All Forum Posts by: James Wheeler

What sort of rehab, if any, does this need?

If I were in Jersey I would give you 10k for it... you might have something great on your hands, but here is the BIG question... Do you have it under contract? If not, then the question is moot. Otherwise, I would, in your situation, quick flip or wholesale it to another investor... You have approximately 56% ARV with purchase and rehab, even adding the $10,000 (which I think is unreasonable for a wholesaler to do... in reality I think closer to $5000 is reasonable even though many will agree with more and all the guru's basically teach wholesalers to gouge as much flesh out of it as they can...) you are still at about 59%, which is pretty awesome. I think that Jersey limits who can "wholesale" and that you probably need transactional funding to do an A-B B-C close (as well as a closing agent that is willing and knowledgeable about this practice).

When you have the deal closed and your 10K in hand, the question then becomes: "what will you do with it?"... well since this will most likely be taxed as ordinary income (assuming 35% state and federal taxes to be paid) you will pay Uncle Sam and Godfather Christie 3500... leaving you $6500 ($5000 nets approx. $3250). 

Now I am not a lawyer, nor a CPA so I am neither legal nor tax advice... please seek professional help for these... I would open a business account and deposit all but $100, then I would take my wife to dinner to celebrate and in the morning... start finding another one to do... then repeat until I have enough in the bank to start fix & flipping properties on my own... 

Also, I would suggest credit repair services... there are some good ones that can help you rebuild and reestablish good credit.

Best of luck in your endeavors!

~James

illbuyyourhousechicago.com is availlable!

Education can be valuable and worth every penny spent, depending on what it is that you are buying. What was he offering for the money? If you can find value to make more than he is charging it may be worth it. You are correct, you can find all the information here in BP, unless he is willing to hook you up and connect you to his network of lenders, buyers and contractors... Best of luck!

~James

You could try to FSBO it without using your realtor, or lease option, or Sub2 or any other number of creative strategies. There is a buyer for every property, the trick is to get them into it... The market should not determine if you make money any more than the wind tells a sailboat which way to travel. Personally, under these circumstances, I would probably sell with a lease option, get at least 15% down... So you are above market, who cares - the buyer you want probably can't get conventional financing anyways. You wrote that you owe 169K on the property, and comps are running at 130ish, no problem.

1st, what is your credit like, what are the terms of your loan?

2nd, IF you sold it FSBO you would have zero commissions, I understand that New York is a lawyer closing state so I would contact a closing attorney and find out what it costs to close a property with title work etc. [lets pretend it is $2500 for combined buyer and seller, I like numbers and atm I have none... ;) ] Ok so you NEED 169,000 + Closing Costs (2500) so you know that is 171,500 You market it for 179,900 as an FSBO and offer easy terms with Credit 560+, If the bank said "NO" we may say "Yes!"

Now you have the buyer who loves it and is qualified (ie Credit Score and Verified income) so you get the down payment of 15% ($26,985). You take that and pay your closing costs, leaving you $24,485, take your wife to a nice dinner, $24,400... From the numbers you gave us you have an effective 11% interest rate on your existing mortgage, assuming a 30-year original note... and about 24 years left on it. So let's assume you have a 900 mortgage payment with 600 in taxes and Insurance at the moment if you offer the Lease Option a 7% Mortgage over 20 years on the balance of $152,915 that they owe after their 15% down, you get $1,186 plus the 600 for taxes and insurance, you still make your payments to your bank and put 20K on the principal from this transaction bringing your owing amount to 149,900 (keep your payment the same and adding in $100 to the principal every month) leaves you with $186 every month for 207 months (17.25 years) and the entire $1186 per month for the remaining 33 months of the mortgage you provided, Net Profit before tax? 

$186 x 207 = $38,502

$1186 x 33 = $39138

$38502 + $39138 = $77,640

Not bad for "creative real estate," all in a days work! - If you love the idea and it works I won't even charge a fee for the advice ;-) (but won't say no if you offer either, lol)

If you sold it tomorrow with a realtor for the same $179,900, assuming the 6% commission and 2500 in closing costs divided you have a net out at -$1144. Yes, that is right unless you pay more in closing than $1250 or can get the buyer to pay all closing, then you might get enough for a cup of coffee.

As for the "Due on Sale Clause," I have not heard of a bank enforcing it on a performing note... as long as you make the payments, the bank is usually pretty happy - they have bigger problems than you selling your house.

** Please note that I am not an attorney or a CPA, the data I provide is from personal experience and knowledge of finance and industry and should not be construed to be legal or financial advice in any way. **

 Jordan,

Being a teacher is the greatest career ever and it works very well with real estate investing. Summers off, spring and winter break... lots of time with weekends and evenings off plus we get actual time we can take off during the year. Banks love us because we have steady "secure" work and a solid W2... Investing doesn't have to be "full-time" to be successful, you just need to take the time to build your team and develop it so that you aren't the one doing all the work... after all, if you are the "self-employed" rehabber then you own a different job, and you move from the E to the S quadrant rather than into the I (investor) one. If you are unfamiliar with the quadrants, I recommend Robert Kiyosaki's book "Cashflow Quadrant." Another great book to read if you haven't already is "Rich Dad's Before You Quit Your Job."

Have you played Cashflow the game? If not, I recommend that also, to get out of the "Rat Race" or quit your job, you need to have passive income that equals or exceeds your monthly expenses. That way you can "afford" to quit your job.

As Jim Rohn says: “If you’ll devote, to start with, let’s say 10-15 hours a week, where you’ll start making a profit, here’s what you can now say. I’m working full-time on my job and part-time on my fortune because profits lead to fortune.” "Then you can say, 'Right now I’m working part-time on my fortune and full-time on my job, but it won’t be long until I’ll be working full-time on my fortune. Can you imagine what life is going to be like?'"

Hope that helps!

~James.

From my experience if the prospective tenant is subletting then their reference would be the tenant of record and the landlord of the actual property. While the previous landlord cannot verify payment history they can verify if there have been complaints regarding the unit that they rented and/or the condition of the property upon vacancy. The actual lessee may be able to provide more details though I would verify with the property landlord that the tenant was permitted to sublet and what the requirements for that would be.

I would also do a background and credit check on them, these items can reveal a lot of information about them personally, including previous addresses. That will help you determine if they actually lived where they say that they have.

My simple rule at the end of the day is: If it smells fishy or rotten... throw it out. There are more tenants and you will likely regret your not trusting your gut later.

Hope that helps!

~James

Welcome to the community! You are right there are lots of great resources on this site and it is wise that you have the Pro membership also! Best of success in your investments.

~James

7%... that is steep. Time to renegotiate with the agent... I have a listing agent in Arizona that lists for 6% unless he sells it then it moves to 4%. This is a win/win since he gets 3 for listing and he and if he sells it himself he makes 4 and I save 2. 

Every cost is negotiable in business and life. Consider the "price" to be their opening offer rather than a "Walmart" price tag...

Heck, my wife needed her winshield replaced recently,our insurance covers 100% with $0 deductable... I negotiated a $50 rebate, free headlight restoration and a high gloss wax job for the car... Negotiate, negotiate, negotiate...go for the "no."

There is a story I heard once about a new salesman for a suit shop had his first customer,they wanted a new shirt... the salesman sells him a couple shirts, some ties, a suit and a few other things... 

Just keep going now! Don't one and done... CONGRATS!