All Forum Posts by: Ed Caldwell

Hi Adam,

Walking away is not an option to me. I do not need a foreclosure on my credit score. This property has no mortgage so if anything I own a piece of land for now until I figure out what to do with it and how to finance a new building to cash flow.

I do not cut corners and will have my contractor pull permits and tear it down. That way I can always go after him if anything is done incorrectly.

Thank you for your input.

Hi Justin, I just talked to my contractor I used for flips and he will board it up for me.  He also said it would cost $6K to $7K to cap all the utilities and completely demolish the building.  I guess dump fees are pretty expensive for this much debri.

I spoke with the City and at least that area is zoned for either single family or multi family.  I am contemplating putting a modular single family or duplex on the lot to at least start making cash flow.  I just need to figure out how I am going to come up with the money to do so.  After demo I will have round $57K into this dump for a piece of land.  Not a pretty picture.

Two years into investing and now FULLY understand the risk of buying sight unseen foreclosure at auction.  Looked good from the outside, but bad from the foundation up.  Anyway, this small house is in downtown Phoenix and was hoping for some recommendations for someone to get the permits and demolish the entire house that won't cost me an arm and a leg.  I received a certified letter from the city requiring me to board it up by the end of the month at a minimum, but that is only a temporary fix for 90-180 days depending on material used.  I was wondering if there were handymen or others that can perform this as well, since it will most likely take longer than the end of October just to get the permits?  I have never dealt with this before, so any advise is greatly appreciated.

Hi Mehran,

Comps in May were at $330K (MLS), house was in in premium cul-de-sac lot. Purchased at auction for $256K, back end commission $9,900, $30K Rehab, $2K closing costs, $2K carrying, 4 month hard money Int at 15%=7,750. Projected profit was $22,350 at purchase. Buyers disappeared and my comps have continued to drop and hard money continues to be paid. Currently listed at $318K. Two Exact houses on the market now, one just came on the market at $300K with a pool but interior looks bad, another on the market at $286K with no landscaping and worn and non-upgraded interior. This one on the market since Oct 2013, originally listed at $369,900!!

Yes, I ventured in into the $300+ houses this time and learned my lesson well. When flipping, stay in the lower market where there are more buyers, epecially if you are using hard money! Not my first rodeo as I have flipped 7 properties in the past 2 years, but have gained enormous experience by jumping in that I would not have learned from a Guru, Seminar or book. I now have two rental properties cash flowing positive that were at break even after rehab. I am now a licensed realtor, so I can now save 3% on the backside going forward and access to the MLS is a must to properly comp and find properties. Unfortunately, the Phoenix market is flat right now and seems to be more of a buyers market.

I have really enjoyed listening to the podcasts and know I am not alone in the learning curve, but at least I am break even on flips and have two passive income properties generating cash flow and appreciating. I have learned how to self direct my 401K/IRA's, bank "Flip Rules" for lending and limited to only 4 cash out properties, asbestos, illegal additions, permits, used hard money, the fun of contractors, got my realtors license as I got tired of realtors that don't work, etc. all while continuing my full time job as a CPA with a wife and two teenage daughters! It has been tiring, frustrating, stressful, tough on the marriage, and I WOULD NOT CHANGE IT FOR THE WORLD!!! I continue to learn and adapt to the market I am in and I encourage all other "Newbies" to JUST DO IT and prove to yoursefl YOU CAN!! You should always continue to learn, but do so while also applying. I found that the "FEAR" of that first deal just kills so many peoples dreams. There are others I met at a seminar two years ago that are still studying and attending seminars and have yet to pull the trigger!! I temper this as a CPA by saying Real Estate investing is NOT for everyone. There are reasons there are investments that stem from a saving account in a bank to commodities and futures. Only you can figure out your risk tollerance so you can sleep at night. I just hope all newbies figure it out before siging on with a Guru for a large chunk of you savings, if you haven't already (I speak from experience on this one). There is an enormous amount of FREE knowledge right here on BP and some really great advise that will save you ALOT of money and stress.

Thank you Bob and Marcus for the suggestions. The Chandler property is in the Sun Groves community. There are currenty about 45 properties in the same development for sale and nothing is moving. Only one sale in the past 6 months. All the other houses continue to drop their prices, which has not resulted in any more sales. Thus, I don't think the prices are the problem. I had already gone down the refi road and due to the newer and greater "Flip Rules", I cannot do a cash out refi until I have now held the property for more than 6 months in January 2015. Also, if I do refi then, they will only loan 75% of the price I purchased it for at auction, not the appraised value. You can see my delema, since I am new to investing and need my money back to move forward, which is why I started flipping. Lease/Option to a seller with this financing would leave most of my money tied up in this property after paying off the hard money.

As for the Chase property, it would be great if I could find someone interested in developing the property. I figure a Triplex at least $600 per unit would generate cash flow of $21,600 per year. If I figure a 2000 sq foot new build building $117/sq ft is $234K, which would be around a 10% rate of return if paid off. Cash on Cash return should be much better using leverage? But, as I said I am not a developer and wouldn't even know how to get a construction loan etc. at this point or if my costs are correct. At this point, I would be better off getting what cash I can out of the property and eat the loss to move forward. The alternative is to just sit on this property as a land investment until such time as I have enough experience to deal with it.

I agree with everyone elses posts here. Get a conservative ARV from your realtor, multiply that number by 70%, then subtract the estimated cost of rehab your contractor gives you. If the number you come up with is in the ball park of what the wholesaler is quoting you, PULL THE TRIGGER ;-)

I reside in Chandler AZ, a sub of Phoenix. I am currently still employed as a CPA and started investing in real estate two years ago and the learning by doing has been tremendous in experiencing the good, the bad and the ugly! I have managed to purchase 8 properties in the past two years and really only made money on the first one that I flipped. I now have two rental properties cash flowing positive, but had not planned on being a landlord yet (Flips turned into rentals). I currently have one property that I rehabbed in Chandler that I can't seem to get sold that has been listed on the MLS for 4 months now with hard money payments of $2K per month chewing through any potential profits. I also have another property purchased at auction next to Chase Field, that I have $50K into and two contractors told me to tear it down, whcih would cost another $8K. I am not sure what to do with this property as funds are tight, so it is just sitting there until someone helps me figure out what to do with it? It is an ideal place for a multi family, but I have no idea how to get it rezoned from single family or how to finance building it? Anyway, I have been listening to BP podcasts for some time now along with investing way too much of my hard earned money into the various "Guru's" education and systems to the point I think my head will explode with all the confusion. I really appreciate the advise and topics from all the members here that aren't looking to seperate me from tens of thousands of my money as a new investor that needs every penny. I look forward to building relationships here and networking with all the like minded investors. Thank you to Brandon and Josh for creating this great networking site!!!!