All Forum Posts by: David Torres

If you can get him down to a 6% rate, that would sweeten the deal, however, you are still only cashflowing ~$75 per unit per month per your projections.

If you already know your numbers since you hold similar units, why not update your proforma to represent your actual numbers. I don't like the 50% rule, I like using actual numbers from the past. Can you update your spread sheet using the known info from your current units with actual Taxes, Insurance, HOA fees, capex, etc. from your current units? Also, what do your capital reserves look like? Are the units vacant? If they are occupied, how long are the leases, what are the rents, etc? I am sure you have thought most of this through, just trying to look at the project from different angles.

@Nathaniel Martinez I am in ABQ as well, let me know if you are looking for any help, always happy to see more faces from NM!

@Britt Griscom , while it initially sounds like a good deal, I would be very concerned about your cash situation.  These units don't cash flow, so the real questions is where are you going to get the capital for emergency situations?   Where will you get the money to pay for the inevitable broken water heater, special asessment, unit turnover, new roof, vacancies etc.

I am also curious to know what a $40K condo looks like in Santa Fe.  Even in Albuquerque, that would land you in a fairly rough area.  You already have units in the area, what do your historic vacancies run?  What kind of crowd does it attract?

If it were me, I would try and package them up in to a commercial loan.  You would need to come up with more cash down, but you would be able to get a more favorable rate and a better price.  Lets say that you can buy the units for $36K each, if you put 20% down, your mortgage will only be ~$2400 at 5.25 percent(Principle and interest only).  That is a much more favorable number than your projected $5400.

Do you have someone you could partner with on the deal?  That might be another great option to move this project forward.  I would not bet on appreciation, especially if it is in a rougher area.

@Easton G. I have some intimate knowledge of this market we should sit down and have some coffee in the near future.  I can point you in the right direction on rehab costs, actual rental values in the area, and sales comps.  I think your rent number might be on the high side.  In the end, I tend to agree with @John Slater .  Good luck.

Flip 4 (AKA the unicorn)

See info about this in the above post.  Great house from a great builder, in an ok neighborhood.

• Purchase Price $135K
• Rehab costs $42K
• Fixed Costs $26K
• Sales Price $217K
• Profit $17K
• Key to Key 78 Days

Front Before

Front after

Kitchen Before

Kitchen after

Its the end of the year and we were able to wrap up 2 projects for a total of 4 flips for the year!  Lots of lessons learned in these past projects, and still looking for the right contractor, but it feels great to finish the year strong. 

Lessons Learned:

• Don't buy the unicorn on the street and be careful when moving in to a new area.  In the past, I focused on one zip code.  I branched out to a different area and thought I had a home run.  I had a difficult time finding good comparables, and this house was about 600 SF bigger than everything else in the area.  We ended up still making a profit, but not nearly what we thought we would
• Hold back the final payment to your contractor until after you have an inspection completed.  This ended up costing me an additional $750 because the contractor I was using became very scarce after he received his final payment and I was in a time crunch to get everything wrapped before we closed.
• Start out with a good accounting system in place.  I have spent thousands of dollars trying to get my books up to date.  It is a lot easier to start out on the right foot.

Flip 3

Another house with a weird layout.  Also, the owner left 4 cats for us (yay?).  Tried some new finishes and put laminate in the kitchen.  Was received well.  We sold this one contingent to the buyers home in CA, so the key to key days are quite a bit longer.

• Purchase Price $95K
• Rehab costs $37K
• Fixed Costs $22K
• Sales Price $189K
• Profit $23K
• Key to Key 130 Days

Front Before

Front After

Kitchen Before

Kitchen After

@Gary Landon what does your realtor have to say about the ARV on the house? Does your realtor have experience dealing with REOs?

It is a great time of year to be a buyer.  A lot of banks want to dump their inventory prior to January 1.  I would make an offer that makes sense to you and see if the bank counters and go from there.  Good Luck!

try @Katharine Chartrand 

I saw this on YouTube and immediately thought of BiggerPockets.  I can't believe the total lack of respect for other peoples property and sense of entitlement.  Luckily, they were able to get these people kicked out, I hope I never have to deal with squatters.  Here's another shoutout to Detroit @Joshua Dorkin 

Squatting the Squatter

@Frank Jiang I use quick books.  If you want to grow your business, I would recommend setting it up early and correctly.  Enlist the help of an experienced bookkeeper or accountant.  It will save you money in the long run.

If you are only going to have a few units, you can easily maintain it in an excel spreadsheet.