@Drew Denham
re: Cash Buyer.
No. I wish. I am an opportunistic buyer maybe. But definitely not a cash buyer.
If I had to put down 25% plus pay rehab costs out of pocket on every deal, I'd have
about 3 houses right now instead of 31 (will be 32 as of next week).
Nope, I'm just a bottom feeder that watches every source of deals there is and have been able to get lucky that, lately, there seems to be one really great deal almost every month.
My last 5 deals have come from: HUD, hubzu, homepath.com. They were all on MLS. Although the one hubzu deal seemed to have slipped thru the cracks on MLS and wasn't there for several months - which is why I think I was able to get it so cheap.
But my model is very simple. I have to be all in (purchase plus rehab) at 70% or better. I buy with hard money and they fund the entire purchase and the entire rehab - as long as my ARV is under 70%. I pay points/fees/closing costs out of pocket.
That limits my out of pocket on most deals to anywhere from 5k to 8k. In this run, there were a couple of houses I went over that out of pocket just to make the numbers work and because I really wanted the house. The real reason I did it was because I was so anxious to hit that 20 property mark before the prices went too high and it priced me out of the market.
That 20 number was really my dream goal when I started 7 years ago. Who knew I'd end up going on such a crazy run like this. Since the end of October of last year thru the 27th of this month (when I close on #32), I will have added 13 homes. And this was after averaging 3 homes a year every year for 6 years. So that is not a typical pace for me by any means.
I think the deals were always out there. But I never had the kind of financing options I have today. Great hard money lenders. And my end loan financing has really opened up. The local banks are all doing the refi's for me. Whereas, in the past, one bank might be doing them and the others were saying they couldn't do any more. Then that one bank would stop and another would start up again. It was a huge task trying to find end loan financing during the bust period. I spent ten times more of a time trying to find financing than I did trying to find deals.
And I'm sure this run will end. When I first started using one of my new hard money lenders just at the start of the run, he came out to see one of the houses/deals of our 2nd or 3rd deal. He pulled me aside and told me that I needed to take advantage of this run and keep buying every single one of these that I could - because there's no way it was going to last forever.
Whats helping is that I now have built up a really nice chunk of cash flow so that my rental income is now feeding the out of pockets costs on the deals.
But I also cashed out my 401k and used most of it to feed some deals right before I went on this run. I really thought the home pricing was done for me so I figured it was ok to put that money into a couple of deals. Little did I know I would get this many homes. I am now refinancing one of those houses to pull 20k of those funds back out.
Every single dollar counts when it comes to my reserves and my ability to continue adding homes while I can.
Whats even more amazing is that the cash flow on the deals I've picked up during this run has been even better than on the deals I was getting during the bottom of the bust.
I think the rents have really gone up in my area and thats helping me quite a bit too.
I used to have a target of 350/mo gross profit (rent minus PITI). I'm now getting 400 to 500 a month in gross profit. Which, relatively speaking, is pretty good considering I'm all in on these properties at 5 to 7k.......
I have another recent post on BP showing the actual numbers on my last 3 deals.
http://www.biggerpockets.com/forums/109/topics/152...
I have a couple of posts in that thread but one of the ladder ones shows the numbers on my last 3 deals - i.e. purchase price, rehab escrow, actual out of pocket, loan amounts, rents, gross profit.
