All Forum Posts by: Gary Nash

Where is your market?

gary

Most investors don’t identify their most profitable exit strategy on their deals therefore, they’re leaving big piles of money on the table. I was literally just telling a high-roller investor friend of mine last night, how I turned down 40k on a wholesale play. He immediately said he would have taken that money and ran until I explained how I was going to put 65k tax-free in my pocket and receive at least 800 dollars positive cash flow per month for the rest of my life. Now think about that for a second and let that sink in. You understand that 40K after tax is really only 26K and if you did that 10 times you would have 260k after tax. In two years, you’d probably be broke. Where 65K times 10 is 650K and with 96k per year residual income for the rest of your life, in two years you could retire. Just sayin ;- )...

Would you turn down 40K for a wholesale deal that had a 159k ARV as it sat (1000 s/f 2 bed 1 bath)?

I agree with Hoa Nguyen, protection in this day is always a good thing.  On another note, you do realize any house left unattended for lengthy periods will expose you to a multitude of problems, for example:

• Mold, rodents, insect infestation is almost certain
• Carpetbaggers, homeless, and or drug addicts may become a problem that could ultimately be your responsibility
• What is the city ordinance? You may be responsible for yard care, trash, and water.
• If there is no water, the city may condemn the house, prove the house to be a nuisance, and order it to be removed, all of which will be on your ticket.

Amy there is some language that states "All renovations must also be permanently attached to the property and add value to it. The renovations must be completed within 12 months of getting the mortgage, and the lender must monitor the job and have all the paperwork that supports the project.

HomeStyle loan requirements and rules

What properties are eligible?

Primary residences of one to four units, one-unit second homes, and single-unit investment dwellings, such as co-ops or condos, are all candidates for Fannie Mae HomeStyle loans. Manufactured homes are eligible, too, but renovations are capped at 50 percent of the “as-completed” appraised value. I hope this helps

Regarding the EMD, I certainly hope your contract states that the EMD will go to your title company and that it is fully refundable, no matter what!  In all my years I have never had a seller check to see if I placed the EMD in escrow, which may be because I have purchased all the properties, I put a contract on. 

Now let's circle back to my previous question about a "Good Deal" and if you don't mind, I'll rephrase the question. What does making a profit look like to you?  The reason I ask is I help investors make more money on their deals, so I was curious.  

Next time build more value in your project and inflate the cost breakdown.  Too much to explain here, reach out.

gary

First, I like to build value in my investment by seeing the property as what it can be by creating more space within the space, and then evaluating the most profitable exit strategy.  Then if it's a fix and flip or a buy and hold I create the bidding docs and prepare the project, so everything looks clean and simple.  Then I bid the project out with the intent of finding the best contractor for the project, one who needs the project the most (for whatever reason).  Then I buy out the contract (meaning having the contractors give me their best and final by adding some additional work to their scope because, if you don't, they will just say, "That is my best and final").  Finally, I put together a mutually agreed construction schedule, link it to their contract, hold their hand to the fire and Walla!  BIGGER PROFITS  

I have a simple rule if it's an expense I charge it or write a check. If I cannot expense it, I pay cash.

Bonus note: I Charge gas as a direct job cost so I can expense the entire amount.  If I put the gas in my general ledger as an expense, I only get a percentage. Just sayin. 

gary

Eddie, don't ever your optimism.  With that said most investors prefer to pigeonhole their go-to contractors.  Understandably so, because if they get too busy, they may not have time for their projects. Now, with that said, most investors don't know how to find the best contractor for any particular project, although they think they do. 

You see there is a multitude of types of contractors—therefore, when you are soliciting contractors, it’s important you understand these different types and what they specialize in so you can get started in the right direction.

For example, when you are looking for a doctor, you would narrow that search down to a specialty, like a cardiologist, general practitioner, or orthopedist.

The same holds true when you are looking for a contractor. First, you would narrow your choices down to the type of contractor, like General Contractor, and then you would focus on a specialty.

Examples of general contractor specialties include design-build contractors, remodeling contractors, commercial contractors, or new home builders. All of which have different approaches and cost ramifications.

1. Many investors compound their losses by hiring any contractor interested in their job because they don’t understand or have the skillset to cultivate, communicate, evaluate, or manage contractors effectively. You see, contractors have a precise mathematical formula on how they charge, and if you think a contractor’s fee is based on their level of expertise, the scope of the job, cost of materials, and or other factors that would make sense, well then, you’d be totally wrong on any one of those instances.

Contractors have their method of pricing, and it’s all about you! Most investors don’t understand this, and they unknowingly jack their renovation costs up just by what they say, how they say it, combined with their lack of knowledge and demeanor.

Now, if you would like to have a better understanding and everything you need to know about contractors before making those calls. Such as, where to find contractors, communicating with contractors, how to prepare budget pricing, what you need to do before bidding your project with a breakdown of a buy-out process that will save you thousands. Reach out and let's see if I can help.

gary