All Forum Posts by: Kenneth Goldman

....It has been so difficult to just identify opportunity in this over inundated market with little supply.
Anyone have any ideas? I have seen the concept floated around about a local investor's coaching program but I don't have any money to spend aside from splitting the profits of a deal 50/50 nor do I know where to identify such a program. Help!!!

Wholesaling - flipping-rehabbing-retailing is one box.

Another box is the Seller Financing Box, Lease Option Assignments and Sub2, etc.

I show the seller they have 3 options (little equity seller)

1. Sell with an agent and pay the costs to sell. Commissions, closing costs, sellers concessions, spruce up costs, holding costs (PITI costs while listed vacant, etc. This is about 10% to 15% of comps, especially if the location is not great (corner, busy street, etc.)

2. Renting it out, many do not want to.

3. Selling on terms in IL. Sub2, Wraps, Lease Option Assignments, etc. Or Owner Financing a free and clear house.

This model is not flipping - retailing. No builders, no cash buyers being too picky.

Just matching up Little Equity Sellers with Just Missed Financing Home Buyers.

Make $5000 in 10 Hours.

@Brian Gibbons

Brian, your advice is great. For number 3 in your list, how do you identify those opportunities? Thank you-Ken

1 Vote

Originally posted by @Account Closed:

I agree with Ken, also call me and I will help you find a property that you can close on. No strings from me.

@Account Closed

Sydney, How do I get in touch with you? Where do you have opportunities? I appreciate any help you can offer. Thanks-Ken

0 Votes

I have been hammering away at trying to start a fix and flip real estate business of single homes in the Chicago market. I have tried pursuing several avenues to identify opportunity including knocking on homeowner's doors, working with wholesalers and brokers, trying to buy notes and calling attorneys for their lists of potential foreclosures and short sales. I am now at the 10 month mark and have not closed a single deal. There always seems to be some problem that causes the deal to fail such as investor issues or seller issues. I am beyond frustrated and not sure whether I should call it quits or try to find a mentor to show me what I might be doing wrong. It has been so difficult to just identify opportunity in this over inundated market with little supply. Anyone have any ideas? I have seen the concept floated around about a local investor's coaching program but I don't have any money to spend aside from splitting the profits of a deal 50/50 nor do I know where to identify such a program. Help!!!

0 Votes

Jim,

Welcome. I am also in the Chicago market and like to meet new and seasoned investors. Let me know if I can help you or at least answer questions. Best-Ken

0 Votes

Originally posted by Michael W.:

@Kenneth Goldman
There is a great excel sheet put out by Bigger Pockets. Here is the link...

http://www.biggerpockets.com/tools/REIPropertyAnalyzer.xls

Many investors like to use the 50% rule which says 50% of your rent will go to expenses and you will be left with the rest. If you carry a mortgage on the property, that would need to be taken out of the second 50% to give you your cash flow.

For example, if rents were $2000. $1000 would go to expenses. Then you would subtract your mortgage from the remaining $1000. Maybe $1000 - $350 to give you a cash flow of $650 per month.

That being said, I like to run it with actual monthly numbers... Rent - Mortgage - Taxes - Insurance - Property Management - Repairs (10%) - Vacancy (5%) = Monthly Cash Flow. You wouldn't have the mortgage and you could adjust repairs and vacancies up or down. You might need to included utilities as well if you're paying them as the owner.

I like to look at my Return on investment as well. So I would take the final monthly cash flow number, multiply by 12 and divide by the total amount of cash I put into the deal.

I hope that is helpful.

Mike

@Mike B.

Very helpful. One final question is how would you structure the return to the investors? Is it monthly, yearly? Thank you again.

0 Votes

Originally posted by Michael W.:

They numbers look encouraging, but you would need to give more details. Are you financing the deal or paying cash? Will you be managing the property or hiring a property manager? Are you sure those the repair numbers are accurate? What is the neighborhood like?
On the surface, it clears the 2% rule of rent to purchase price and approaches the elusive 3%. That would make me interested.

Mike

@Michael Wentzel

Michael,

I would be grateful if you could tell me how you analyzed this deal? The deal would be cash. The neighborhood is okay. There are some renovated homes across the street and on neighboring properties. According to the wholesaler these are the real numbers. As to property manager, I am not sure. I live about 45 minutes away from it. How do I determine investor return based upon purchase price and rehab costs? Thanks

0 Votes

I was recently approached by a wholesaler with the following facts for a 2 unit home in Hammond Indiana. I did an analysis and seem to come out with negative operating income but want to check my analysis since I am new to this.

It is a 2 story, 2 unit. with full basement. 5 bedroom, 2 bath. approx. 2254 Sq. ft.

Collecting $1400. month in rents.

Indiana taxes about $1400. a year.

Needs approx. 5-6k in exterior repair.

Asking $41,000.

0 Votes

Originally posted by Brad Chandler:

If you are competing with hedge funds you are either looking at listed properties or auction properties. Its hard to find deals within these two areas even if hedge funds didn't exist. You will start to see hedge funds get out of the buying market in the coming months. If you don't want to compete with them market for motivated sellers.

@Brad Chandler

Brad, You are correct and I realize my mistake since the mls is not the top resource for a fix and flipper. However, you mentioned the hedge funds will get out of the buying market in the coming months. I would be grateful for more elaboration on this insight. Simply stated, what will change? Thanks-Ken

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Originally posted by Ellis San Jose:

@Jerry W. Thanks for the compliment, I tried to keep my response short & to the point. I enjoy reading your contributions on BP quite a bit.
@Kenneth Goldman Way too skinny, not a deal worth the risk.

$290,000 ARV

-$205,000

- 29,000 transaction costs/commissions

- 40,000 repair

--------------------

$16,000 gross profit

now let's pay income taxes, private investor return & contingency for stuff that could go wrong

@Ellis San Jose

Ellis just to be clear, should I always adhere to the 70% rule as a business policy to be successful? Do you ever violate it? Thanks-Ken

0 Votes

Originally posted by Ellis San Jose:

@Kenneth Goldman
The quick & dirty is .70 x 290,000= 203,000 - 40,000 repair

= $163,000 target purchase price

Profit 10%, carrying costs 10%, transaction cost 10%

@Ellis San Jose

Ellis,

With private investors involved, is there room to bend the numbers? What is the most you would offer ($205k out of the question)? Thanks

0 Votes

All Forum Posts by: Kenneth Goldman

Kenneth Goldman has started 13 posts and replied 55 times.

Post: Find a Mentor or Quit?

Post: Find a Mentor or Quit?

Post: Find a Mentor or Quit?

Post: Newbie from Chicago, IL (actually from NW suburbs)

Post: Buy and Hold Deal Analysis

Post: Buy and Hold Deal Analysis

Post: Buy and Hold Deal Analysis

Post: Competing Against the Big Players-How?

Post: Need Help Knowing a Good Deal

Post: Need Help Knowing a Good Deal