All Forum Posts by: Mo Sheikh

@Dustin Verley Thanks! I'll have to dig up the before pictures, but a few of the after pictures are below. This was a pretty simple rehab, mainly needed to redo the kitchen, living room, and bathrooms.

@Myles Ngumezi Yes we bought cash. I'll send you a PM, maybe we can do some business!

@Treveion Harris This rehab went pretty smoothly, no major issues thankfully. The biggest problem was a few minor cracks in the wall after repairing the foundation, but we expected that and planned accordingly.

We ran into a major issue on our other rehab property though. One of the previous owners built a garage addition... they were using it as a 1 BR apartment for a family member. We took the seller's word that it was permitted (big mistake!). Turns out the addition was built in the 60's, and the city didn't have a record of the permit! We had to spend an extra $15,000 demolishing the addition after we already listed the house.

That was pretty rough. We could have gone through the process of getting permits, but both the city and our GC advised against it. The property is in a flood zone and it would take 3-6 months to possibly get permits. We definitely would have factored the demolition costs into our budget if we knew about the permitting issue before buying. It's our own fault though, we should have verified with the city. Luckily we have enough room in the deal to where the additional $15,000 expense won't destroy our profit margin.

After that experience, a smooth rehab is exactly what we needed!

@Chuck Webb We found the property through postcards and letters we send to out of state absentee owners in our farm areas. The owner moved to NC for work and never got around to selling the house. It was vacant for over a year and needless to say he was tired of making payments on it.

@Kami S. Thanks! Keep at it and I'm sure you'll be there in no time!

First post in a few months, but my partner and I completed our first rehab deal! We bought the property for $175,000 from an out-of-state owner on our mailing list and spent $16,500 on the rehab. The rehab took a little under six weeks to complete. We listed slightly below market at $235,000 and received four offers within the first few days on the market. We accepted a cash offer for the full list price of $235,000! From purchase to sale the project took a total of eight weeks and we ended up making $26,450!

This is actually the second property we rehabbed (the other one hasn't sold yet - recent flooding in that area scaring buyers away), but man does it feel good to get a deal under our belt! We're pumped and can't wait for the next one!

I also wanted to thank the BP community for the awesome discussions and information here. We scoured the site and forums throughout the process and it was a tremendous help! We're definitely going to return the favor and become more active in the BP community!

Thanks for chiming in everyone!

@Cody Kauzlarich @Michael Le @Trey Watson Is there a minimum profit margin you look for when evaluating a deal?

We went into this looking for a 10% profit margin if all goes well. In the scenario above we are at about 7.5%, but we are confident the property will sell at $315K to $320K.

In addition to the lender fees and mortgage payments coming back to us, we also control half of the commission costs when selling the property (my partner is an agent and will list the property). We'll probably list it at 4%, which adds another $6K or so goes towards our profit.

Selling at $315K with 4% commission costs puts us at around $38K-$42K of profit (excluding the note coming back to us), but we are trying to be conservative in our analysis since this is our first flip and we know we'll probably make a few mistakes along the way.

Thanks for taking a look @Fred Heller!

The property is in Westbury. For the property taxes we're using last year's tax bill as an estimate. As for the insurance, it breaks down as follows: $725 for a 3 month Builder's Risk policy, $725 for a 3 month Vacant Dwelling policy after rehab is complete, and $1300 for flood insurance (annual). The Vacant Dwelling cost is an estimate from our insurance agent who says it would be around the same cost as the Builder's Risk policy.

Do those numbers seem high?

My partner and I have found what looks like a good first flip for us. We have the property under contract and are currently in option period. I'm hoping BP can help us and see if we're missing or overlooking anything.

As is illustrated below, purchase price is $180K and the house needs $55K in repairs. We also budgeted an additional $3K for contingencies. Our CMA shows similar houses have sold in the neighborhood for $310K to $330K, but we're conservatively estimating the selling price at $300K.

Based on the SOW from our GC, the rehab should take 2 to 2.5 months, with another 3 months allocated to market and sell the property. We're financing the purchase and rehab via a private loan from us to our LLC at 1 point & 5% interest. I think the estimate on closing costs is a bit high, but I'd rather be conservative and overestimate than underestimate.

We are confident in our numbers, but because it is our first deal we want to be sure we're not overlooking anything before we move forward.

Any feedback/advice?

Thanks!

Thanks for the warm welcome everyone!

@Tim Shin and @Charles Nguyen - Thanks for the heads up about the local BP meetup! I'll be sure to make it out to a meetup soon.

Hi all!

I've been lurking the site the past few weeks as I begin my real estate investing journey. The knowledge and resources this site has to offer have been really helpful, so I decided to join and introduce myself.

I'm relatively new to real estate investing, but have been reading everything I can get my hands on over the past few months, and have attended a couple of REI meetings to network with local investors. At this point I'm primarily interested in wholesaling/flipping but I'd like to slowly reinvest the profits into buy and hold deals for long-term wealth.

After educating myself for a few months, I finally started taking action this month. I'm still diligently searching for my first deal. I've come close twice, although both deals ultimately fell through. It's been tough, but I learned a lot by actually going through the process of evaluating a deal, negotiating with the seller, etc.

Anyway, thanks for the great site and I'm looking forward to being an active member in the BP community!