All Forum Posts by: Patrick Donley

Hi Everyone:

I'm partnering with a financial investor on a rehab that we will flip.  I have found the deal, will close on it and will do the entire project management on the house.  He wants me to have skin in the game, so I've agreed to invest 25% of both the purchase price and rehab costs. He, obviously, will kick in the remaining 75%.  

We will split any profit 50/50.  

He is suggesting after $20,000 on the rehab costs, that we then will split the rehab costs 50/50.  I feel like I'm being quite generous as it is bringing 25% to the table, bringing the deal, and managing the complete rehab with my team.  

DETAILS:  The purchase price is $13,000.  Estimated rehab costs are $25,000-$30000

ARV=$70,000-$75,000

This is the 1st rehab I've partnered on.  All the previous ones I've used 100% of my own funds as well as managed the rehab.  

Any thoughts on this would be much appreciated.  Thanks in advance, Patrick Donley

Thanks, Kellen!  I appreciate you taking the time to share your thoughts.  I am leaning in the same direction as your comments.  Definitely going to pass on the multi family, but not sure if I should do a long term hold with the property as it is in an up and coming urban renewal area or rent it out.  It is going to be tough to stay under $10000 even with the most basic fixes.

 I'd say you're right, Scott.

Hi BP people:

My name is Patrick Donley and I'm from Columbus, OH...apparently one of the top 25 hottest markets according to an article I read on the site last night. I just bought a SFR in a short sale for $22,500 for a home that sold for $60,000 in 2001. Avg. sales price in the neighborhood is around $55,000. I'm putting $10-$15,000 into it and planning to list it for 30-45 days once the rehab is completed. If I don't sell it for close to the median range, I'm going to rent it and think I can get at least $700-$900 a month for it. Most of my available funds are tied up in this project.

The house is in a pretty bad part of town, but has gotten a lot of press that it is turning the corner....warehouses converted into artists' studios, a brewery, and pubs and more upscale restaurants are now there.  Some big commercial developers have also planned large mixed use projects in the area.  It also has the highest murder rate in the city.  

I don't know if I should flip this or if it should be a long term hold?  

I just found what looks to be a screaming deal in the same neighborhood.  A 4 unit multifamily.  Two studios that rent for $500/each and 2 1 bedrooms that rent for $650/each.  The current owner is an 80 year old man who has 4 rentals.  He maintains everything including mowing and he is tired of it and just wants to sell the place.  It was listed at $50,000 and he has reduced it to $35,000.  I think he'd accept $30,000.  He rents it as furnished units and he pays utilities.  I ran the numbers and it cash flows about $1000 per month.  It doesn't need that much work.  Maybe $10,000 worth.  I'd pay cash for it.  Cash on cash return is 28%.  That factors in hiring a property manager to manage the property.  

Part of me thinks I should jump on the deal.  Another says I should be more conservative and finish my current project and either get it flipped or rented and see how it is being in this neighborhood.  

I'd love your thoughts!  Thanks in advance....Patrick