All Forum Posts by: JAMES Coleman

Will,

Thanks for your input. My cash reserve is "reserved" for living expenses while job hunting. Flipping sounds great and I've been deal hunting in SoCal for fun. The problem is I'm not going to have access to conventional financing and/or large amounts of cash at first.

What would be great is to find a mentor/teacher whom I could learn under and/or work for.

My wife and I are selling our house locally and have always wanted to live in southern California, anywhere between San Diego and Orange County. When we sell our home, we will have a year and a half of living expenses in the bank and are contemplating making the move to the San Diego area.

My training and experience is in law enforcement and I’ve studied my job options in SoCal, which look fairly promising (it’s just tough to land a cop job out of state without living in the area). That being said, I’ve always been fascinated with real estate investing and real estate in general. I would prefer to work in real estate full time as compared to being a cop (good pay and benefits, but not without some big negatives).

So here is the question:

If you wanted to start a career in real estate and didn’t have to make a sizeable wage for 1.5 years, what would you do and how would you do it? I’m very interested in rehabbing and general investing, but would also like to do what I can to learn about real estate transactions and real estate in general.

Ideas?

Jim

Alex,

Thanks for the link, it says "no seasoning required", but does not specify any details. Should I take that to mean the seller does not have to be on the title for any required amount of time?

I have been doing some research into the flipping game and have made myself a student of 123flip.com (thanks for the awesome info Jason). I have read about the title seasoning period for FHA buyers (whereas I would need to be on the title for 90 days to be able to sell to an FHA buyer), and the waiver for that rule.

In my area USDA Rural Development loans are king. Does anyone know if there is a minimum amount of time I would need to be on title to sell to a USDA RD buyer? Also, are there any other minimum time periods I need to fulfill in order to sell the property?

Thanks as always,

Jim

Jim,

You certainly pose an interesting question, or series of them. In response, I would have to agree with Will. I think what makes the difference, and what I'm striving for from the outset, is to treat flipping like a business. Dot your "i's" and cross your "t's". I would also agree that relationships are critical and I'm thankful to have several trusted local people to help me get the ball rolling.

Rob, thanks for your input, I think that's a good rule of thumb.

I have a question about the seemingly subjective nature of appraisals. As I previously mentioned, I got a good deal on my personal residence, renovated it, and plan to realize a profit when I sell. I recently spoke to my realtor, who stated there are several appraisers in my small town and they continually have different ideas of evaluating properties. My agent stated a couple come in low and one comes in high (compared to what she thinks they should).

So my question: With the help of my realtor and my own research, I believe I can sell my house for $150k (after looking at many comps). If I’m so lucky to get the “low-ball†appraiser, who values my house at $135k, how will that affect the sale? For example, doesn’t the appraisers’ valuing set the stage for what the lenders will lend? If someone falls in love with the house, is willing to pay $150k, but the appraiser says it’s only worth $135k, is the deal shot?

Thanks for you input,

Jim

(after writing the above, I found the very informative post by J Scott. The one thing I’m still unsure on is what kind of recourse do I have is I get an unfair appraisal? Furthermore, if the first offer doesn’t workout, could there be multiple appraisals via different lenders?)

Thanks to everyone for all the valuable feedback.

J Scott, I took a look at your website (okay, more like a 2 hour “lookâ€), and I really appreciate all the helpful information you shared! I like your idea of setting a profit goal and using that to evaluate the purchase to see if the property can meet your goals. I suppose the next thing for me to do is establish a profit line in the sand. I would like to start using contractors to do the work, which I know will cut into the total profit. I’m fortunate to have a stable job that allows me to not need to realize a huge profit initially. I will also be able to reinvest 100% of the funds into the business.

On a somewhat unrelated note, how long did it take you to replace your job and how was that transition?

Jim

I've been studying BP lately and have a question I've been unable to answer through my search.

My wife and I stumbled upon a good deal on our home two years ago, renovated it, and are listing it for sale next week. We have done 90% of the work ourselves and hope to realize a net profit of $35k when we sell (that is the number I arrived at after deducting all associated sales and renovation costs).

My wife and I have a strong desire to continue in our real estate investing, beyond our primary residence. One point of consideration is we love doing the renovation work ourselves but it's slow and physically taxing. For our next deal (other than our primary residence), I'm toying with the idea of utilizing seller financing or a hard money loan to finance a rehab property that we aren't also living in.

My question: assuming all contracting work is hired out, what is a good rule of thumb for estimating profit on a flip? I value time and money and if I can do one flip per year doing the work alone versus two or three hiring the work out, I would rather hire it done! That being said, I'm not opposed to a little hard work and "payment of dues" to learn what we need to learn to be successful.

Thanks for your thoughts,

Jim

Like Manuel, I'm also considering seller financed deals. To clarify what was stated above, after you have had the property for several years, let's say you go to the bank and present your rental history. Assuming the history is good, according to my local banker, she will count 75% of the rental income to offset my debt-to-income ratio. So.. For this to work you would need your rent collections to be 25% higher than your mortgage payment correct?

My concern is not having the DTI ratio to allow for traditional financing. So if you had multiple owner financed properties that you're trying to conventionally finance, that could be a problem. Likewise, is the bank also going to want the standard 20-25% down on each one?

Bill,

That is excellent information, I appreciate you taking the time to share. I have scheduled meetings with local banks to see what they have to offer. We shall see. =)

Jim