All Forum Posts by: Lance Wakefield

I got a fantastic list of brokerages that do REI in different ways from another investor. Let me ask him if its okay for me to share that list on the forums or with each of you personally @Jordan Carty and @Erik Drentlaw. Do any of you know someone who is the "authority" for flipping houses here in the dfw area?

The best tip I can give you is work with the city and get the rental permits required. Then if you aren't going to owner occupy the unit you'll need someone on title who lives in one of the units that you can trust. If that isn't going to work you'll need to get an out of state discloser signed in the provo city zoning office where the unit does not need to be owner occupied, but the catch is that its only good for 3 years. 

If you have any questions at all let me know but work with the city and buy according to what they have already established, don't work against them. 

I figured the deductible was more, but at least its a start. What doe the lease say about this sort of circumstance? You would probably need to review it with your attorney because its not like we can interpret it for you. It seems to me that your lease would clearly name the tenant as responsible for damages and their cost. 

Personally if it were me I would negotiate with the tenant and keep it out of court because after all the only winner there is attorneys. If you do manage to get a judgement getting that judgement paid is a whole other story. See how much the tenant is will to pay if anything. 

The last saving grace could be how your insurance company works with you. For example in one of my rentals we had a very cold night a pipe froze and burst, flooding the basement. So what does the tenant do? They wait 6 hours to call and inform me and when they do they call it a drip. It was a freaking waterfall, if there hadn't been floor drains in the middle of the house it would have been really bad luckily it was only 4 or 5 inches deep. Anyway long story short they paid $3500 of damages and it cost me $250 to get it fixed. I put $3250 in my pocket for dealing with the headache. I used the handy man I use for everything to fix it and costs were very minimal. So that could be a silver lining. 

Best of luck

At the very least wouldn't their security deposit go towards that deductible? I suppose it does all depend on the wording in your lease. 

What area is your deal in? From what I see in DFW hitting the 2% rule on SFH's is not so easy anymore. If I am wrong about that and someone has one I would love to buy it! Here are the numbers I am seeing though on a monthly basis

Income $1400

Debt service (assuming $0 down) $618

Taxes $250

Vacancy  $117 

Lawn care $50

Misc $84 (I am not sure what misc is referring to but ill leave it on there for you.)

Cap X $114

Management $114

Maintenance $114

insurance $114

Monthly GOI = $1400

Monthly expenses= $1689

Monthly cash flow= $(289)

Feel free to adjust these numbers and repost if I missed something or was higher or lower than what you believe it would be for this particular property. 

This is a great post it both motivates me to get into the wholesaling game and shows me the sheer amount of work it is going to be. I love it though! great job!

I have a few properties I am about to list right by BYU campus in provo. I bought one 8 years ago and the other is a fix and flip. Both are houses with mother-in-law apartments and are great live in rentals. I don't live there anymore but I still play in provo, it has great flips. 

Labor is part of the expense but honestly there are guys in CA that work for $15 bucks an hour and are excellent at what they do. The amount of time you will be holding the property and all the impact fees permit fees purchasing the lot etc will cost significantly more and the labor of 8 guys at $15 bucks an hour adds up but if you're able to do all of that work seems like you could also over see others doing it. It seems smarter to manage the guys and build a few of the houses to get in the ball park of the profit you're talking about. Thats just what I would do rather than building it myself.  

After reading this thing I really wish you had a picture of this tenant his girlfriend (although she hasn't been mentioned in a long time) and the opposing attorney, it would give even more color to this story. 

It's crazy to condense these 4 years into about an hour of reading and see all the cycles of this mess. The good news for Will is that there seems to be some level of hope that money can still be made after all this. 

Just curious if I put this together right so the purchase price was 250k holding fees have been 40k for a total of 290k? I am sure there are other attorneys fees etc that need to be added to that number and your ARV is 500k? What is your repair budget? You mentioned you're doing a total gut? Just curious about the current numbers.

@Will BarnardYou have been an awesome example of patience and doing things the proper legal and lawful way no matter the frustrations. People can learn a lot from this crazy story thanks for sharing. The day the DB leaves is there going to be a party?

I would warn against going with hard money the first time just because it creates so much pressure. Lots of hard money lenders will loan like 90% of the cost of the property AND repairs. The catch is that if you buy a property for 70k and are planning to put 30k into the project you would need 10k down plus usually some cash 5-7k for holding costs. BUT if something comes up like roof, foundation, HVAC, major plumbing or electrical that was unforsceen that could put you back another 6-15k and more. Or if your hold time goes longer or if your ARV is off and you have to drop the price and closing below what you owe you could be cutting a check at the end. So not having those reserves is just really high risk in my opinion.

I dont want to discourage you, I just know that on my first flip i ended up needing an extra 10k for holding costs in the end I still made money but if I hadn't had the resources at the time I would have been in really big trouble. I still made it work and I am sure you will too. I would just encourage you to think through different possibilities like the ones I listed and come up with plans for them before you jump in.