All Forum Posts by: Elliot Marszalek

Just wanted to give a quick update on my situation for those that are still interested. I made my first purchase about 4 months ago and it's a completely different situation than I expected to be in for my first purchase. I was looking to house hack and ended up buying a live in flip.

As @Mindy Jensen would say, "I bought the ugliest house in the nicest area" with the neighbors thanking me for buying the "blight of the neighborhood" and wanting to fix it up. The property was listed on the MLS but because it was a Fannie Mae first look property I was able to get it under contract before there was competition. Purchased the property for 85k, with closing costs it was just under 91k. I plan on doing the majority of the work to the property myself and have already done quite a bit to it. By doing the work myself I'm learning a lot and saving money at the same time. Since the home has to be owned for two years before I can sell without paying capital gains I have plenty of time to do the necessary renovations and continue working my full time job with lots of overtime. I know market conditions can change drastically in two years but my realtor thinks that in the area I'm located and with my renovation plans I should be able to sell it for $200-212k. If everything goes well and I don't have any significant costs added to the renovations it should be a home run and I'll be looking for my next deal whatever that may be as the time passes.

As always thank you to the whole BP community and especially those who have commented here and spoke to me directly with DM. Had I kept my blinders on and only focused on house hack properties I would have missed out on this opportunity.

@Mindy Jensen

I've messaged you a few times and I really love BP (more specifically the money podcast/FIRE community aspect) and would like to contribute whenever I can. I have a pretty busy life right now so if there's any time requirements that might be an issue but if I can write when I do have the time that would be great. In the post you mentioned what's your expertise, well I see myself as more of an enthusiast at this point with the thought that since I'm an eternal student I'll never really be an expert in my own mind. I also don't have any writing or video that I can link to so hopefully having something done prior to this isn't required. 

Thanks for so many informative responses. If it's going to cost even 1/10th of the amount Casey said then it makes it pretty easy to pass on this property. There were some other very expensive fixes that I might have been able to do over time but the attic space would have had to happen almost immediately to finish a 2bd unit and without that it would leave it cash flow negative. Hopefully others are able to benefit from the information here too, I sure learned a lot.

Thanks I appreciate it. I definitely haven't seen trusses like this anywhere else so you're probably right that I should have a structural engineer take a look.

This is the attic space in a property I've been analyzing and was wondering if anyone could help me out with the trusses. If I purchased the property I would like to remove these trusses and replace them with ones that make the attic space open enough to make into living space if that's even an option. What kind of options are available and costs would I be looking at for that kind of renovation? I searched google about attic renovation and trusses quite a bit when I was attempting to research and couldn't find any other examples of attics with trusses like this so any thoughts would be appreciated. 

@Daimian Leslie

No I'm not even really sure how the wholesale process works. I understand the basics and that you're a middle man for the transaction but I was looking to purchase for myself not to sell to someone else. Like many have said, I'll have a hard time finding anything if I'm sticking strictly to what the UBG says. I think I may have been over estimating the rehab costs as well which would also help explain why the offer price would be so low compared to the list price. 

I really appreciate the feedback. Thought I was doing it right going by the formulas and calculations but I guess they don't hold true entirely with today's market. Like everyone says, you don't know what you don't know and it's really great to get responses that have constructive criticism so I know where/what I need to improve to be more successful. I have to admit I almost felt bad even considering offering at some of these prices because I know that if I was in the sellers shoes it might even be insulting regardless of how much work the property needs. So far the only one I've put an actual offer in for is bank owned so at least there's no emotional attachment to it.

@Bryan Devitt Thanks for that tip. The reason I ran the numbers that way is because that was the formula that's mentioned in the UBG for flipping houses. I definitely need to learn more about the wholesaling process. I listened to a few youtube videos on it with people who do it as a day job and it sounded like a whole lot of things you need to know before you even start.

Thanks for all the responses. Maybe I'm just doing bad math, these are how I've been evaluating the properties.

For the live in flip homes I've been looking at the basic formula I use before I dive in deeper to the details is (ARV*0.7)-Rehab cost= Initial Offer Price. If it looks like it might be a good deal with that then I go look at the property in person and get a better idea of the estimated rehab cost and adjust my offer price accordingly.

For the rental/house hack properties I analyze I just use the rental calculator and fill it in as accurately as I can. Most of them won't even break even at the list price. If it's one that I'd actually want to move into and house hack I try to get as close to break even or slightly positive cashflow as possible and if it's one I don't want to move into and just look at as a rental I try to get to +$100 per door cashflow. 

It may also be that the area I'm looking in is just too small as well, I have my search set up to look for properties that are within a 20 minute drive of a set location.

I've run the numbers on quite a few properties in my search area and have found that the majority of the ones I like the numbers aren't good on unless I offer way less than the asking price. I'd like to stick to my numbers so I don't buy a bad deal but the most recent one I ran came up with an offer price at 40% of the sellers list price to make it work. This was the lowest so far but most of them have been around the 50-65% of list price range after looking at rehab costs and rent rates etc. Should I be considering what the rent rates should be instead of where they are currently? If I would offer on something based on those rates and get it, do I raise the rents from day 1?


Thanks in advance for any help/advice on this!