All Forum Posts by: Laurel Bowen

I always use an RMLO because it they can pull my buyer's credit history and give me an educated opinion on whether they are a good candidate or not. It's as much an art as a science, so their opinion is invaluable.

I found several just by calling Mortgage brokers and asking if they knew of any brokers who specialized in working with people to improve their credit. These brokers will work with my buyer long-term to improve their score, which gives me the option of doing a lease/option deal if a seller-finance deal isn't going to work.

Update: We sold house #1 to a cash buyer for $125,000. It was on the market almost 90 days, which is above average here in Knoxville. We closed in 2 weeks and after giving our buyer a detailed list of repairs (with photos), and doing a walk through with her, she opted out of doing a property inspection. We ending up going $1000 over our estimated rehab cost, but ended up with a $26,000 profit. We did a good job of choosing what repairs/upgrades to do to move the house quickly, but took too long to rehab. We didn't get started quickly (I moved which put a 2 month delay in starting) and I chose a subcontractor to refinish the hardwood floors who overcharged, took too long to do the work (3 weeks for under 1000 square feet of floor, and who gouged up walls and baseboards badly). He was recommended by our realtor so I didn't check references. My bad! But we did find an excellent contractor, an excellent realtor, plus we learned a ton!! We are now diligently looking for our next flip. And we're picking up mobile homes to do Lonnie Deals on. We're already carrying notes on 2. I guess I am now a REAL real estate investor.

What we got out of the wholesale deal was a little profit and a good buyers list. We found that having a couple of real houses to wholesale brought us serious buyers. Plus the experience. Our first buyer for house #2 ended up bailing on us 2 hours before closing. We sure learned a lot from that experience!! We dug in deep and found a second buyer just in time.

Great advice, but I am confused. We already completed the deal on our first wholesale house, and are rehabbing the second for retail sale.

Update: We sold house #2 to a landlord looking for rental property and both of us were pleased with the deal. We bought house #1 and are working on the rehab - at this point, we are on track to spend about $8000 in repairs, mostly adding to the curb appeal, refinishing the hardwood floors, and some repairs. We plan to put it on the market at the end of January, just in time to be on the market during Knoxville's annual peak sales month. We are listing it with a realtor and she thinks we could make $25,000 - $40,000 profit. She has worked with the local investors in our area for years and we have been taking her advice on what to rehab to make it sell quickly. Our local REIA group is really active and joining it was the best decision I ever made. That's how we found the landlord who bought house #2.

Your repair estimate seems really low considering you'll need probably painting, flooring, a new HVAC unit, sheetrock, etc. I can't imagine that the kitchen and bathroom won't need gutting. What kind of shape is the roof in? A house in this kind of condition - probably at least $40000 is a good start for a repair estimate. I would get a really good real estate attorney to handle this transaction. He can research the title for you. There will be legal issues.

I have a corporation, and I dread individuals and sole proprietors who send me 1099's for my company. It's just a huge hassle with the IRS. Do your homework before you hire anyone. Have them fill out a W-9. Then just report a 1099 on anyone who has a social security number, but not those who have an EIN. It's just good business etiquette.

Wow, thanks for all the helpful advice!!

I did include comps to show how I arrived at the ARV, plus a detailed breakdown of repairs, but I didn't think to include a breakdown of holding costs, staging costs, etc. on the buyer's side. I'm not sure how to estimate that unless I know how the investor will finance. Maybe assume they'll use hard money, which would be the most expensive option. Thanks for the suggestion.

I've got a contract on 2 houses to wholesale and have been advertising heavily for a buyer for a couple weeks (classified ads, bandit signs, craigslist, other online sites), but haven't gotten any calls. I've got comps, photos, and video on a webpage. So now I'm wondering if the reason I'm not getting any interest is that they are bad deals.
House #1 - 2022 square feet, 4/1, very upscale historic neighborhood in Knoxville, TN - List price was $99,900. I'm buying it for $70,700 and selling it for $80,500 (adding in closing costs, hard money cost to purchase, and $5000 profit for myself). I've also included in the ads that I could assign the contract for less. The ARV is $135,000. Repair costs are estimated at $10,000, so profit would be $44,500. Seems to me that's enough "wiggle room" to make a good profit even if things go wrong, which I know they will. So where am I going wrong?
House #2 - 1106 square feet, 3/1 (with room to add a second half bath), quiet street, working class neighborhood - List price was $20,000, HUD owned. I'm buying it for $20,500 and selling it for $32,600 retail or $29,900 wholesale (added in closing costs, hard money cost to purchase, and $5000 profit for myself). The ARV is $75,000. Repair costs are estimated at $28,360, so profit would be $16,740. I've found several retail buyers but am waiting to see which one could get a mortgage. I'm steering them to a local broker who specializes in the FHA Rehab loan. I think I know the problem with this one -- I didn't get it significantly below list price, even though I got it at 78% below ARV (29900+28360)/75000. Am I right?
Thinking about buying House #2 myself, but really don't want to walk away from House #1. My reputation is important to me and it is just plain wrong.
So advice? How did I screw up?