All Forum Posts by: Mitch Messer

If you can walk it with the contractor, that would be my #1 recommendation.

As a distant second, you could gather up all the photos and vids you have and just send those to your contractor to get their high-level estimate.

But, you want #1, not just because it's more accurate, but also because you get to ask your contractor questions as they walk the property to better understand what they are looking for!

@Jessica Uresti It sounds like a major renovation, so you may be getting in over your heads on your first deal.

But, let's talk numbers first: Can you share the financials that indicate "$400 -$900 profit a month?"

Also, what exactly was the quote provided by the contractor?

@Alex Ferranti, do you mean "after-repair value (ARV)" or "repair budget?"

The ARV is determined by sales of nearby comparable homes. If you can get a local agent to pull a list of recent transactions, you should be able to estimate, based on the photos, what your target property will sell for post-renovation.

The repair budget is the list of repairs (with estimated costs) required to make your target property look like the "ARV homes" you found above. An experienced investor could walk a property and work up that list. For now, you'll need to engage an experienced general contractor to help you identify the repairs needed and the associated costs.

@Alfred Dublin I'm not saying you shouldn't call around, just be aware that no lender can/will really engage with you until there's an actual deal on the table. There are just too many variables to consider.

So, just make sure your calls are short and sweet: Get the high-level facts and then wrap it up!

Once you do have a deal, make absolutely certain the numbers make sense, and then circle back to your lenders.

Great idea, @Shanna Chan!

Are you looking to physically shadow on a seller-finance deal, or to do so virtually?

If in-person, where are you located?

I believe Airbnb has a system in place for handling disputes between guests and hosts, and they may offer compensation for damages or issues caused by a guest.

I would start by documenting everything: A detailed written description of the incident and timeline, records of all your communications with the guests, before/after photos of the damage done to the furniture and the bedsheet, a statement from the neighbors about the trespassing incident, etc.

Then I'd approach Airbnb looking for guidance.

It's impossible to know without a deep-dive into the condition of the property, the projected renovations, and finance options.

But you should still try to answer the question! 

You can (and should!) start building a basic underwriting spreadsheet so you can play with the various deal inputs, test out different scenarios, and see how they perform financially.

Analyzing deals is the only way one really learns to think like an investor!

Hey @Alan Scott Hobbs, thanks for responding with some data to crunch!

At $1250/unit/mo and 24 units, we're looking at gross income of $360K. For simplicity sake, let's assume a 40% expense ratio, giving a net operating income (NOI) of $216K.

If we were to buy at their asking price of $2.99 million, we'd be looking at a cash-on-cash return of 7.2%, and that's without factoring in capital expenditures or debt service.

I'd say this one has a looong way to fall before it's a deal!

Hey @A.j. Silva, why do a land contract?

If I'm putting $40K down on a land deal, I'm getting the deed!

Also, if the property were to foreclose, it would be because you defaulted on your note! You presumably wouldn't allow that happen if you still had equity in the deal.

But, if you did lose the property to foreclosure, it would be auctioned off. Any "equity" held in the property would first go toward paying off your note balance (as you would expect).