All Forum Posts by: Jesse Dickens

Investment Info:

Single-family residence fix & flip investment in Denver.

Purchase price: $254,000
Cash invested: $125,000
Sale price: $425,000

This project had just about everything come up on us; from asbestos, to a complete overhaul of plumbing/electrical, to firing 3 subcontractors.

What made you interested in investing in this type of deal?

Wanted to get my feet wet with a local flip.

How did you find this deal and how did you negotiate it?

Found it through a local wholesaler who is well respected. They allowed an escalation clause on the offer, so we were able to come in at a price that made sense for us, and it was accepted!

How did you finance this deal?

Hard money.

How did you add value to the deal?

I was the money guy. I partnered up with a GC who also does flips, but he needed someone to come in the they down payment and rehab costs.

What was the outcome?

We lost a good chunk of potential profit to being quite a bit over budget and over our timeline, but still ended up walking with about 30k.

Lessons learned? Challenges?

I learned so much about myself through this deal! I know that flipping is not the long term solution for me. I am up for doing another one at some point, but cash flow is the solution for me. I also learned what types of partnerships/operating agreements I want/don't want. I also will never get in to a deal with a partner who doesn't have any skin in the game.

Currently under contract on my first flip in Denver, CO. We are set to close this coming Thursday and as os now, the property will be in my name. I'm trying to figure out if it's worth getting LLC for this project. I know it's a relatively simple and inexpensive process to get an LLC, but won't the homeowners insurance that I get for the duration of the project cover me?

Thanks in advance for the help!

I'm pretty sure it's 30k. 

This is from a turnkey company. Both sides are currently on a lease until next summer. Doing some more due diligence on it. Thank you Autumn! 

Thank you Marcus, I will reach out to Nemius. The rents are about $650/unit. I appreciate the cap-ex mention, it’s a great point. Both water heaters/furnaces were replaced in the past 2 years so I figure I have a good run to hopefully avoid any major costs, while developing a good reserve from the cash flow in case anything does happen. I would love to talk to you more about the Milwaukee market in general as well.

Looking at purchasing a duplex in Milwaukee. I live in Denver and would definitely need property management. It's not in a great neighborhood, but the numbers look great and justify the risk for me. Would love some recommendations on property management.'

Thanks!

I'm looking at starting a partnership with a local REI/contractor that I met at a meet up. He is looking primarily for 'gap funding' because he uses hard money and basically needs someone to fund the downpayment/interest on the hard money. He is willing to pay me the same rates as the hard money (1 3/4 points plus 10% interest) as well as a small % of the profit.

This would be my first deal and am looking to learn first and foremost. He said he is willing to walk me through everything that he is doing, but that we should probably factor that in to what my return should look like. He went through one of the local RE training programs and I've met with him a few times (he has a good reputation and I trust him). 

Just looking for some advice as to what a good partnership agreement should look like. Any help would be greatly appreciated!

I am looking at using a company called Fund and Grow to finance either a local flip or an out-of-state rental. Fund and Grow applies and negotiates on your behalf to acquire unsecured business lines of credit for whatever you choose. They claim to average between $30,000-$80,000 on your first draw, but can eventually get you up towards the $200,000 range. These lines of credit typically have a 12-18 month window of 0% interest, allowing you to get in to a deal and then transfer the debt to something long term (or just sell if it's a flip). 

To actually use the funds for a RE purchase you have to go through a company that will essentially swipe your card and wire the funds to you for 2.75%. So it's not really 0% funding, but it's substantially less then using hard money. 

They have a fee up front as well, but this still seems like a really great tool for quick, relatively low interest funding for a project. 

Does anyone have any experience with using this type of funding? In particular, has anyone ever used this company?

Thanks in advance

Jesse

Hey BP family, I am researching some out of state markets to purchase rental properties in and hopefully apply the BRRRR strategy to. I'm struggling finding up-to-date information on job and population growth. I have looked at citydata.com, worldpopulation.com and the US census data website (which shows data gathered in 2010). Any suggestions on where I could find up-to-date information?

Thanks!

@Andrew Postell take a look at the link that @Matt Rauer posted. It's a BP forum on this exact topic. They can explain it way better than I can, and its a really great debate. I still struggle with fully understanding the concept, but I've decided not to move forward with it. As suggested earlier, I will probably just use my HELOC to make investments that should yield a much greater return than the 4% interest on my mortgage.

Thanks guys!