All Forum Posts by: Kevin M Finley

I start private money lenders at 2 points and 12 percent for our first deal and then dial back to 2/10 and am kicking around dropping to 2/8. 

There needs to be enough meat on the deal for your investors to be interested in taking the risk (you). The amount you will save in fees etc is more than worth offering a little more honey 

Definitely check all local REIAs and clubs/meetups/etc. Your network should be your top priority and you'll earn quickly what wholesalers know their stuff and who to avoid by hanging around other investors. 

Just a tip here though- wholesalers do tend to have large mailing lists and the good properties will drive a bidding war. Be wary of overpaying. 

Here is a screen grab from my analysis spreadsheet. As you can tell I figure out ARV and then compare 65,70,75%. This is my first check to make sure I am in the right realm. I then go through profit scenarios with acutal costs and come up with my offer.

This particular deal I bumped up $20,000 because there was a 1 acre buildable parcel included that I would separate. 

Tier 1: Friends and family who trust you and what you do. The most beneficial form of funding to you, but also the toughest to maintain relationships. 

Tier 2: People in your network who have seen how you run your business and are willing to invest, provided they get a healthy return and feel comfortable in said investment. 

Tier 3: Hard Money lenders. 

All are considered private money. The first two are the most beneficial but the third is the easiest to find. 

It's a scam. I don't even have to look it up. 

If it looks like **** and smells like ****...

If everything is opened up for him a rewire should be no more than $8000 if they aren't touching service inside and out. 

I guess I'll offer a little bit of an angle that others are not. There is no rush to put the money to work it doesn't sound like, so since you have your license and presumably MLS access, start researching. Take a look at the areas around your town that are selling quickly and what numbers they tend to bring. Become very confident in calculating your "ARV" (After Repair Value). If you don't know what the house will be worth when you are done, you have no business even starting. Don't calculate your "It could go for" number, calculate what price you would list at in those areas for the house to go under contract within 14 days and close quickly. This number will be more accurate.

Now with regard to selecting a property, you have a few things going for you that will put you at an advantage over other flippers (like myself). 

1. 1. You do not have interest or financing costs.
2. 2. You are presumably willing to do a large portion of the work yourself. 
3. 3. You are willing to use this as a learning experience and aren't trying to make 20k off the top. (It's your first flip, if you look at it this way you'll drive yourself crazy)
4. 4. You save realtor/transaction fees. 

All of this being said, do not get in over your head. Don't take on a project that is out of your control and something that is difficult to budget for. The perfect flip for a newbie will typically need paint, carpet, counters, plumbing fixtures, and MAYBE some subcontracted roof, windows, electrical upgrade, furnace, etc. Here is the profile of a house that I was trying to buy but couldn't agree on numbers a month or so ago:

ARV: $180k

Work needed: Paint throughout. 2 windows. Roof on house. Water heater. New toilet and vanity. Light fixtures. Outlets and switches. countertops (cabinets were fine).

Subcontracted budget: $18,000. Self performed budget: $7000. I don't self perform but I highly considered it. 

I got the seller down to $133,500 but I couldn't get him any lower. My financing charges would have been nearly $10,000 and with realtor fees on the back end, I would barely make $15,000. I won't touch a deal if there's less than $20-25k profit. 

This would have been the perfect deal for someone in your position, and a low risk deal at that. Even if you mess everything up, there is only so much damage you're going to do with a light cosmetic flip. Going all in is fine, but minimizing risk and making sure you know your numbers is important. 

Sorry for the long post, but I've had a good amount of success by going all in, and I didn't have the head start that you already do. Throwing yourself at it is fine... just be smart. 

While most of the posts here are pointing in one direction- payments. I guess I'll offer a differing point of view. 

Around here, it doesn't matter how expensive or cheap the labor is, it just does not exist. There is such a massive shortage of good contractors that the bad ones are the only ones that can get to a job... and will charge what any top of the line contractor will. 

Do your research and get references. Solid references. Follow up on those references. 

I take ten minutes and plug everything into a spreadsheet. Now obviously it's just an estimate, but by breaking into line items you are much more likely to sneak up on the real number. 

ie 2 dumpsters 3 days labor cleanout- $1400, 50 sheets of drywall at $48/sheet, furnace $4000 etc etc. 

Tough to go by square footage especially when talking about your mechanicals, roof, etc. Would you want to estimate a roof the same on a 2000sq ft ranch vs the same size 2-story? 

I've never heard of a rehab taking $4000. This sounds like appliances and carpet. Beside that, are you willing to manage an entire rehab to make a couple grand? I'm not.