All Forum Posts by: Jonathan Marcus

I would suggest start by getting the book by J Scott here on BP entitled "The Book on Flipping Houses..."

As a wholesaler your end customer/clients are folks that rehab properties. The only difference is your stopping short of buying the house and fixing; instead you assign your position. But the beginning process is exactly the same. Plus you get a great education on estimating renovation costs which is critical in order to successfully wholesale a property.

Best of all, it is a whole lot cheaper than what you'll pay Legrand.

Brokering privately held notes was my entry into real estate many years ago and I've always loved this area of real estate.

Check out notetools.com they have a number of great books on the subject. Also, papersourceonline.com, noteschool.com & papergame.com which has a lot of articles written by John Behle.

If you held on to this one, you're expecting $125/mo cash flow. If you sell it, you can potentially acquire 2 properties, based on your typical formula. With 2 more properties, again based on your numbers that's $1k-$1,200 in monthly cash flow.

So its $1,500 vs. $14,400 in yearly cash flow. Unless you see other overwhelming benefit to holding on to this larger house, go for the larger cash flow.

@Andrew Potievsky to get that type of return, you should probably consider the boroughs -- Brooklyn, Queens & Bronx. Across the Hudson river over in Hudson County NJ -- Jersey City, Union City, Weehawken should also be on your radar.

Figure out your investment strategy so you know what type of properties you should be hunting for.

Yes, I think it is worth your time. Even if all you get is education.

But first, tie up the deal. Get a contract subject to inspections & lien due diligence. Whatever it is just have an escape clause. Then...

• Get comps on the property
• Go to the tax collectors office and find out the total amount to pay off all the liens (taxes, water, sewer, etc...)
• Visit the zoning department to find out the highest and best use for that property. If it is a knockdown, what can be built on that land.
• If someone does not want to knock it down, get an idea of how much it would cost to renovate the property.

Once you know all this then you can market the property effectively and you would know who to target, either a builder or rehabber.

I've been thinking about this idea and I would like to run it by BP members who does fix and flip. I guess if I have to put an title to it, it would be "Option-Rehab".

The idea is to find a vacant house that is dated. Not needing a gut job. Properties you see listed on the MLS all the time.

You get an option to purchase a property for at least 70-75% of its ARV with the right to renovate and improve the property's condition. After you renovate it you sell/flip the property.

Example Numbers:

• ARV of home is $300k

• Option to Purchase: $225k (75% of ARV)

• Option Consideration: $1,000

• Renovation Cost: $20k

• Holding & Misc. Cost: $6k (mostly for utilities)

• Sales Cost: $18k (6%)

• Closing Cost: $6k (transfer taxes, Seller concession, ect..)

• Total Cost: $51,000.

• Potential Profit: $24,000 ($300k - $276k)

• 88.88% ROI on monies invested which is $27k (bold numbers)

• If you borrow the entire $27k from a private lender and pay 12% that's $3,240

• Adjusted Profit: $20,760.

Pro:
1. Since it's an option agreement, you're not messing with the title. Good for FHA loans.
2. You don't need to borrow money for the acquisition only for the renovation. So no hard money required.
3. No closing costs just an option consideration.

Con:
1. Possibility of option expiring and you lose the money used to renovate the home.
2. Unexpected rehab surprises that can throw the whole numbers off.

Is there any other downside I don't see?

You have one of the best resource here on BP. Read all of @Michael Blank 's articles and watch a number of his videos. He has great info on syndication.

Also, I just started reading this book, Pure Profits by Al Auger about commercial real estate. Really good. You can get it used for a penny on Amazon but shipping is $4 bucks?! Still a good deal though...

Hi Phil, I am a licensed agent in NY State and work with a boutique agency by Union Square. As an agent you are an independent contractor and you choose how you run your real estate sales agent business. You can focus on rentals or sales or both. Residential or Commercial. You can do it part-time or full time. Like myself, I'm an investor and a real estate agent. I like working with investors because I can identify with them easier.

You don't need to tell a sponsoring broker that you don't plan on becoming a power agent. If you close a few real estate deals as an agent they get their investment back in you. Just choose your sponsoring broker wisely and watch out for the ones where they charge you a monthly fee. You should also ask if the broker owns investment properties. If they do that's good.

A NY real estate salesperson license is only good for NY. The only benefit I see if you're investing outside of NY and you're dealing with an agent there, you can probably get better cooperation. Professional courtesy.

Lastly, you need to be sponsored by a broker in order to start practicing.

Hi Andrew, there are people that do this in NYC but remain very quiet about it because as you've already found out, one can get in trouble real quick whether you're the owner of the property or subletting. Even SRO properties (single room occupancy) are being curbed with new laws hitting the city.

It is really not a sustainable investment strategy.

Checking Rentometer and Craigslist for Studios in SD, looks like you're overpriced. If the area is good and property condition is good and its still not renting, usually it's the price.

I would suggest speak with a Realtor who knows the area well to figure out pricing that's competitive.