All Forum Posts by: Kenneth Goldman

I am looking at a house in Skokie, Illinois where the asking price is $205k. It needs roughly $35-$40k in rehab work. The comps seem to indicate the house may get an ARV of $300k tops (conservatively $290k). I would be using private investor money for purchase and rehab. Using the 70% rule, I should be making an offer of $210k minus rehab costs equaling $175k-$180k. If I buy the house at $205k, I am already $30k over the 70% rule purchase price. Furthermore, do I assume that hard costs are roughly 9% of the ARV? What is the best way to analyze this?

@Sean Kuhn

Sean-According to the realtor, the hedge fund is buying at a clip of 400 houses a month and Skokie is one of their targets.

@Account Closed

Joe- to answer your questions, I am trying to flip properties. As a novice, I have been more or less relying on what I have read on here and general investor principles such as the 70 percent rule. On average, I would say the 70 percent rule is a safe bet for my investors but if there are other ways to play this, then please educate me. Thanks-Ken

@Anson Young Anson if i understand your correctly the mls is just one means of finding properties that probably is not the most effective resource for small fix and flippers anyway? So in effect, the hedge fund was never really a major competitor for my part of the market. is that correct? Also what do you think of the seventy percent rule?

I was just talking to a local real estate agent in the Chicago market and she informed me that the houses I am interested in are being bought up at prices over asking price by a hedge fund and other bigger players that are seasoned and well established. I am trying to just get started and am discouraged that I am trying to buy in the same market using the 70 percent rule whereas the hedge fund is buying 400 houses a month, paying above asking prices, and mostly sight unseen. The only difference is that they are holding them for rentals rather than flipping them back to market. Nevertheless, they have the quick funds, relationships to do the work at a cheaper cost since their contractors are doing volume, as well as obtaining materials from China at a discounted price. One of these types of players alone is enough to be overwhelmed and yet there are others that are also knocking on the same market door. Moreover, the market is only picking up which means things will get even tighter. Help! How do I compete and not get quickly discouraged?

Mancill,

I am trying to find houses in the Chicago market to rehab. Please add me to your wholesale list. Thanks-Ken

Does anyone have a fix and flip joint venture agreement for multiple private investors that you are willing to share? I have searched on line and the selection is weak.

I have found several abandoned homes in my area. Usually there is some notice posted with an 1800 number to contact. I call the number and make it as far as the bank holding the property such as Bank of America but never make it any further. I would like advice as to how I proceed further. These seem like great opportunities but can't penetrate the fortress of bureaucracy. What are the next steps?