All Forum Posts by: Jason S.

price per sq ft is difficult to nail because everyone has a different trim level to which they are completing the home. Some people include fees and others do not. Some include the garage, some do not, some even include it in the price per sq ft calculation.

I would argue that price per sq ft is based on the home sq ft and therefore the garage is thrown into the numbers.

Also what trim level are you at? 1/2" drywall with plastic fixtures, particle board vanities and cabinets, and fha minimum grade throughout or 3/4" drywall, 10' ceilings, granite, wood tongue & groove cabinets, deep sinks, 9" faucets, smooth stucco, and full interior trim?

What is it that you are doing.

With all of that said, a basic 1300 sq ft home with 22x22 sq ft garage with FHA minimum trim level, comp roof, single gable, fake pergo, wood cabinets, granite - $50 sq ft, in CA, based on the sq ft for the home.

Of course fees here, water meter, sewer, etc will be another $40K.

Everyone's plan is different as is every market, target end buyer, as well as extent of work to be done. Do you need permits? What are you doing? etc.

I just think that the fees can add up quick, I am not here to discourage anyone from their dreams and your partner may be the best guy in the world.

So I would say, it depends.

Just watch the bottom line. If you have no money at all be aware you need to front the construction costs before each draw.

If you go past the initial term be aware to get an extension you have to pay them interest.

Just be careful, run the spreadsheets and see what works for you.

It's an interesting proposition if you are totally out of cash, and their site says:

"When your loan commences, origination points will be added to the principal of your loan. "

So it looks like they are giving you the full 70% ARV (by the time the work is complete).

1. I would not suggest to use them for your first flip or if you are a beginner because a beginner can easily go over 5 months.
2. Do not think you can use them with $0.00 in your pocket. You do need to front 25% of re-hab before you get a draw.
3. There is a lot of wasted money in their fees/points/etc.

Though, if you are experienced and you simply want to do an extra deal and:

a). lack the on hand cash
b). do not want to share with a jv partner
c). for some reason have not developed other funding options

it may not be a bad deal.

They are filling a niche. But be aware of the tight terms and overall cost of borrowing.

One more thing - there are lenders that will go 65%ARV with 2.5 points and 12 % interest for 12 months if you have a little skin in the game. It may be worthwhile to save up some "skin" frst unless you really know what you are doing.

Got it.

I normally deliver everything new top to bottom including re-texturing the walls - when you walk in it is looks like a brand new tract home. No leftover dirt or anything else from prior ownership. This way we get top of market for minimal extra cost.

It simply is not that much money to make everything new.

I carried this theory over from my vast experience with Manufactured Homes. I always wondered, during the housing boom, why people would buy the MH on an infill lot over the older site built homes - well first I made them with perfect curb appeal, but what I found was they wanted everything new and fresh inside. They were willing to buy the MH simply because it was totally new.

So there is confirmation of your observation with a MH twist.

Rich.

I am a little confused in your analysis. Aren't all Fix/Flippers supplying ready to move in properties?

Please help me understand where I am missing what you are seeing/asking for confirmation on.

I read Rich as saying it was 30% annualized based on a 90 day flip. I read it wrong. Funny thing is I read it several times, and read it wrong each time.

The numbers you quoted are where most of us are at.

There is nothing with a better ROI, with mitigated risk. I have a lot of things with a far greater ROI but they are difficult to scale in a meaningful way and they are not secured like RE.

This is truth ^^^.

As for Norris, I want to place a clarification (just in case he is reading this, and I know he is, and I need to borrow again in the future).

His course is good. It even covers what to do in different markets as well as how to anticipate changes in the market. He has a whole system of recognizing the signs of the market etc.

I do question the price, but then again $5K keeps out the rif raf and it is credited to your first loan. Like I said, I went free because I had borrowed from Norris, so it was included with the loan.

I also know that Norris buys MLS REO's because I have put in offers against him before on MLS REO's - so I believe he does practice what he preaches.

I am having a tough time with the annualized returns quoted above if they are based on a 90 day flip.

I cannot touch a deal if I have to turn the money 4 times to only make 30% annualized.

This is really the margins that others are working on? No wonder I am outbid on so many deals.

Maybe I should look into finding an investor and expand operations (instead of all personal cash as I am now), if I was only accountable for returning 25%-30% per year, I could do that without any problem. Those are my targets per deal therefore a 4 times turn would be all gravy.

What am I missing here?

#9 is the single vanity with counter top for $125?

@Ed Lee - you would want to look at both numbers. The first is your real return but the second gives you insight to the risk you are taking.