All Forum Posts by: Greg Clark

I'm looking at a potential flip. Is there enough potential profit to do this deal? It doesn't quite satisfy the 70% rule, but I'm being pretty generous with my repair costs I think (given the market and the property size). And this would be my first flip, so frankly, I'd consider breaking even a success for the sake of the learning experience.

The details are as follows:

$150k purchase price
$69k for rehab and holding costs
$20k admin/purchase/sale costs
$280k ARV (based off a nearly identical house recently flipped around the corner)
$40k desired net profit



This is what I have for rehab costs:

You'll want to consider the fact that you have to rent it for a reasonable amount (I think it's illegal to rent for way high or way low, but maybe that is a local thing), and that rent is taxable income. Then you have Depreciation Recapture when you sell, which increases the amount of taxes you'll pay then. 

@Stephen Keighery Ok, that makes sense. I'm used to more traditional sales where you never want to leave (or have the customer leave) without closing, but that's usually for simple purchases of goods. I'd hate to get a verbal agreement with them just to have them change their mind later when I send over an actual offer. But I guess if that happens, maybe they didn't feel like it was a good deal to begin with. 

That's good advice. I'll probably do that. Is it common practice to bring a contract when you visit the property the first time and try to get the seller to sign it then and there, or is it more common to simply discuss terms and have an attorney send an offer contract to them later? I want to be prepared so I don't sound like such a rookie. 😅

I'm interested in going after off-market deals without a real estate agent. My plan is to start marketing and reaching out to individuals. I'm a bit unclear as to the ideal process though. Do I set up a time to meet with them, look at the property and make an offer on the spot and try to get them to sign? Or is it best to make an offer the next day or something? 

I guess my concern is that I'd like to get them to sign something as quickly as possible, but I want to remain flexible enough to be able to get creative (offer to buy subject to, owner financed, cash, whatever). 

What is the ideal order of operations? Any books out there that go over this process in detail? Also, I'm in Utah, if that matters. 

Wow, I didn't even know they made it in 1/4 inch. Thanks! 

Oh, interesting. Thanks for that insight.

I think that unless something changes my mind before I get to the store tomorrow, I'll probably just do 3/8 inch drywall over the top and call it good. Though I am super curious what's behind that drywall... 

Just pulled off some paneling on a rehab job and behind it was a thin layer of plaster. Then, 1/2 inch Cement backer board. THEN drywall.... 

So from outside in, it's vinyl siding, weatherproof wrap, sheathing, studs, drywall, backer board plaster, paneling. 

Why would someone do that? Was it common to put Cement or plaster over the top of drywall in the early 50's?

And what do I do about it? I'm considering either removing it down to the studs and putting up drywall or just adding a layer of 3/8 drywall over it to smooth it out and calling it good. 

I have a duplex under contract which I plan on house hacking. One side is already vacant. The other side is rented, but it's rented at about $200-250/month less than I could rent it if I fix it up inside. I'd probably spend about $6k to make it pretty.

Any thoughts on how to run those numbers to determine if it's worthwhile?

My first thought is to do something like: (increase in rent * 12) ÷(cost to rehab + vacancy and re-rent expenses) to get the cash-on-cash return (COC of this slice of the deal). In this case, that ends up being about 30%, so great deal, right? Or did I miss something?

I've got a potential deal on a 3-structure/4-unit sale (5% down conventional). It's one SFH, one "efficiency unit" and a duplex. The duplex rents will basically cover my mortgage and the SFH rent will cover other expenses plus provide some cash flow. But the efficiency unit is a 16x10 foot nightmare. The toilet is in the bedroom area. The sink is in the living/entry area. The shower is in the basement under the stairs (yeah, this tiny structure has a basement) and there's really no kitchen.

I had a contractor eyeball it and he said he guessed it would be about $15k to redo the place (move the shower/sink into the bedroom, convert the upstairs entry area into a tiny kitchen, consolidate the furnace/water heater with smaller units and move them to a corner, and then have the basement be the living area. 

I think he's probably coming in a little low. So it might be closer to 20k. I don't think I could rent this unit for more than 300/mo, so is it even worth trying to fix it up, or should I just move on? 

The property is listed for $229k and has been on the market for a few months now. I figured I'd offer about 200k. 

Any thoughts on this? If it costs 20k to repair, and I only get 300/mo in rent should I put that money elsewhere? Or would the net cash flow be higher since there's almost nothing that I would have to repair for at least 5 years?