All Forum Posts by: Dan V.

The way you book items in the closing statement depends on your RE investing strategy (flipping, buy & hold, wholesaling, etc.). Also, the closing statements format vary, so depends on what items are under closing costs, some of them need to go to balance sheet while some go to income statement. For example, interest, property tax and property insurance are booked as expense for buy and hold but "holding cost" (asset) for flippers. 

@Brendan Harrison and @Dylan Pino Is theautomatedrei legit? Did you get any good data/leads from their list or services?

@Marc Estepa I think condos are good investments in the Philippines if you get it a good price and allow short-term rental like Airbnb. One other challenge is finding a good property management company and cleaning crew, but AIrbnb is becoming more popular now, there are more and more companies or people offering the services, usually you can find them in Facebook. I am not updated on the trend there but I think Taguig or somewhere near the airport I think is a good location. As you know, a lot of Filipinos are working overseas, plus the tourists, having Airbnb near the airport will definitely get booked. 

@BJ Marshall The closing costs vary by state/city and also depend on the title company or lender you use. I think the best people to ask about these fees are the people you are dealing with, like the title company and the lender. I usually look for fees that I may have paid upfront like appraisal or inspection fees. Other than that, as long as the total closing costs is within 2-3% (average in my area) then I don't really question each line item. Good luck on your first!

@Brandon Moss As Joseph mentioned, HML only look at the deal, and make sure the property is enough to cover the loan. Some HML also will not allow you to borrow only the purchase price or rehab, they must be both. Start talking to them to see their terms so you can factor them in analyzing the deals. If you are considering BRRRR strategy, make sure you also factored in the seasoning period for the bank. Another good option is to speak to people you know about your plan to invest in real estate and see if they're willing to lend you money enough to get you started. Good luck!

Congratulations!

@Derrek H. He's saying he won't pay taxes on the $86K since according to him the transaction was considered "refinance" not a sale, so in essence, there's no real gain, rather they got equity. I think the main reason for this strategy is not to save on taxes but to avoid seasoning period from the bank and to get more cash out for the refi. But I think this might end up costing them more (CPA fees, LLC fees, higher property taxes, etc.).

@Candi Peterson and @Vasilii Aramilev When we looked at it, my contractor estimated about $50-$60K rehab and ARV of $240K by adding a master bath (from 4/1.5 to 4/2). Based on the rates I can get from my lender, I was only hoping for about $15K-$20K profit (looking for first base, not a home run), I made an offer based of that. We upgraded the electricals, did moisture & termite repair, and some other little things which add up to additional $15K. Well, there goes my profit so I was only expecting a break-even at that point but as we got closer to finish date, I asked my agent the most recent comps and fortunately, it's higher than we originally anticipated. Got multiple offers, 2 offers fell thru and 3rd was the charm, sold over asking price! From acquisition to sale took about 5 1/2 months.

Actual numbers below and I don't mind sharing to everybody hoping it will help out for those who are starting out in a similar situation. Please note that I used HML with 4% origination and 12% APR and only one general contractor. Sure, I may have earned more if I shopped around for better loan rate and call around other contractors, but my main goal on this project is to learn on the sideline. And I'm glad it turned out great for the first time and everyone made some money!

@Account Closed I think within 2-3 weeks. I think I got lucky at that time because I've been looking at MLS again for a few months now and the ones I picked are either gone before I can make the offer or somebody outbid me. There are still deals in MLS, they're just harder to get this time.

Investment Info:

Single-family residence fix & flip investment in Norfolk.

Purchase price: $118,000
Cash invested: $40,000
Sale price: $263,000

Contributors:
Sierra Alderman

This is my first fix & flip project.

What made you interested in investing in this type of deal?

I am an accountant by profession and seeing the numbers of my clients in real estate made me interested in real estate investing.

How did you find this deal and how did you negotiate it?

I found it thru MLS. There's actually 2 of them on the same street across each other and looked at both. I liked the other property better but the seller accepted an offer before we made ours so I ended up making an offer on this property and got accepted. The property was on short sale, initially offered $121K but was able to lower it to $118K after further negotiation.

How did you finance this deal?

Private money lender for the DP and hard money lender for the purchase & rehab costs.

How did you add value to the deal?

I'm not sure. I guess, I tried to stay on top of it make sure we are on track, though we still ended up over budget and delayed (blame it to COVID). Or maybe I'm good in picking the right team member?

What was the outcome?

Despite overbudget & delay, I still ended up with the same profit I was expecting when I bought it. The property turned out nicely, I think.

Lessons learned? Challenges?

Lessons: Review the inspection report (if you have one) and make sure the scope of work covered majority of the findings. I lost the first offer due to issues in the crawlspace that was not handled by my contractor. Keep track of the project and adjust accordingly, we have to move around the budget to stay on track. Focus on rehab/upgrade that will add value to the property.
Challenges: Due to COVID, we had delays on some of the materials and inspections.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes