Skip to content
×
PRO
Pro Members Get Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
$0
TODAY
$69.00/month when billed monthly.
$32.50/month when billed annually.
7 day free trial. Cancel anytime
Already a Pro Member? Sign in here
Pick markets, find deals, analyze and manage properties. Try BiggerPockets PRO.
x
All Forum Categories
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

All Forum Posts by: Josh Young

Josh Young has started 12 posts and replied 331 times.

Post: Minimum Profit Margin for a Flip

Josh Young
Pro Member
Posted
  • Rental Property Investor / REALTOR® / Property Manager
  • Gilbert, AZ
  • Posts 339
  • Votes 382
Quote from @Joseph Hernandez:

Thanks Josh for your input. I'm a newbie wholesaler, although I've flipped 7 houses and i'm a real estate and mortgage broker. I'm looking to do my first wholesale deal. Let me see if I got this correct: let's assume fmv is 400k. ARV is 560k. repairs 100k. So, 560k x .70 = 392k. 392k - 100k = 292k. This is how much you would pay as a flipper? 102k below fmv? If so, you will be making 102k, instant equity. I've been reading a lot of posts here in BP and some fix n flippers are whining if the wholesaler makes more than 10k on a deal. IMO, this isn't fair. The wholesaler is the one that spent $1,000's and a lot of time finding a deal, not the flipper, yet the flipper thinks it's fair to make 10x as much. what's wrong with this scenario? the flipper can turn around and sell it to another flipper and make 50k-100k. I've seen newbie and novice flippers buy fixers in the MLS at fmv all the time. perhaps I should take out a HML, sell it "as is" in the MLS for fmv. I will make roughly 90k after expenses and I won't have to hide my assignment fee from flippers and whatever else red tape there is. what are your thoughts? BTW, I really appreciate your help.


Yes, because $292k purchase is actually $315k with closing costs and financing, and $100k rehab is actually $150k with overage and holding costs, and sale of $560k is actually $520k with commission and closing costs, so profit is only $55k. 
I think most wholesalers should just get a real estate license, so instead of trying to get it under contract when they don’t actually intend on closing on it, they can list the property for sale and make a commission. 

Post: Any tools availabe to get data on new multifamily construction data in major cities?

Josh Young
Pro Member
Posted
  • Rental Property Investor / REALTOR® / Property Manager
  • Gilbert, AZ
  • Posts 339
  • Votes 382
Quote from @Peter Cheung:

Wow, looks like it is "over-built". Thank you for the links. 

You are only looking at one piece of the puzzle, to make any conclusions you need to look at population growth and household size. I would argue that single family is going to be “under-built” especially with limitations on new construction.

Post: Any tools availabe to get data on new multifamily construction data in major cities?

Josh Young
Pro Member
Posted
  • Rental Property Investor / REALTOR® / Property Manager
  • Gilbert, AZ
  • Posts 339
  • Votes 382

@Peter Cheung here is a link that will give you new permits.

https://www.census.gov/constru...

I will also say the Phoenix has a lot of permits listed, but our state officials just said they are going to stop approving new building projects, here is an article: https://dnyuz.com/2023/06/01/a...

Post: Mult-Family opportunity financing in Phoenix

Josh Young
Pro Member
Posted
  • Rental Property Investor / REALTOR® / Property Manager
  • Gilbert, AZ
  • Posts 339
  • Votes 382

@Ali Khan that could be a great opportunity for you, if the units are currently rented for that much it's likely worth more than $800k, maybe as much as $900k depending on location and condition/deferred maintenance. If you could get her to not renew one of the leases, so you could owner occupy and get a FHA loan you could house hack with only 3.5% down, that's where I would start. Or if she owns it free and clear you could buy it from her with seller finance terms, or if she does have a mortgage on it you could still do seller finance terms and "wrap" the existing loan. In either of these examples you could then refinance after a year or two. You just don't have enough capital to take it down with traditional financing as an investment property, at least I don't know of any lenders that do anything close to 8% down which is what you are wanting to do.

Post: Why you need reserves

Josh Young
Pro Member
Posted
  • Rental Property Investor / REALTOR® / Property Manager
  • Gilbert, AZ
  • Posts 339
  • Votes 382

I see a lot of people analyzing deals and they do a nice job of assigning a certain percentage of monthly rent for different expenses, maybe 5% repairs/maintenance, 5% Cap Ex, 4% Vacancy, and 8-10% Property Management. I think this is a great way to underwrite a deal, but in reality these expenses don't happen all nice and spread out like the budget; they can and do happen thousands of dollars at a time, sometimes tens of thousands. In the past 3 months I replaced the HVAC in two of my rental SFH, one was $9k and the other was a little bigger, so it was $10k, this wasn't a big deal because I had the reserves. My point is, for anyone starting out wanting to live on the cash flow from rental properties, do yourself a favor and add a little extra to your reserves, it will help you make better decisions. Lenders usually require 6 months of PITI payments as reserves, but I like to have a little more, I like to have 6 months plus $10k per property for SFH. How much do you like to keep in reserves?

Post: Is it a good idea to only own 1-2 multi families?

Josh Young
Pro Member
Posted
  • Rental Property Investor / REALTOR® / Property Manager
  • Gilbert, AZ
  • Posts 339
  • Votes 382
Quote from @Adrian Gallant:

Hello Johnny,

I would estimate I’ve analyzed anywhere between 100-125 properties. It’s hard to find properties that cash flow 100-150 per door. My “why” is to simply diversify my income streams and obtain an asset or two. My plan was to straight sell whenever I saw fit. 

I would also like to know if the hassle of being a landlord is worth it when I plan to only own 1-2 investment properties.

On the rare occasion I do find a good deal, it’s sold within a day or two! 

That's a good sign that you know what a good deal looks like if it sells quickly, next time you see a good deal you need to buy it as soon as you see it, don't wait a day or two for someone else to buy it.  When I was first getting started an experienced investor told me: do your due diligence, and when the numbers make sense pull the trigger.

Post: We closed on this house on April 28th and it is still vacant.

Josh Young
Pro Member
Posted
  • Rental Property Investor / REALTOR® / Property Manager
  • Gilbert, AZ
  • Posts 339
  • Votes 382

@Amir B. here is one close by that’s the same square footage and condition:

https://www.zillow.com/homedet...
it looks like they have had tons of contacts, but also had to lower the price a couple times.
You also might consider allowing a small pet, you will get more applications and can usually up charge a little for it too.
For every month of vacancy you lose 8% of revenue, so at this point you would have been better off starting your price 16% lower than where it actually ends up. Because of this I like to fill vacancies quickly and with better applicants rather than trying to see how much I can get.

Post: FHA House hacking risks?

Josh Young
Pro Member
Posted
  • Rental Property Investor / REALTOR® / Property Manager
  • Gilbert, AZ
  • Posts 339
  • Votes 382

@Armando Carrera what you are talking about is mortgage fraud and it’s a felony that could send you to prison. 

Post: Minimum Profit Margin for a Flip

Josh Young
Pro Member
Posted
  • Rental Property Investor / REALTOR® / Property Manager
  • Gilbert, AZ
  • Posts 339
  • Votes 382
Quote from @Joseph Hernandez:

If you purchased a 1,300 sq. foot SFR that needed cosmetic repairs, how much $$$ below FMV would you pay? Also, if you really needed to flip a property, would you ever pay FMV? Thanks!


ARV x70% -repairs =purchase price

this formula is good because it helps you cover for things you might not think about like: transaction costs such as commissions, closing costs and holding costs.  It's also helpful because repairs usually cost more and take longer than you think, and you want to make sure you make money.  

I think that overpaying because you "need to flip a property" is how people lose money.

Post: Putting in an offer

Josh Young
Pro Member
Posted
  • Rental Property Investor / REALTOR® / Property Manager
  • Gilbert, AZ
  • Posts 339
  • Votes 382
Quote from @Mary Schlabach:

We are rookie investors looking to buy a lake house. We suspect there will be a bidding war. 

What can we do/offer to make our offer more enticing so that they would accept our offer over others that might have offered more?

 Find an experienced agent to work with who can help your offer stand out. Here are a few things that I have done before: (these are just examples and ideas and shouldn't be considered advice as I don't know your specific situation)

1. offer a large earnest money deposit, this shows you are serious and costs you nothing extra as it all goes towards your closing costs/down payment and if you overpay it will be refunded to you at closing (but it could be at risk if you get wild with waiving contingencies and/or you back out of the transaction without a contingency)

2. write an offer letter to stand out, but be careful not to violate any fair housing laws, these letters are not allowed in some states because of the possibility of violating fair housing laws.

3. offer a shorter inspection period, but make sure you still give yourself enough time to perform the inspection

4. if you know enough about inspecting a property yourself and you feel comfortable doing a visual inspection when you are viewing the property you can make your offer "as is" and still have an inspection period as a contingency, but you won't ask for any repairs. I don't usualy recommend completely waiving the inspection period.

5. if you have extra cash available and you are very confident in comparable sales you can waive the appraisal contingency fully or up to a certain $amount. I have done this before and then the appraisal came back higher than my offer because I had great sales comps, but I have heard of other people doing this and they had to come out of pocket $50k because they didn't have comps/the appraisal process is not an exact science and can be somewhat subjective.

6. you can write an escalation clause into your offer, so your offer will start at a certain price and increase to beat the highest competing offer by $1k up to a certain max offer amount. 

7. offering cash can make your offer stronger, and then doing delayed financing, if you don't have enough cash you could get a bridge loan to help, but that can also be expensive.