All Forum Posts by: Luis Maza

Quote from @Account Closed:

Quote from @Luis Maza:

Hi all, 
returning to the game this year and would like to pick your brain a bit, we started working with a wholesaler that will send us properties here and there with the "wholesale" price, but every time we check the properties and add the numbers, the margins are, well, I am not sure, too low perhaps, maybe we are getting to picky, but this is my dilemma for example...

Today we got a property, wholesale price 300K, rehab about 50-60K, ARV is about 440k, but with the cost of hard money, we have about 100k cash, hard money interest at 11%, keeping the property for 90 days while we finish the rehab, closing costs, commissions, we ended with 30k profit before taxes, while it sounds appealing, adding up all expenses and cost we ended up expending 50K on rehab(labor/materials) and about 50-60K with cost of the loan, interest, commissions, etc, everyone makes money, happy with that, but it seems that we are working to produce a 100k for everyone else, while we make 20-30k if everything goes well...

In my opinion, we are not really getting "wholesale" price, it seems that we either buying to expensive, rehabs are much more than we would like to spend and the cost of borrowing that money is too high...

We came up with thoughts as: lets fund it ourselves with money from a close friend/partner that we will bring in, and that would save us 10-15k here and there, but still, is that the norm now?, not so much for the profit we are making, for all of the expenses involve that surpass our profit.
I just add the spreadsheet we use as a sample to see if this makes sense....

Would love to hear your opinions on how much money are we making for everyone else, before we make 20k

Your comment: "keeping the property for 90 days while we finish the rehab". I'd in the month that it takes to actually get an offer and the additional month it takes to close. 90 days is too optimistic.

Shoot, that is correct, completely forgot that could take longer and in my opinion i though that 90 days was ok, but you right from the time we can do showings and people get their paperwork/money together we could be talking about 60-90more days, thanks for bringing it up Bob..

Thanks Kevin, Thanks Peter..

Good info, we are trying to get cheaper money by financing it ourselves and getting 1 partner in on the deal.

15% do seem high, i can see myself running for the fences at 15%, but like you all said, every deal is different and we do have to find creative ways to play with the numbers.

Thank you Ned, that is exactly right, we actually check a condo/townhouse about 2 weeks ago, the thing was a condo with a basement, I cannot tell if it was a condo or townhome, anyway, the ceiling in the first floor was bowing, the 2nd floor, one of the bedroom was sinking, could not tell how this damage was done but the walls came apart from the floor, you could see the roof of the unit bowing inwards towards the structure a bit, and their "general contractor" estimate that for 5k they could straighten the property and level everything, even 1 window and 1 door looked so uneven that you would think there was something wrong with your eyes...5k for structural damage, good luck with that one, we ran as far as we could from that....but we have seen they do inflate their ARV, since we learned the hard way , we go through these deals with a magnifying glass, I knew I was not so picky, numbers do not lie.

Another thing that caught my attention, which I do not know if I am overly suspicious now that I am older, but they want to get the closing for us at the same time/day they are getting the property from whoever they buying it, which it seems to me they try to save on the closing by having a "dual" closing when in reality is just 1 closing and we are the one paying for it...I do not know there are few things that do not click right with this folks.

Quote from @Ned Carey:

@Luis Maza welcome to BP. 

What do you mean by    "Difference this time for me is hard money and wholesalers"

Wholesalers and hard m oney were around in 2005 and 2006. What do you find different?

Thanks Ned,

Short answer to explain it, I did not know they were around back then, just found out now when we are coming back,
a little background, when I started in 2005, I was a child :) 28 years old and thought I knew it all, all, all :), did not know about hard money lending, only new about bank loans, and Home equity lines of credit, did not know where to find more money, since I did not have much, I would rely on what I could get from banks, loans, credit cards and was not always that great, it was a learning experience.....

and Wholesalers, I did not know that even existed, everything I would find back then was already on the market and through a "friend" agent, MLS, FMLS and all those, nothing like what we have today.

Totally new world for me knowing there are properties off the market, wholesalers, and people that loan money just for this purpose, different from a bank, I have always thought we were doomed from finding a good deal as everything I found was already on the market...my little knowledge and limited believes got me trapped.

Hi all, 
returning to the game this year and would like to pick your brain a bit, we started working with a wholesaler that will send us properties here and there with the "wholesale" price, but every time we check the properties and add the numbers, the margins are, well, I am not sure, too low perhaps, maybe we are getting to picky, but this is my dilemma for example...

Today we got a property, wholesale price 300K, rehab about 50-60K, ARV is about 440k, but with the cost of hard money, we have about 100k cash, hard money interest at 11%, keeping the property for 90 days while we finish the rehab, closing costs, commissions, we ended with 30k profit before taxes, while it sounds appealing, adding up all expenses and cost we ended up expending 50K on rehab(labor/materials) and about 50-60K with cost of the loan, interest, commissions, etc, everyone makes money, happy with that, but it seems that we are working to produce a 100k for everyone else, while we make 20-30k if everything goes well...

In my opinion, we are not really getting "wholesale" price, it seems that we either buying to expensive, rehabs are much more than we would like to spend and the cost of borrowing that money is too high...

We came up with thoughts as: lets fund it ourselves with money from a close friend/partner that we will bring in, and that would save us 10-15k here and there, but still, is that the norm now?, not so much for the profit we are making, for all of the expenses involve that surpass our profit.
I just add the spreadsheet we use as a sample to see if this makes sense....

Would love to hear your opinions on how much money are we making for everyone else, before we make 20k

Hi all, hope everyone is doing well and just wanted to introduce myself, returning  from 2005-06 when we did few flips (3) and few rentals (4) and learn some do's and do not's. 
Difference this time for me is hard money and wholesalers, it has been interesting. 
Looking forward to learn more and share experiences.

Thank you all for all the information and knowledge you folks share in this platform, found out about bigger pockets through a podcast and I was like whaaaattt, these folks know what they are talking about I can learn here so much.

Thanks for the heads up Matt, will do that.

Hi all, new here at the forum and thank you all for all the knowledge you guys share…its amazing.

I am interested in this question as well as we just got back into this from like 10 years ago, few things have changed for us, and the main one is finding deals with whole sellers, sometimes the price looks good, but once we add numbers we are currently seeing that everyone else in the deal makes tons of more money than us….

for instance, we have checked properties now, where we pay closing cost, interest on a portion of the borrowed money, commissions after selling the property, etc and we see 30-40k going out on all of this,  then we barely make a 20k profit or less on a property of 200k …many of the deal we found we barely get close to a 10-15% of the initial purchased price, which to me sounds like a lot of hassle and my wife says that i am getting old and too picky :)

i keep saying that ideally we should shoot for 15-25% profit from the purchase price…if i get a property at 200k and the rehab is 50 and everyone else makes 30k then we should at least net out 30k as well.