All Forum Posts by: Jason Brown

 I second this. A great tenant has less to do with the whether or not their job is a blue collar or white collar as it does with their overall history of responsible behavior. No matter what people say Miami is still a service based industry city which runs in line with a lot of "blue collar" professions. Maybe that is soon to change with new tech knocking on the doors but that's the current situation.

Now as for cashflow. Well everything will cashflow if you pay enough lol so perhaps you're wanting to know where in Miami could you find a conventional financing SFH that would cashflow. The answer to that unfortunately is nowhere. I don't doubt that with a lot of searching you might be able to find some lower end condos or apartments which might produce a little cashflow with a low HOA but for SFH that game is pretty much over.

Now can you find a serious value add fixer upper SFH, renovate it and rent it out for cashflow? Definitely but anything turnkey you'll most likely have to find another creative use to generate income such as STR in order to make it viable.

Good luck.

Within that price range I would guess that you would probably be looking closer to a Jacksonville type area. I doubt anything like that would fall in very many B class areas but I'm fairly sure you would have some options available. At 150K a side though what kind of rents do you think you would be getting? My guess would be anything from 500 - 700 a month but you never know seeing as the rental market here is Florida has been heating up like crazy.

Best of luck
  

Very impressive. I'm not 100% clear on your numbers so could you help me understand.

To me it looks like you're buying these for approximately 70% of your final sales price that I get. Are you selling to end buyers or as deals to investors? 

If the latter then, for deal #2 for example, you're saying that you're acquiring for 290K and selling for 415K with an ARV between 550 - 590K is that correct?

That would essentially mean you are buying them for approx 50% of ARV less costs?

Is that correct or am I misunderstanding? and if that is correct why the hell am I not on your list lol.

South Florida wholesalers I need a little honesty from you guys. 

I'm a serious buy and hold investor here in Miami and I'm looking to get a better understanding of what you guys are seeing in today's market.

I buy mostly SFH and small multifamily deals.

1. What kind of deals are you guys getting under contract?

2. What % of ARV are you locking them up for? Meaning on average are you guys passing these on to your buyers at 50% of ARV less costs, 60%, 80%?

Everyone is familiar with the 70% of ARV less costs benchmark when all is said and done but if those numbers are antiquated or just not the reality of today's market then what is?

Let me know.

 Agreed. What I think Zillow is NOT doing however is going after the more serious value add properties that a lot of us small time investors are set up for. 

Zillow is and always will be a data company. As they leverage that information into their lending and closing services I am willing to bet they will look for more complimentary business activities (like flipping hahaha) even though those activities themselves may not be true profit centers. Data is much easier to aggregate and monetize when you are now actively creating it lol.

We all know that Amazon's true goal, apart from becoming the online retailer of the internet, has been to become the primary server of the internet (AWS). To say that their retail division isn't profitable may or may not be true but it's nice to front and promote other more pedestrian lol lines of business vs being solely known as a BIG DATA engine.

Originally posted by @Vayna Jerabek:

Investment Info:

Single-family residence wholesale investment in Kent.

Purchase price: $370,000
Cash invested: $10,000
Sale price: $450,000

JUST CLOSED on a wholesale deal here in Kent, WA - here's how it went down!

To get the deal, I got a list of homes in two separate cities all older than 1990 and sent out 16,000 "We Buy Houses" postcards to the addresses - roughly $6,000 all-in. These went out over the span of 4 weeks (4,000/week) and within a couple days, the calls started coming in and I set 4 appointments in one weekend - this was one of those appointments!

I set the appointment and went to meet the seller and check out the house - the home was in great condition, just original to 1962 so it was a 3 bed 1.5 bath cosmetic fixer. I asked permission to take photos and video of the house and did so, and I learned that she had just moved her elderly mother out of the home and had already talked with several realtors about listing the property. She wanted to avoid the hassle of the real estate market and was interested in how our offer would save her closing costs, so we looked at the numbers and it turned out that yes, she would net a few thousand dollars more by listing but I shared that selling off the market would be less hassle on her part, plus I would cover all her escrow fees and close in as little as 1-2 weeks with no contingencies. At the house I offered her $365,000 and she countered at $370,000 - I accepted and wrote her the offer. She signed a few days later and I got to work finding a buyer!

The ARV of the property is $520,000 and rehab cost would be about $30,000 (~77% margin). I posted the house for sale on the WA State Real Estate Investing Facebook page for $400,000, going for a $30,000 assignment fee.

I received 40-50 inquiries from that one post. For each person interested I emailed them the additional photos and video walkthrough I had of the property and let them know that if they would like to see it to please send me their proof of funds PLUS proof of downpayment (since most will be hard money financing). 4 people responded and their proof of funds checked out so I scheduled them to view the property at 30-minute appointment intervals all on the same day. Here's where it gets interesting -

Of the 4 potential buyers, they were all interested and I let the fourth buyer know we already had bids above $420,000 and I was fully prepared to take one of those offers. At this point I didn't think the fourth buyer would go for it but they were pretty unique - not only were they paying 100% cash out of pocket, they also had a 1031 exchange to fulfill so they had no issue bidding the price up to $450,000 and offered just that. He was an elderly man (with his adult children involved helping him) and was looking to keep the property as a rental, not even to flip (despite being old it was still livable). So he found his perfect property!

I tried to proceed per usual by using an assignment contract to "sell" them the Purchase and Sale Agreement, but I quickly learned that the 1031 exchange agent needed a Purchase and Sale that says $450,000 as the purchase price in order to release funds - the assignment contract didn't fulfill this as the assignment is stated as an additional "fee". At this point I could've moved on to a different buyer to simplify the process, but in order to make this work and NET more money, I decided to close on the house with a hard money loan with the seller, then sold it to the end buyer for $450,000 a few days later.

There were more fees this way, but like I mentioned I still netted more money as opposed to assigning the property for less.

Here's how the numbers played out:

Purchase:

-$370,000 Hard Money Loan

-$14,501.47 Closing Costs (out of pocket)

Sale:

$450,000 Sale Price

-$12,000 Selling Agent Commission

-$9,352.33 Closing Costs

-$369,737.24 HML Payoff

=$59,649.55 Profit

Notice the buyer did have an agent so I factored her commission in. If I had wholesaled the property the "traditional" way for $420,000, the profit would have been about $50,000 so I still came out ahead by jumping through hoops to sell the property at the bid up price.

Lots learned during this process - while "double closing" the property was quite unconventional for typical wholesaling, in this case it was worth it because the numbers worked, even after tons of selling costs. At times it felt like a waste that just because of the buyer's 1031 exchange, the "easy" way was to double close and pay all those extra costs, but I remember that it was because of the 1031 that they were willing to pay so much. At the end of the day, everyone won and I gained a lot of experience by going through that process. Very grateful for the work I do and I'm excited for the next one!

I'm actually a little upset I can only like this post once.

What impresses me the most about this isn't even the amount of money, which is amazing by the way.

You did what 99.9% of all wholesaler's won't do. You put your money where your mouth was and took down the property yourself AND MADE EVEN MORE money because of it.

People come on here and complain about the ethics of wholesaling or whatever but you did your own LEGIT marketing to locate the seller, offered them what YOU were willing to pay and able to CLOSE on and made the deal happen.

A lot of people would be on here asking for advice on how to hide the difference between the contract price and the sales price from the seller which in my opinion is foolish.

Hat's off to this one. That's a pro move in my mind if ever I've seen one.

I just don't understand. I spent a good 3 weeks calling lumber yards across all 3 counties here in south florida trying to get some red oak for a staircase. 3 weeks!

The way I had understood it was that they were simply running into the same supply chain crunch for the materials and renovations of these houses that the entire industry is feeling right now. Their business model is to try and find newish homes that really do in fact only need paint and carpet, do quick rehabs and then get them to list. Margins are slim as printer paper on the flips but they're shooting for volume as well as the fact that its a great interlocking income stream for agents fees and commissions as well as for their lending and closing lines of business.

I guess it's good to know that I'm not the only one who can't find two sticks to rub together at the lumber yard.

Also to echo what everyone else is saying without some kind of signed affidavit from the roofer that he told you about the damaged sheathing (which I can't imagine the buyer being able to get a hold of) I think the buyer will have an uphill battle as the burden of proof lies with them and not you.

I've replaced a few flat roofs. Are you saying its possible that the roofer stripped off the old bitumen/tar roof and found rotten sheathing but instead of replacing it they just laid down new felt over it and torched it down?

I can't imagine a legitimate roofer doing this without alerting someone to the condition of the OSB or plywood underneath just to cover their butts.

I guess the real question is was this a licensed roofer or you know....... just a guy?

That might be the real underlying issue.