translate in to being a success as you still need to execute the plan but at least you are off on the right path.

Hi L Gale and welcome to BP,

Lots of great folks here that can help you with all your questions. I just joined myself last month and I have learned a lot.

For checking if the property is owner occupied or if the owner is out of state, I usually check the Central Appraisal Districts information, most of the counties have this information readily available online. If the Tax bill is sent to a different address, you can almost guarantee that it is not a Owner occupied property. Here in Texas you can also check the history of the Tax records, you can see how long it has been owned by the same person.

Hope this helps a little...

//Stefan

Thanks Ryan,

I am sure there is plenty more like you and I out here. Like you I have no plans to quit my day job yet, but before I am 50 this is what I will do full-time, just need to put my plans into action...

Good luck with your efforts.

Great points Vikram,

Especially the point about about planning for losses in the beginning.
I am sure that each case is a bit different from person to person depending on what experience you have when starting out.

For example, a General contractor will have a great advantage in terms of estimating repairs and getting good pricing from all trades which might lead to him or her being able to better identify the deal amongst all the duds.

I am so grateful I found this forum, I have learned more here in the past month then I have in the previous 6 months.

BP rocks :D

Howdy,

Just curious as I am sure this varies from location to location. Given the current lending and credit climate, how much cash reserves would you consider enough to start a business flipping homes?

Would it be 20K, 50K, 100K?

Here in Dallas, TX there is plenty of homes in the 75-125K range (ARV) which I consider my target market. Several of these homes can be had for 15-30K needing an additional 15-20 in rehab costs.

I can't help but think that one should be able to be successful starting a business flipping homes with as little as 20K with these circumstances.

I understand that one could probably only do one deal at the time to start with and that you would risk to loose all of it with that small of a reserve.

What say you professionals? How much did you start with and do you wish you would have had more or less cash when you started?

Does it not hinder (or at least slow down) the process of learning to use other peoples money when you put in too much of your own cash in the beginning?

Hi Danny,

I am by no means an experienced flipper so take my advice for what its worth. I am so happy for you that you are taking the first steps. Doing something is much better for learning then just sitting on the sidelines.

As for as calculating ARV, you will need to find an agent or someone that can provide you with comps for the neighborhood you are looking in, they need to be similar in size (within 10%), number of bed/bath rooms etc. They should preferably be sold within the last three months.

The second piece of the equation is figuring out the repair costs, I saw in your earlier post that you have a GC lined up, could you bring him with you when walking through? He should be able to give you a quick estimate that should at least give you a ball park (within 10-15%) of the repairs you need to make.

Then you can calculate your max allowable offer (MAO) ARV *70% minus repairs, if the house is worth 100K and need 20K in repairs your MAO is 50K (100K *70%=70K minus repairs 20K =50K).

At least this should give you a good starting point.....

Stefan

alright first deal. Late fall of 08, picked up a 3/1/1 in a decent lower middle class income neighborhood. paid 50K, put about 9K in repairs (did them all myself which took too long but I learned a lot), used hard money for purchase and repair (don't remember the terms now), refinanced and rented out in the summer of 09, same tenant lived there ever since and has verbally committed to 3 more years. Cash-flow (after using the 50% rule) is $198 per month, not a home-run but a solid deal. Property now appraises at 95K which means I have close to 45% equity. 15 year note, if the tenant stays 3 more years, she's paid of 33% of my mortgage, I keep hoping to find two more tenants like her :)

//Stefan

What do you experienced investors see as the big differences/benefits/disadvantages between Banks and Credit Unions?

With some of the Credit Unions around here you can get much better terms on Credit Cards, Lines of Credit, used car/boat loans, mortgages etc but I am not sure if any of them work with investors.

I know I should do my own due diligence and I plan to call around this week to both Credit Unions and Banks to see which ones might be most beneficial, I just wanted some input from you guys first..

//Stefan

Great points J Scott,

I believe TX state law states that if I provide appliances I am liable for repairs if they break.

But I tend to agree with you, most of the time the tenants knows probably less then the landlord about the state law and wouldn't fuss to much if it is in the lease like you mentioned.