All Forum Posts by: Nereo Mendoza

There is lot of hard and private money for the experienced rehabers, that is why ypu see so many offers, if the rehaber have enough money to purchase only 3 houses a year probably he will get private money to get another 3 and keep as busy as possible and doing more money

Cash offer typically means for the buyer quick closing and no problems coming from the bank financing

In our case we look for houses located in a quarter mile radius, typically there will be 5 to 20 (depending on the area) and we look for the average to be around 30 DOM, that is a really hot area, were you will sell quickly if you rehab and price accordingly with the neighborhood, we try to price a little bit lower to move it faster, and we calculate this from the beginning even before buying. If the 3 rooms 2 baths SFH of 1200 sq ft are selling around 250k we price ours in 245k and try to have at least the same features and some nicer details.

Its a mistake to compare with bigger or more luxurious houses to get your comps. or to try to over expend in things your market will not absorb 

Try to think like the bank will do when analyzing the loan of your future buyers, if your house is above the recent sales they will not approve it easily, the smother the loan process goes for your future buyer the faster you will close and get paid 

best regards

Nereo Mendoza   

I will say is a good thing the have but it doesn't come for free

Here in DC if you get a real estate license you need to work for a Brokerage, typically there you get training and can share experiences with some other agents. The commissions go to them from the title company at closing and they give you a part of the commission (it varies depending on the agreement between each agent and the brokerage, but typically can be between 5% and 50% of the commissions until you reach certain amount in the year, that way they cover their operating expenses). I also heard the fixed costs of being a realtor can be between 1,500 and 3,000$ a years for accessing the MLS, paying the license and some other things, but a probably is better if somebody from your area can tell us how much it cost to be a realtor there.

If you have access to the MLS you can see the data of properties active, sold and under contract in a certain area and period of time, and you can also get into the properties without waiting for anybody to open the door for you, that is a really good advantage

Finding properties in the MLS is possible but the better deals are taken before they get listed, typically the investors build relationships with realtors, wholesalers and even the sellers to get better deals and less competition

if somebody knows better please share

Hello @Raven Parmer 

The key here is check a recheck the numbers of the property before jumping in and also analyze the area to be sure you will not be getting stuck on a property with no profit or longer than expected

I suggest you to get your own comps from and unbiased source (a Realtor, a comp website, etc to see how many houses has been sold recently and for how much, the days on the market (DOM) are very relevant, if the average DOM is high the area is slow and chances are your property will be sitting there for a while after you rehab it. Just don't trust only in the comps supplied by the wholesaler

Also check and have different estimates for the rehab work and materials and time necessary to complete, be sure you have the right contractor and the right numbers ready before committing

Also take into account apart from financing costs you will also have: closing costs when you buy and when you sale later, Realtor commissions to pay (5 to 6% of selling price), holding costs (utilities, taxes insurance, mowing the grass, removing snow, cleaning, small repairs, etc) meanwhile you wait for closing the house (once under contract it can take 2 to 4 months to your buyer's bank to close), so be prepared to have the property under your wing from 2 to 6 months, even if you repair it in 3 days and find a buyer immediately

The older the house the bigger the contingency you have to build into your numbers, there will always be something unexpected with a very old house

hope this help

best regards

Nereo Mendoza

@Daniella Ortiz My main suggestion is sit to discuss clearly what you and him want from this business relationship and what will be the responsibilities of both. Sometimes the expectations are completely different and that leads to problems later 

If possible ask to have access to the rehab process, so you can learn: times, costs, processes, people involved, etc. But try to not slow it down, time is of the essence in this business.

Expending 10 hours on a construction site at least once in your life and/or following the purchase process (for material and labor) during a few weeks  can give you a completely different perspective of many things, that also will help you to protect your time/money investment in the deal.

You have to think for your market: how much you expect to charge for wholesale a property? how much do you expect the profit to be after rehabing the property?

For example 20% of a 25k profit is 5k, and that 25k profit seems probable after paying everybody (realtors, closing and holding costs, interests, etc) in a 90k purchase with 50k in rehab and reselling for 200k 

Please correct my numbers if somebody seems something odd

good luck and lets is know how it goes

Nereo 

@Anil Samuel 

If you find a house with good numbers let me know maybe we can partner

good luck

@Andre Vaughn 

My advice is think from the perspective of the investor a few months down the road when he is selling the house after repairs are done, his end buyers will go the a bank for finance, the bank will lend the money based in the market value determined by an appraiser, the appraiser will look for RECENT sales of SIMILAR properties located CLOSE BY 

Many wholesalers sent you comps from houses located a mile away when there has been cheaper sales in the same block or cheaper sales earlier in time, or compare with bigger or newer houses or with luxury renovations

Typically a bank will like comparables of similar properties in a quarter mile radius in the last 3 to 6 months (they adjust it depending on the neighborhood and the property but in general this protects the bank from mistakes) 

Your investor typically want to rehab and resell quickly (to avoid hard money interests and other expenses), so he will not price it at the top possible price in the area because he wants it to be attractive to possible buyers and realtors.  

Also don't forget your investor has to pay closing cost (4  to 6%) on the purchase and the resale and Realtor commission on the resale (5 to 6%), that can easily eat up  20k in a 200k sale

As @Eddie T. said before, a 60% of ARV typically will give the investor room to pay for: the rehab, closing costs, commissions, interests and have a reasonable profit after 3 or 4 months of waiting for the end buyers and his bank to close. Note that If the rehab is massive the purchase price needs to be even lower

Good luck and keep way from the dark side of wholesaling 

Yes is moving really fast, if you find something with good price there, it will be easy to find a partner and to resell later

Welcome aboard @Jeremy B. 

Petworth is one of the hottest neighborhoods in DC for flipping lots of investors looking for houses to flip, maybe you can try to find some of them and wholesale them or partner with a experienced investor to flip them 

Cheapest place close to DC seems to be Baltimore, but you have to be careful to choose the proper area , there is lots of good people here in BP that can help you with that also 

best regards

Nereo Mendoza

welcome aboard @Julia Johnson you will find plenty of ideas and information here, just read and ask questions, there is several people here eager to help

best luck