All Forum Posts by: Jerry Powers

 I have been involved in the home building industry for over 25 years. I can tell you that it is quite involved and challenging at times - especially working with subcontractors. However, with a lot of diligence, persistence, and preparation, you can build your own home if you can find a mentor to help you. I would highly suggest that you find a mentor that can help you get contractor pricing and their attention when you trying to build your home - mistakes can be VERY expensive when building a home and subcontractors typically have no patience with inexperienced builders.

Concerning the funding, you need to check around with banks and mortgage brokers who offer construction to permanent financing. This will save you money on closing costs and streamlines the entire process.

Good luck in your pursuit. Keep us updated on your progress.

Welcome to Bigger Pockets, Daryl! I live just down the road from you in Kiefer.

Unfortunately, I cannot provide you with any wholesaling stories. Since I have working in the home building industry for over 25 years, I concentrate on rehabs. Rehabbing seems to be easier for me given my experience.

However, I can answer your question of what makes a "great deal" for wholesaling. As you will see here on Bigger Pockets, the 70% rule is a great place to start. That rule says that you start with the After Repair Value (ARV), multiply it times 70% and deduct the repairs and your desired assignment fee to determine your maximum allowable offer (MAO).

Your best strategy at this point is to build a database of all real estate investors in the area to which you can market your deals. Furthermore, you should contact them and ask them specifically what they are seeking and their desired profit margin. Once you have the buyers in place, you just have to find the sellers.

I hope this helps.

Short of you providing the ARV and repairs, I would suggest that you use the 70% rule to determine your offer. However, you also need to reduce your offer further by your desired assignment fee.

Fortunately for us, the price of the FLIR camera is becoming quite affordable. I don't have one yet, but I hope to get one soon! I'm not associated with this company in any way - however, you can check them out for under $250 at http://www.flir.com/flirone/

 Gilbert - That is exactly why, in my personal deal analysis software, I place a greater importance on the neighborhood and, separately, the school district where the property is located. In my built-in decision matrix, those factors weigh greater than the financial aspects of the deal. You are correct that location is the greatest consideration.

@Catherine Thompson:

Welcome to Bigger Pockets! Yes, the resources and advice provided by Josh, Brandon, and the BP staff is top notch. Congratulations on making the decision to put your education to good use and pursuing the fourplex.

Please keep us updated on how the deal transpires.

Ron - MPP is Maximum Purchase Price. It is often also referred to as MAO - Maximum Allowable Offer.

In all of my analysis I always use the MPP/MAO procedure since I have this automated in the custom software that I have built for myself. The 70% rule-of-thumb does not consider differences in closing costs, sales commission, or other costs that may be different for specific properties. I'm too much of a perfectionist to not have all of my costs automatically figured upfront - other than my on-site inspection of rehab costs (I'll use a rule-of-thumb for rehab costs with an inspection contingency if I have to submit my offer immediately).

I personally don't care for direct mail campaigns - the typical response rate of 1 - 2% just isn't enough for me to get excited about spending a lot of money. Since the greatest resource for most people looking for products or services is the internet, I prefer to do my marketing primarily there. With a good website that is optimized for local keywords for owners looking to sell, keeping content current on the website, integrating the marketing campaign throughout your social networking channels, you will attract qualified leads for very little money.

I say very little money if you have the ability to setup your own website and incorporate targeted search engine optimization. The only costs are registering your domain name, website hosting, and your time. You can enhance this further by utilizing facebook and twitter ads at the beginning while your website is moving up the search engine results.

I believe that Will Barnard also discussed the 70% rule in podcast #132. There have been some other podcasts that have covered this subject. One answer that I liked - much like what Vincent said, was that we have to purchase the property at a price that allows us to support our family - make it personal; not a business matter.

If you haven't already read it, there is an excellent article concerning the 70% rule at http://www.biggerpockets.com/renewsblog/2014/02/14...

Additionally, you probably know that the 70% rule depends upon the situation - your desired profit, the ARV of the property, etc. I watched HGTV's Flip or Flop today and calculated their offer - the two that I watched were 80% and 85%.

My thoughts exactly, Hugh. Mixing different materials that expand and contract at different rates, on the exterior in a very cold climate, is a recipe for disaster. Short of replacing the piping with consistent material, heat tape wrapped around the piping and enclosing it in a highly insulated enclosure is going to be necessary.