All Forum Posts by: George Krajacic

To come out of your situation with most money in your pocket you first have to educate yourself.

First I would put a lock box on the property so that you or your relatives do not have be letting people in for inspections/estimating.

Second, I would establish as-is value and "After Repair Value" (ARV) by asking 4 or 5 real estate agents to give you both numbers.

Third, I would use “THEBLUEBOOK.COM” and get 4 to 5 suitable contractors to give you complete renovation bids.

Fourth, I would go to local Real Estate Investment Clubs (You can find them on internet) and talk to flippers. Many of them would be more than happy to provide repair funds and then split the profit with you. Again you would have to talk to 4 or 5 flippers and they would do their own estimate and tell you what they are willing to do and how the profit would be split.

Fifth, after you get all the proposals from the flippers than you call back all the contractors that gave a bid and ask them if they would be open to doing renovation with their funds and getting a portion of the profit on top of their bid. When the house is sold, first all the sale costs are deducted, then agreed repair cost is deducted and what is left is the profit.

Finally, how the profit is split depend on negotiation and on how extensive renovation was. It has to be win-win situation and the hardest thing will be to know when the people are trying to take advantage of you. That is why I suggested educating yourself and hopefully you come out with enough money to do this again and start having an income. You have an unbelievable opportunity make best out of it.

Also I would immediately start going to local investment clubs and really get to know investors and flippers. Remember you have valuable property! Almost anything that was built in nineties and has ARV of $270K is worth fixing.

Good Luck,

George Krajacic

p.s. When you narrow down to one or two potential partners I would check all their references and I would also check their credit(for credit check you have to have permission).

Just be upfront with your lender and ask them what they need. Tell them that you are going to do certain amount of work yourself and if it’s okay. You may need to do is indicate the work you are doing yourself on the estimate.

There are a lot of good estimating tools that you can use to do the estimate yourself. Google “rehab estimator” and find something that suits you. Many of them give typical costs already loaded for many items.

You could also use a service ($200-$300) that will draw up a cost estimate for you.

Good luck, 

George Krajacic 

Hi Tiffany, 

I think your decision to stay away is wise since you are a new flipper.  In general, I recommend that new flippers stick with rehabs that require paint, carpet, some landscaping, and maybe appliances.  Put most of your hard work into finding a good deal for now.  Then work your way up on more difficult flips and pick up some education and good subcontractors. 

Good luck, 

George

Hi Charles, 

Sorry to hear about the last minute funding problem.  But as we say in the business,"If you have a good deal, money will find you."   

Good luck with re-funding your flip. 

George

Hi Renee, 

The primary issue is that it sounds like you are referring to a house you live in.  That makes you fall within the rules of consumer financing.  Most private money lenders do not make consumer loans because of the limits on interest charges are under what they need for a return on investment.   If you are seeking private money at 5%,  only banks give those types of terms.   It makes sense why you are running into so many scams if private money is claiming to offer loans at that rate. 

Good luck, 

George

Hi Gabriel,

It is a good idea to consult with a few lenders while you are looking for an investment flip. You should know the lenders’ requirements for down payment, points, interest, other fees and conditions. This will give you a good idea of how much house you can buy based on your available funds. Many lenders require 20%-30% down and then they will finance 100% of the fix up costs. Fix-up money are controlled funds that are paid out as work is done (milestones are hit).

Get to know your local private money lenders at real estate investment clubs and association meetings. Try a google search or meetup.com. You can get good referrals from your fellow flippers that way as well.

Also, to help you analyze lender costs and project profits, there are a number of good “flip calculators” available. Try a google search to download one you like. It can provide side by side analysis for comparing lenders’ terms or in projecting potential profits.

Good luck with your projects,

Geroge Krajacic

Thank you, Robert and Cornelius!  I like what I've seen that Bigger Pockets has had to offer so far.   The community seems so friendly, knowledgeable, and helpful (like yourselves!) 

Regards, George

Hi DJ,

You are on the right track with starting to look for something that needs mostly cosmetic repairs. That is a good way to get your feet wet.

As far as the neighborhood goes, it can be a “C” and even “D” neighborhood as long as the crime statistics are not too high. Many investors make a great return on investment in those communities.

I would suggest that your purchase price plus repairs do not exceed 80% of your projected After Repair Value (ARV).

There are a number of useful tools to help calculate this on the web. Try looking for “Flip Calculators” or do the calculations in Excel yourself.

Additionally, if you are paying cash or can get conventional financing to buy that property, doing it yourself might be the right path. However, if you are borrowing hard money, then it is more important to flip the property in 2-3 months, so you may want to consider hiring a contractor for the 2-4 week rehab period.

Good luck with your flip,

George Krajacic

Hi, I'm George.

I am a private money lender living in Orange County, California. My real estate experience extends back over 30 years. I am a real estate broker and general contractor. I have experience in lending, syndicating, building multi-family projects, and residential and commercial real estate sales.

I am looking forward to participating in the BiggerPockets.com community.

Regards,

George Krajacic