All Forum Posts by: James De Silva

Hi BP,

I'd love to get your thoughts on this potential deal.

Sale price: 4 Bedroom, 2 bath - $87,000, VA foreclosure.

Location: Michigan, area with good school district in Oakland County.

From the CMA, seems that the average cost per sqft was $104 (this property is $64). So say we fixed it, resold it for that sqft. Then we're looking at $135,000 ARV. Maybe $140 to be generous since it's a 4 bedroom and everything else in the CMA is 3 bedroom.

Rehab cost

Assuming we purchase at $87k, then the amount of profit for a flip is based on rehab costs. This requires someone with real experience, but off the bat, I know we need to:

• Repaint the interiors ($2-3k?)
• Carpet the upstairs bedrooms (3 small bedrooms - 2K?)
• Replace the flooring in the kitchen. (2k?)
  
  • (What's your typical estimate per sq ft for flooring related things?)
• Fix the 2nd floor bathroom (No idea what state it's in. could be working and just winterized..). ($4k)
• The windows seem to work, but about 5 window panes are broken. ($2k)
• No appliances provided, so new appliances should be installed. ($2k)
• A few smaller odds and ends with broken cabinet doors etc, but fairly minor. ($1K)

A few interesting oddities to be aware of:

• There isn't a garage, but there is a brand new shed where there should be a garage. The backyard is enormous as this is a 5.8k sqft lot.
• This is 1.5 streets away from a train line! 
• There was a permit taken in 2001 to look at some sewer repair work, but the permit was never closed. I don't know whether this means it was fixed and just never updated.

I'm happy to either rent or flip it depending on circumstances. ($1350min average rent in the area.)

Happy to hear any and all thoughts!

@Sonya Stovall @Neil Aggarwal Thanks guys, good advice.

For those who are also wondering, these things can definitely be challenged without too much hassle. My realtor didn't charge the fee in the end and I've also asked for the description to be amended to be JUST that specific property. :) Little victories.

I'm in the process of putting in offer for a property, which was introduced to me by a realtor (though it's also publicly available on Zillow). Before putting in the bid, he's asking me to sign a buyers agent contract. There are two things with this contract that I don't like.

1. An exclusivity arrangement for all enquiries relating to the purchase of any single family property 50k to 100k through oakland county MI to be done through this broker for a period of 3 months.

2. An $295 fee that must be paid, even if I decide to not go through the purchase. 

I don't recall having to do either of these with my previous purchase. Is this something I can ask to be removed from the contract or negotiate out? I'm a real estate investor in Oakland County, Michigan obviously.

After completing my first cash only purchase (yay me!), I'm up to purchasing numbers 2 and 3, but I'd be looking to finance these properties given I've only got enough for either one more cheap cash purchase, or two good quality financed purchases.

I'm interested in which banks or credit unions are the best in the michigan area (including out of state banks obviously) to work with as a real estate investor who wants to eventually own a large portfolio of SFRs. Whoever I work with must also be good for refinancing. I'm took @Joe Villeneuve  smart advice and purchased my first property with cash with the intention of eventually refinancing later to cash out the original price + more. Ideally banks/credit unions with lower seasoning requirements (time between purchase date and refinancing date) and smaller LTVs (20-25% instead of 30%) would be better.

I'm currently looking at PNC, Citizens, 5/3rd and Huntington. Would you guys have other recommendations?

Well that's a lot of feedback in both directions! But it sounds mostly positive as to why I, as a real estate investor, would want to work with a wholesaler.

@Jeremy Tillotson Thanks, I'll let you know if I'm ever interested in branching into Indiana. After all, it's not THAT far away.

@Victoria Winters - Great points Victoria. Easier said than done when starting. Sometimes I feel like I want to try ALL the investing types. But there is only so much money! P.s. I've been to Laguna Beach in Cali and it's awesome that you live there. Beautiful place.

@Scott K. - Telling it like it is.

@Brent Coombs  - I totally agree with you, using wholesaler techniques can work. Unfortunately I also work full time which means I need to focus on the deal acquisition, not the marketing work.

@Jesse T. . Solid advice, I suspected that wholesaler properties would be a bit more rough. If you've got a ready to rent property, a realtor would probably get you a better deal as he would have way more clients offering to buy your property. That said, a property that needs some reasonable rehab but would still work out roughly the same as a realtor property after repairs would make for an great learning project if I ever wanted to branch out into more flipping.

@Chris Simmons  interesting 85% is still an reasonable discount I would have thought, but good thoughts. I'll look into the 70% case then.

@Richard Allen Sounds like I need to get out to more REIA meetings and start making better relationships then! If a wholesaler typically has only 4-5 deals, then I'm guessing each investor has a number of wholesalers they have to look after to make sure a steady stream of decent investment opportunities arrive.

Everyone else, thanks for the feedback.

There is a lot of information out here on how to become a wholesaler, but I can't see as much for people who want to buy and hold properties at the best price. Would I be correct in saying the following?

A wholesaler will find properties which are undervalued and get them under contract to be sold to an investor or a rehabber. They want to maintain good relationships since buyers often come back to them, so they might "buy" a property thats 70% below market, and "sell" it to the investor at say 85%. Then both parties are better off.

Whilst this is similar to a realtor, a wholesaler isn't as constrained about what they can say about the property.

1) If this is true, why would anyone who is in the property investment business buy from a realtor?

2) Can landlord investors profit from wholesale purchases or is it only those who rehab and resell?

3) I'm sure wholesalers can be found at REIAs, but what's the best way to determine who is worth doing business with? (Note - For anyone who wants to give referrals, I'm in the Metro Detroit area)

Erik,

Welcome to the BP community. I'm also in the Metro Detroit area and have started my US property journey. I'm looking to close on a property within the next few days, so things have been very busy! It's definitely good to learn as much as possible before starting, god knows I've been spending ages just reading.

However, unfortunately the best way to learn is to get your feet wet! I learned more in the last two months than the last two years of just reading. For one thing, having an impending inspection date or purchase agreement to sign or closing coming up soon forces you to get super familiar, very quickly!

But this is as good a place as any to get a hand.

Hi bigger pockets community!

So after getting started in the community, I've got my first purchase going to closing next week. Very excited. It's a duplex, at a reasonable price in the Oak Park, MI area. It's already tenanted with one good tenant, but with another tenant that I'll need to evict. That tenant is on a month-to-month, long history of delinquency, plus that unit has enough minor issues to fail inspection by the city. But that's a story for another day, probably in stories section of BP.

I'm looking for a good property manager in the Metro Detroit area (read, oakland county). I've read the bar in Metro Detroit is pretty low and you have to be pretty hands on. I live 5mins away from my property, but I haven't the time to be full time property management. It does mean I can drop by to keep people honest though haha :)

Does anyone in the area have any recommendations? I met the guys at Castle Property Management and they seem legit, but being very new, I'm not super-excited about trusting my very first property to them.

Welcome to the BP community! I joined relatively recently as well and this place is a wealth of new information! 

Hi BP! Say I have a property that's 100k (including all closing costs etc). Say I could comfortably purchase this property with cash only.

I obviously don't want all my money to be tied down in this property, so I want to get this financed. But the question is, which would have a better outcome? Purchasing this property financed (20% down) or  purchasing this property with cash and then refinancing it completely with a bank very soon afterwards. 

The property in question is a duplex and already has tenants in it. I'm wondering if I finance later, would I get a higher appraisal value and hence actually recover my closing costs.