All Forum Posts by: David Ebbeson

Hi Carolyn,

Congrats and welcome to our BP Community!! You have made a very wise choice in becoming part of this community. Since you say you & your husband are just getting started you will find this site to have a ton of material you can gain knowledge from in many different formats like webinars, podcasts, blogs, forums, articles, and books. Speaking of books I would highly recommend 2 of them both from John Scott titled "Flipping Houses" & "Estimating Rehab Costs". You also may want to look at a site called houseflippingworksheet.com for additional help on how estimate costs of rehab. I would also recommend joining and attending local REIA meetings they can be very useful for meeting others like yourselves, contractors, realtors, etc... they can also be a very good source for gaging your market and what is happening around you. Well, I hope this information was helpful to you. If I can answer any questions for you or if I can be of help please let me know.

Have a Great Day & Happy Investing!!!

Hi Tony,

Welcome to our BP Community and Congrats on your very smart decision to be apart of this site. We are glad to have you. So, if fix & flips are the market you a re looking into then I would highly recommend John Scott's 2 books titled "Flipping Houses" & "Estimating Rehab Costs". But, even more importantly know your limits stay within your means and comfort level at first don't take on to big of a project and get overwhelmed. I would also suggest you join a local REIA Club, meeting or group as it is the best source of finding out what is going on in your local market and is a great place to make connections with other real estate investors and contractors. Some information I can give you though that maybe be helpful is that lenders will finance usually between 75% - 100% of the purchase price and 80% - 100% of the rehab costs up to 65% ARV (after repair value) some may go as high as 75% rates can be 7% - 15% with 3 - 6 points. There are factors that play into those percentages such as what state project is located in, your credit score, funds you have available, experience, etc... If you have any questions that I maybe able to answer for you or you just want to discuss fix & flips or your investing plans please feel free to contact me. I hope this information was helpful to you.

Good Luck & Happy Investing!!!!

Hi Jose,

Welcome to our community and congrats on your investment sounds like a good project. I agree with John Scott that his book does contain a spreadsheet. I also agree that the HouseFlippingSpreadsheet.com is a very good piece of software from what I have been told from some of my rehab clients. I have not personally used it I am just mentioning it on feedback from seasoned investors clients of mine. Best of luck to you on your project!!

Have a great day & Happy Investing!!!!

Hi John,

What exactly are you looking for when you are asking for a good resource?  If you are looking for books the books by John Scott that have been recommended are a good place to start. There are also some other sources I can recommend that may help you getting started but, you would have to contact me if you want them I am not allowed to put them on here. If you have any questions I can help with let me know we are all one big family here and working to help one another.

Have a Fantastic Day & Good Luck on your investing career!!!

Hi Brandon,

Welcome to the BP Community and congrats on your wise decision to join us. You will find a lot of information on this site to help guide you through your learning process. I see you have read John Scott's book or at least jumped into it which is very good start. In regards to lending in that area I can assist you if you would like to talk further I have some pretty good avenues depending on what your situation is. There are some questions that would need to be answered and information provided. But, that is only if you so choose. I have other things I can suggest to you as well that may help you as you begin your journey. I would highly recommend attending a local REIA meeting, event or group. They are often your best sources for contractors and other things. They are also your best source for keeping up on your local market. If I can answer any questions for you or you want to talk about your investing plans please feel free to reach out to me.

Good Luck & Happy Investing!!!

Hi Gwendolyn,

Welcome to the BP Community and congrats on your wise investment!! It will be easy to see from the response you will get from your post that the members here are great. You will find an abundance of information on this site in many different forms like, webinars, forums, podcasts, articles, blogs, posts and books. So you can find your method that works for you. The Ultimate Beginner's Guide to Wholesaling is a good book if you are looking to build some cash before moving into the fix & flip or buy & hold arenas. For fix & flips I would recommend the 2 books by John Scott titled "Flipping Houses" and "Estimating the Cost of Rehab". Now, if you choose the buy and hold for rentals then you should read Brandon Turners 2 books titled "Rental Property Investing" and "Managing Rental Properties". I would recommend picking one of them and learning as much as you can before jumping in blindly. Once you feel you have a comfort level of understanding then begin but, don't be afraid of making mistakes just make sure they are manageable. My next suggestion which maybe of bigger help is to find and join or attend a couple REIA meetings or groups, they are often your best source for contacts and to get a real time pulse of what is going on in your market area. I hope this information was helpful to you and if you have any questions or would like to talk about your investment plans please let me know I will help as much as I can.

Have a Blessed Day & Good Luck on Your Real Estate Investing!!!

Hi Elon,

Welcome to the BP Community!! Congrats on making such a wise decision to join the community. If you haven't discover it already this is a great place for information on anything having to do with Real Estate Investing (REI). The material is in various formats to help you learn whichever you feel most comfortable with. The are podcasts, forums, webinars, books (which I highly recommend. Wholesaling maybe a good place to start and build some cash. But, if you get a loan be smart with it you don't want jeopardize your future. If you are considering fix & flips in most cases you will need between 10% - 25% down and rates can be 7% - 15% with 4 - 6 points plus closing costs and fees. Also, 2 great books to read before jumping into it are the 2 books by John Scott titled "Flipping Houses" & "Estimating Rehab Costs". If you choose to go this route I have a 2 websites I can recommend for you to help with rehab. If your ultimate goal is rentals then Brandon Turner has 2 good books titled "Managing Rental Properties" & "Rental Property Investing". You can do both one you get established. The suggestion given to you earlier about joining a local REIA meeting, group, club I would highly recommend because there you will meet other investors who can help you along with contractors and others. It is also the best source for getting a pulse on what is happening in your local market. I hope this was helpful to you.

Have a Great Labor Day Holiday, Be Safe & Happy Investing!!! 

Hello Rotimi,

Welcome to the BP Community and I congratulate you on your dedication & wise decision to join our community. You definitely sound like you are engaging in the site and learning that is a great first step. Your book list is very good as well. It appears you have your goals set in place and a plan you are following. One suggestion I would make to you which could be very helpful and also informative to you would be to find and join a couple local REIA meetings, groups, clubs. They have people there that are newbies like you and seasoned investors as well and also other individuals you will meet that could help you. I wish you the best & very much success on your new adventure into the world of REI!!!

Have a Great Day & Happy Investing!!! 

Hi Cynthia,

Welcome to the BP Community of REI. Congrats on your decision to join BP!! Buy now I am sure you have figured out it was a wise choice and you can see we are very helpful. You ca learn a ton of information from this site from many different types of media from webinars, podcasts, articles, blogs, posts, forums, books and so much more. Don't waste your time spending that kind of money helping someone else get rich. Spend the money and buy The books by John Scott that @Josh Braun recommended they are very good for newbies getting into fix & flips. If your choice is the avenue of fix & flips here is a good formula to follow. I have other information I can give you to assist in figuring fix & flip cost estimating if your interested connect with me and I can share it with you. They come recommended from other RE Investors and use it on each and every deal.

I have found that many new Investors that flip homes use the 70% Rule that says 0.7 x ARV - Repairs = Your Maximum Allowable Offer (MAO). What hurts Investors that use this formula is it does not account for Holding Costs, Backend Selling Costs, etc.

Use the following formula to determine your Maximum Allowable Offer (MAO). This formula is the Profit Margin Formula that accounts, for 99.99%, of everything.

ARV – Desired Profit – Closing Costs to Buy – Repairs – 10% of Repairs – Holdings Costs – Concessions – Realtor Fees – Closing Costs to Sell = Your Offer (MAO or Maximum Allowable Offer).

ARV: After repaired value or what you think it will sell for once repaired.

Desired Profit: This should be taken off the top first. Most people run their numbers to determine what their profit should be. That is backwards, you should use your profit to determine what your offer should be. As a General Rule, minimum Desired Profit should be $20,000 or 20% of ARV whichever is greater. To have an offer accepted, one may need to adjust their Desired Profit; however, it should not be below $20,000, or what one feels is acceptable.

Closing Costs to Buy: What is it going to cost you to buy the property? If you are using hard money you need to budget for the points and fees as well as traditional third party closing fees.

Repairs: The money it is going to take you to rehab the property plus an extra 10% of estimated repair costs to account for unexpected repairs.

Holdings Costs: Here is where a lot of investors get tripped up. Start by determining an amount of time that you will hold the property, probably 4-6 months. Then add ALL costs related to holding the property (utility costs, insurance premiums, property taxes, loan payments, etc.).

Concessions: Concessions are what you give back to the buyer at closing. It could be for closing costs, unfinished repairs or something else. Most typically subtract 3%, of the ARV.

Realtor Fees: What is the commission you are willing to pay your listing agent (unless you are the listing agent) and the buyer's agent. Utilize 6% of ARV.

Closing Costs to Sell: Title fees and other closing costs. You can budget around 4% of the sale price to cover these.

This is a conservative formula. If you come out ahead without Buyer Concessions, on budget, etc., this puts more money in your pocket, when you close at selling.

Cynthia, I hope you found this information helpful. If you have any questions I can answer feel free to connect with me on BP and let's talk.

I wish you great success. Have a blessed day & Happy Investing!!

Hello Jason,

Welcome to the Bigger Pockets Community!! You may not see it yet but you have made a very wise decision and investment in joining the community. There are many forms in which to educate yourself here from webinars, podcasts, forums, articles, blogs, and books. Since you said you were interested in fix & flips 2 very good books to get are John Scott's books on "Flipping Houses" and "Estimating the Cost of Rehabbing". There have been many great suggestions for you here from joining a local REIA to get the insider information to your market to connecting with local realtors to help you find areas for best profits. You also need to make connections with wholesalers, contractors, and lenders to assist you with your project. The costs, rate, points, fees you are charged can vary from lender to lender but, other factors like your credit (even though generally not used in determining eligibility, it is used to determine likely of repayment, also looking for BK's, judgments, foreclosures), experience, state property is in, strength of deal, cash available for deal and reserves can all play a factor in the deal getting financed. You will find lenders that will offer 80% - 100% of purchase price and 90% - 100% of rehab costs upto 60% - 70% ( have seen upto as much as 80%) of ARV. Again, it just depends on the Lender. The formula Thomas Franklin gave you is a very good one that most of the investors I know seem to use as well.

I hope you find this information helpful. If you do choose to go the fix & flip route I have some other information I can give you that I believe will be of assistance to you in figuring out your deals. The information comes recommended from investors I know that use it as part of their everyday practice. If you have any further questions or wish to discuss your REI plans feel free to connect with me on here and we can talk. Either way I wish you success in whatever you do.

Have a Great Day & Happy Investing!!!